Track Money Coming In

Your budget estimates and compares income and expenses and shows you how you’re spending your money.  A successful budget includes documenting all incoming sources of financial resources. To be highly successful at budgeting, you will have to be able to account for all sources of income accurately. Often, people only think about income from a job or paycheck that they receive. This is an obvious source of income, but other sources also need to be considered when you budget. 

 

Have you considered if you have any other income sources in addition to your regular pay?

 

Three months of tracking income and expenditures should provide you with enough information to assess your financial health. Tracking helps you spot trends of how income is being spent. Tracking provides you with an analysis of all money coming in and all money going out to help you understand your financial behavior and spending habits.  Making a spending plan isn’t just about tracking your expenses. It also means looking carefully at what you have to work with — your income.  Always remember that your gross income is subject to tax and other deductions. These deductions can be as high as 30% of your gross income on average in the USA.  After deductions (the remaining 70%), your remaining income is referred to as your net income.  Your net income (take-home income) is what your budget is based on, not your gross income.

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Income

Use this checklist to think through all of the funds that come into your household to determine your total gross monthly income:

  • Your paycheck
  • Your spouse’s paycheck
  • Rental or roommate income
  • Interest and dividends from savings or investments
  • Grants or other stipends (not loans, of course)
  • Other outside wages

Can you think of any sources of income you may have overlooked? Tips, Gig Economy Money -- Cha-ching! With your total monthly income sorted out, you can move on to tackle the expenditures.

Cash Flow

When developing a healthy and sound budget, you have to consider your overall cash flow and financial allocation. Cash flow budgeting takes your regular budget to the next level by also considering the timing of financial inflows and outflows. 

Do you get paid weekly, monthly, or in some other irregular intervals? Are most of your financial outlays coming at the beginning of the month vs. the end of the month? Are there large expenditures that you have to make a couple of times a year? These are all questions to ask yourself while determining your cash flow budget.