Income and Assets
Step 1: Determine your Income and Assets
Your income includes any money that comes into your possession, which you can safely expect. Your paycheck is something you can pretty much count on, so that is definitely included. Other forms of income need to be considered as well. Child support, alimony, self-employment income from a side-business, social security, and welfare might be a type of income that you can count on. Most importantly, you can only consider it income if you can count on it--your winnings from last night's Online Poker binge doesn't count because you could just have easily lost it.
When organizing your budget, first determine how often you are paid. Most people fall into the following categories:
Common for temp and contract work
The most common way companies pay their employees
Often paid on the 15th and last day of each month
If you are paid commission and don't know how to budget for it, take a close look at your sales for last year to get an idea. If you are still uncertain, try to be as conservative as possible when including this income in order to minimize any negative impact on your budget if you do not meet your sales goal. If you get paid monthly or even less frequently and find that you consistently exceed your budget, try breaking it down into a weekly budget in order to gain control of your spending.
Once you have identified all of your sources of dependable income, multiply it out in order to get an annual income amount. Take note to multiply the net amount of each paycheck, or the amount you take home after taxes, insurance and other deducted items. Be careful not to overestimate your income! You want to get a realistic picture of your income and expenses so that you can assess your situation and improve it the best way possible. Don't include income you may or may not have later. Ignore that promotion at work that you are waiting for, that new job you just applied to, or that bonus you might get if you finish the project you are working on early. What you want to identify is the money that you have to work with right now. Try using the Income worksheet.