Smart and Sassy Guide to Budgeting: Part 2: Income

In the previous post, we discussed an overview of budgeting.  Now we’ll move on the the first big part of a budget: the Income.

Our heroine, “Trish A. Example”, sits amidst her pile of paystubs, previous month’s bills, and account statements.  She’s put her most basic information in her budget spreadsheet, which she downloaded from the first post in this series.  Now, she ready to list her income on her budget.

She looks at her paystubs from her previous month’s pay.  She’s paid twice a month, on the first and the 15th.  She’s earning a gross salary of $28,000, and she takes home $975 per pay, or $1950 per month. She also sells thrift store finds on the internet from time to time, and she usually clears about $150 a month for her on-again off-again sales.  Finally, she has a high-yield savings account that pays her a little over five dollars a month in interest.  Here’s what she gets when she enters the numbers into her spreadsheet:

It’s that easy!

Wait, what if I have a really variable income, and I’m never sure what I’ll earn in a month?

Good question!  Don’t let your variable income blow your budget out of the water.  Instead, spend your previous month’s earnings in the current month.  For example, I’m posting this in May.  If I were making a budget for May, I would list April’s income on my budget.  To do this, you essentially need to have a month’s income sitting in your checking account at the beginning of the month.  This takes some time for most people to save up, usually around two to three months of very low spending and concentrated saving.

I can’t save up that much!

Seriously?

Well…  It’s too hard and will take too long.

Two or three months will go by anyway, and you know where you’re going to be if you don’t do a budget.  You may as well do the budget and save up the money.

Curse your logic.  Also, I don’t make any other income from internet sales, and nobody can get that much interest on a bank account anyways.  I call shenanigans!

Fine, then just delete the line that has the internet sales.  If you have other sources of income then list them in a sensible way.  And I make more than $5 per month in interest on my modest checking account, and without any shenanigans at all.  So there.

Next:  Smart and Sassy Guide to Budgeting: Part 3: Expenses

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