How to calculate income is different for everybody. The goal is to understand how much money you are getting from all income sources for a given period of time. The following sections will help you calculate your income. After reading over this section, you can use the spreadsheet in the Personal Budget Tools page to calculate your income.
Picking an Income Period
You can calculate your income based on a convenient time interval. If you get paid monthly, then the most convenient time interval is a month. If you get paid weekly, then pick a time interval based on a number of weeks. A four week interval or a monthly interval works best, but pick one that is convenient to you. If your income is not regular, which can be the case for contract work, or seasonal work, then pick a period that is convenient.
Another factor to consider in picking a time period is when you pay your bills. A monthly time period may be best as bills often come once a month. Since bills generally come on a monthly basis, if your income period is set to four weeks (just under a month), then occasionally a budget period will pass where you don't have to pay one of your bills. This is like getting a bonus for that budget period.
Strategies for Calculating Income
Whatever time period you pick to calculate your income, make sure you include all of your income — salary, tips, child support — everything. The list at the bottom of this page gives some ideas of income sources.
When calculating your income, always choose a pessimistic outlook. For example, if you get between $100 and $150 in tips a week, then use $100 as your income for that category.
Employed or Not
As with anybody, when there is no regular income, then cutbacks have to be made. Until you are getting a regular income, you need to cut back on all unnecessary spending. Any expenses that can be put off until you have an income should be put off. Any time you are about to spend some money ask yourself if you can get by without it — either until you have a steady income, or forever if you didn't need that particular item in the first place.
The following are some places you may be getting income from:
- Child support
- Investment income
- Social security
- Unemployment insurance
Related PagesWhy Budget
What Is Needed To Make A Budget
How To Budget
Personal Budget Example
Personal Budget Tools
Budget Allocation Tool