Creating a budget is like building a house. There are lots of steps, and the most important one is laying a solid foundation. If the foundation isn’t strong, the house built on top won’t be sturdy either. But when a foundation is strong, the house on top will be sturdy too. It won’t crumble after a few years, and will hold firm when the weather gets rough.
We want our budgets to have a solid foundation like this — one that allows us to weather the storm and change with the seasons.
The foundation of a budget has several pieces, the most important of which is estimating income and spending. When we can do that well, we can learn to adapt our budgets throughout our lifetimes, so that our budget continues to serve us well for years. After all, budgets are never final!
But what’s surprising is that many people are never taught the fundamentals of creating a budget. Our friend Lisa said,
“I never saw a budget that my parents used, so [making a budget] was new to me. They might have had one, I just didn’t know about it.”
So that’s what we’ll focus on this week! We’ll start the budget making process by creating a sturdy foundation that you can build the rest of your budget on. The first step is knowing how much income you have to work with.
Today’s Assignment
- Estimate your income. If you’re not using the Goodbudget app yet, or are just getting started, head to your online bank account and tally up all of your incomes from the last month. Be sure to include things like paychecks, side hustles, child support, pensions, etc. If you’ve been using Goodbudget, you can get an exact figure by looking at your Income vs. Spending report.
- What did you notice when you estimated your income? Was it higher or lower than you thought? Share your experience in the comments below.
Note for couples: Remember to count all the money that you share. That might come from monthly paychecks from each of you, plus money from one of your side hustles. And if you don’t have the same, clear understanding of which incomes you’re sharing, now’s a great time to get on the same page.
That’s it for today! We look forward to seeing you in the next assignment.
Happy budgeting,
-The Goodbudget Team
375 thoughts on “Build the Foundation”
Seeing it in paper is a shock considering how much I spend I am eating money there it is in my face. Okay here I go.
I had a concept of the amount, but actually adding it up was a surprise. Where did all of that go during the month?
We have a good grasp on how much comes in each month. But seeing it on paper makes it real
The amount of my income is what I had known, but the little purchases are hard to see
My husbands income is variable so I’ve used that as an excuse as to why we can’t budget but looking over the past three months it’s actually fairly stable.
It looks great on paper and you do not think that the little stuff adds up to big money.
My income has varied widely over the last year due to the pandemic, but now that I’m back to work I have more dependable income. I also have a ton of credit card debt. So hopefully I can learn to build a budget so I don’t have to scramble for overtime to keep up with the bills.
My income is looking alot better from going thru this pandemic. My income has changed, I am finally getting bills paid for, also paying off my credit card debt.
It was much less than I thought I actually. Because of pandemic struggles, my job hasn’t been able to pay me.
My income looks better since my promotion… If only my spending had stayed the same.
According to the app, I am making (slightly) more than I spend. This is not exactly where I want to be – I’d appreciate a bigger cushion – but am feeling that the current amount is ok. Still, I haven’t gotten the whole app figured out, so this may not be the real number. Hoping this course will help out with my budgeting…
Adding up my income, its enough. But its not all going into the right places
Thanks for sharing, Fatima! Sounds like figuring out how to divvy up that income will be super helpful for you.
Already have a budget so wasn’t surprised, just go over it every fortnight!
My income looks good on paper and should cover all my expenses but somehow it doesn’t and I need to figure out why.
Wow!
Seeing my estimated income on paper helps me to see it as something growing. Like planting a seed, my estimated income is now planted and I can start cultivating it and watch it grow.
I’m switching from income to pension this month. But I have not received the amount for my pension. I’ll just do a guess and fix it next month.
Estimate was about the same as the actual income
I found that I make a little less than i had expected my income to add up to.
I know this is early but I was excited and will be in hospital tomorrow so did it tonight I noticed we are stretched thin but making it because of the help from pregnancy center and mom in law
After looking at my bank statement for the month I see where most the money goes.
It definitely is an eye opener to see just how much my expenses are
After in putting everything I was shocked on how much was being spent opposed to how much was coming in. .
I spend a lot more than I earn…
My income is half of what I used to get.
It looks great on paper but reality is different when I using apps
There was more income than I thought. So now I’m really concerned about the amount I’m spending. It must be much more than I thought as well.
Way higher than I thought which is even more shameful at this point!!
So my income was a little less than what I expected. It’s pretty rough trying to make things work financially since covid. Any downtime I get then that’s when I’ll do the homework.
Only paper I actually had more than I realized which means I need to get a better handle on my finances.
Income is less than I had hoped. Unfortunately, my paychecks are not inflation adjustable. Mostly concerned about inflation now and just how bad it’s going to get. Will be cutting things out of the budget for sure!
I found that I estimated over our actual income, which made my eyes open a bit… no wonder why my family is struggling!
I’ve been using GB for awhile now so I knew how much my income is. I’ve been on the inconsistent side of tracking my expenses. I know I make a lot of small expenses for everyday things but they do add up. I need more self-control when it comes to need vs want.
Knowing my income was clear, I just wasn’t keeping tabs on how much I have bee spending.
I am in the same shoes as you, Robin. The need vs want war.
Another thing that had been working against me was not having separate envelopes, so I end up spending a chunk on items I want in a different category at the expense of needs in another.
Lots of money was spent than what was coming in.
Ok after seeing my income I don’t know why I am not in better shape financially. I spend on little things that add up and cause me to be in a bad place. Also helping others financially is hurting me financially.
I’m a full-time student and surviving off of savings right now, so this one is easy and fixed.
I definitely make less than I used to, but still more than I thought. I also just had an increase in income, and will likely have another at the end of the year, so I want to be able to plan ahead how to save and invest that better.
High then I thought
My total cost for the mouth is $365
Help me realize my debt is high I need to work on lowering my debt.
My income is much lower than I thought but I really don’t spend much money so I don’t need to make very much.
Am on a fixed income, so I have known for sometime what my earnings are.
I don’t have an income
I never realized how little I was spending in some areas while in others I was spending a rather large amount on other things.
I have a part time job and I babysit on random days adn occasions
It was a lot higher then I thought it would be the money I make goes straight into my account without me even realsing
My income is very unpredictable and low.
It is just as i expected.
My income was lower than i thought it would be. Made me realize I spend more than i can really keep up with..
My income was better than I realized I was not counting all of my income sources.