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
402 thoughts on “Build the Foundation”
My income is pretty much fixed.
Well, I was surprised. I have only estimated our monthly income, we actually have more net income than I thought. I need to get things set up better.
My salary is the same monthly so no surprises.
Ahorita estoy en una pasantia gano bien poco pero me preparo para ordenar mi presupuesto.
I recently got a new job so I am still trying to figure out what my actual income will be. I feel this is a good starting point to budgeting, new job and budgeting.
” 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.”
As another Lisa: it’s like they read my mind.
1. 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.
I know my income already from my np clinic job and lack a side hustle or childsupport or pension (yet)
2. What did you notice when you estimated your income? Was it higher or lower than you thought? Share your experience in the comments below.
I am always surprised to see that when i figure out a budget i have plenty of money except i spend much more than i realize or intend, and now that i have this loc problem, my budget will be sadly tight, and i am so grateful to have my good payin’ job, truly, doing work that matters to me and hopefully to others: yay!
I have a fixed amount. Seems less than I would have hoped.
I am in a good position. I have 2 pensions plus my government pensions and my investments. I also have a side hustle that nets between $7,500-$10,000./year. It is more than I thought I would have when I was working, before I retired.
I was surprised as our income was higher than we thought. My next goal is figuring out how much is being spent impulsively.
So grateful to have a good position which pays a nice salary. Last month was not a typical month. Our annual bonus hit and this month we are getting another larger paycheck. Pay increase will be reflected in next check, but so will the adjustment to my investments. When I get a raise and/or bonus the extra gets invested and this year the chunk is going towards my daughters wedding. So my income is a little trickier in February/March.
I have one salary job and a pay per hour job which has 24 hours a week. I just started this job and some times I get called off. So I will have to estimate.
I have a salary pay plan so I can plan my income vs expenses easily. I’ve identified that I spend too much money on recreational and fun things instead of paying off the debt. I need to pay off the debt instead of shopping and start increasing the savings with automatic transfers to the savings account
My income is pretty routine.
fixed income at the moment but hoping to find a side hustle to increase.
I’m pretty much starting from the beginning because I’ve only just taken over mine and my husband’s finances. I was trying to let him be more in control since he’s the one with the job, but he can’t seem to wrap his head around expenses that are less than immediate, so we decided I should take more control since I’m better at that.
I just got a new job so it was slightly higher than before
My income is fixed with Social Security and Pension
My income is about what I expected, I’m paid hourly so it goes up and down depending on my hours. I figure my income as my base hours of 40 hours a week.
My income is pretty much fixed, however, my husband’s income varies on how much overtime he gets
In looking at our income versus expenditures, we spent $500 more than we made.
I have a fairly steady income. I’m on a fixed annuity for retirement and base wages for my job. There is opportunity for overtime in the fall and spring.
My income is pretty much the same every two weeks after taxes.
I am already using goodbudget and am on ei for maternity leave so I know what I am making every 2 weeks, the only variable is my top up pay from my employer that will not be coming in during the summer and will only be for 7 days in September when school starts up again.
My income varies from paycheque to paycheque because they take of my retirement based on teaching days which changes from pay period to pay period.
No surprises
My income is very stable, for which I’m grateful. I know what I’m going to earn each month.
It’s more than I thought.
I KNOW MY EXACT INCOME
My income is more than I realized, yet I still don’t have any money. What’s up with that! Lol
My income is based on my hours I work so therefore I am going back for several months to take an average on my income just so that I can plan accordingly and the extra money well I will have to put that in savings or justs simply use it to pay down debt
My salary is a set amount each month, but I’m in the process of transitioning to a new position for the coming year. I know what my total salary will be, but I have to estimate my actual take-home.
I was not surprised. I keep track of my income.
My biggest issue that I hope to resolve in my budgeting is accounting for money i dont have on hand yet, That has seemed to be a daunting task for me .
Recently changed but for the most part fixed income
I make good money – but I also spend a lot of it…
My income is fairly fixed month-to-month.
Right now I’m waiting to see how close I was b/c I haven’t started my new job yet. I really think it may be a little higher
My income is pretty much the same
My income is good. My notion of saving for retirement is not so good. Time to fix that.
My income has been changing a lot recently. I do make more than I expected but my spending is not very controlled. Wants are satisfied before needs are considered. I hope to get ahead of that and develop new habits.
I make more than I had expected. I need to better manage my spending.
The net income in our home is fixed. We are trying to see if we can make changes to our W4 to decrease how much is taken out in taxes each month.
Regular income comes and then goes out. Using this budgeting tool where I am checking what I’m spending everyday is keeping me focused.
My income is about what I was expecting. Just need to stop wasting my money on stuff I don’t need.
Fixed income. Was already pretty aware of how much we make but more than I thought it was when I put it on paper. Makes me realize that it’s my spending that’s the problem!
My income is fixed but if I get any unexpected income I transfer it straight to my savings account
Salary is fixed.
My income is fixed in that I receive preset amounts from SSA, an annuity and a payout from my investments.
I’m on social security so income is the same every month.
Net income was higher than I thought.
It’s about what I knew.