Many of my readers have expressed interest in creating a budget and many have said that it is overwhelming, stressful, and they just don’t want to take the time to sit down for an afternoon to do it. Because of that, I decided to break up the steps of creating a budget into a small series so it is not overwhelming, confusing, and stressful! Today we are starting the second step of creating a budget. (In case you missed it here is yesterday’s intro on why we are creating a budget and where to start).
Yesterday we began with a small step to create a budget. I asked you to gather your financial information because today you are going to need it!
For today, we are going to use that financial information to begin our budget. For some of you this is going to take less than 5 minutes and for others (myself included) it will take a little longer.
Today we are going to gather up our INCOME information. For those of you who get paid a salary and it’s the same every month this will be simple. For the rest of us with irregular or variable income it’s a little more difficult.
In order to create a budget we need to know how much income we have each month. It’s hard to know how much money there is to spend (or not to spend) if we don’t know what we have to begin with. You will also need to note how often you receive this income (monthly, twice a month, bi-weekly, quarterly, etc)
Different sources of income could be:
- Your Salary
- Your Spouse’s Salary
- Your/Spouse’s Salary (From 2nd Job)
- Bonuses
- Self-Employment
- Child Support
- Alimony
- Rent (If you receive it)
- Unemployment
- Social Security
- Disability
- Gifts
- Interest Income
- Trust Fund
- Other Incomes
For those of you with irregular incomes like we do with farming, I want you to go through as many months as possible of your financial information and note when you get paid, how much you got paid, etc. This will give you a small glimpse of what an average for you will look like. Later in this series I will be posting on Irregular Income Planning and having a special post just for you! Even though it is a little more difficult to create a budget with irregular income, I think it is more important for you to have a budget because you need to be able to pay your bills every month, regardless of if it’s an extraordinary month or an average month!
This is it for today. After you have went through your financial information you should know how much income you have to work with each month (except for your irregular budget makers, but you should have a more realistic idea of how much money you have made in the past!)
I hope you’ll join me back here tomorrow morning for the next step!
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