I hope you all have had a great week so far.
Last week, I went over goal setting.
This week, I would like to go over creating a budget.
Why is a budget important?
A budget will help you stay financially focused while saving money.Doing a budget each month also tells you where your money is going each month. With this, you won’t be surprised that a chunk of your pay is going to important expenses. It will also help you decide where to cut expenses at (so you don’t get broke down in the future.
Today, I would like to go over the first step in budgeting. It is figuring how much money you are bringing in each month.
Let’s discuss this step further.
First off, you need to figure out if you have stable income or unstable income.
Stable income means that you are bringing home around the same amount of money each paycheck. (e.g. salary job; consistent hourly job).
Unstable income means that you are not earning the same amount of money each month (e.g. commission job; inconsistent hourly job; seasonal job/business).
Once you figure that out, then you must figure out how much money you are making each month.
If you have a salary or consistent hourly job, use one of these resources to figure out how much you get paid each paycheck:
- Look at your bank statement from last month and see how much money was deposited into your account from your job. Round that amount to the nearest dollar and multiply that by the amount of times you get paid each month (If you get paid weekly it’s 4 times a month; If you get paid bi-weekly or bi-monthly it’s usually 2 times a month). Use that amount as your monthly income on your budget.
- Check your last paystub and see how much they paid you. Go with the net pay, not the gross pay. That is what you get after your employer deducted the taxes that have to be paid to the federal and state governments out of your paycheck (and any other required deductions they have to take out under certain circumstances e.g. child support; wage garnishment for past due personal taxes).
- If you just started a salary job,-go to www.paycheckcity.com. Choose the hourly or salary calculator (depending on if you get paid hourly or salary). Select the state you live in. If you get paid salary, type in how much your gross salary is per paycheck. If you get paid hourly, type in the amount of hours you typically work and the amount of money you get paid each hour and have it calculated. Choose your filing status and allowances. Then I would click calculate and it would give me a net amount. I would round it to the nearest dollar and multiply by the amount of times you get paid each month to get the monthly income amount.
If you don’t make a consistent amount of money each month, go to this website (moneypeach.com/budget). This article tells you how to figure out your income if you do not get paid the same amount each pay period.
Once you figure out your income for the month, record it somewhere where the information will not get lost. You will put it on the income section of your monthly budget.
Also, don’t forget to include other extra consistent monthly income you get (e.g. child support, alimony) on your budget.
Tomorrow, we will discuss how to figure out your monthly expenses to put on your budget.
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Thank You and Have A Great Day