Beginner Budgeting: Know How Much Money You Make

Welcome back to the Beginner Budgeting mini-series! (Yesterday I introduced the topic of budgeting for beginners. You can find that post here.)

Are you frustrated by finances? Drowning in debt? Bowled over by bills? Exhausted by expenses?

You may need a budget. I did.


No, budgets don’t necessarily solve money problems. They do, however, have the potential to take away some of the stress we sometimes feel surrounding our finances. Budgets force us to plan. They force us to look at our bank accounts in black and white, rather than through rose-gold colored glasses.

Before I had a budget, there was nothing I couldn’t afford.

Wanted that $60 sweater? Bought it. Felt like a night out on the town? Swiped my card. Needed a weekend away with the girls? I deserved it.

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It wasn’t until I was confronted with actual numbers that I experienced my first rude awakening.

“What do you mean I’m an unemployed undergrad/recent grad/graduate student living off student loans?! There has to have been some error. [grows desperate] Check the list again!”

Alas, it was true. In many ways, I was trying to live a lifestyle that many older adults were living, only I wasn’t an older adult and I hadn’t worked my whole life to achieve their level of financial security or disposable income. In short, I wasn’t living within my means.

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This awakening came only when I found the courage to look at my financial situation through the lens of a budget. It’s hard to ignore the truth when it’s all laid out in front of you. And, for me, it was the first step toward a feeling of financial peace.

Yesterday, I shared a bit about why I budget. I also outlined five tips/principles for how beginning budgeters can get started with the whole process:

  1. Know how much money you make.
  2. Track your expenses.
  3. Assign every penny a destination.
  4. Start. Right. Now.
  5. Be flexible.

Today, I’ll be diving into tip #1.

Know how much money you make!

No, I don’t mean before taxes. That is your “gross” pay and it’s just a theoretical number that leads many of us to spend more than is actually deposited into our bank account every pay period.

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What I’m referring to is how much, down to the cent, you receive from your employer every paycheck. After taxes. After deductions. After contributions to retirement, health savings accounts, or the other myriad places our money can be directed before we ever see it. Whatever is left…that’s what you have to work with. This is your “net” pay.

If you work multiple jobs, have a passive stream of income, or a spouse that also contributes (they should be involved in the process anyway!), add it all to the total.

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Some of you may be thinking, “That’s all well and good for someone who receives a predictable paycheck once or twice a month. But what about those of us who work the kind of job that means irregular pay?”

Business owners, servers, people who work on commission…the task of starting a budget is not quite as easy for you. But take heart. It is possible, and people are successful with it every single day. In fact, many people thrive on this type of budget. You may just have to do a little more research to figure out how much money you can actually count on every single month.

Dave Ramsey recommends that these individuals design their budget around their lowest paid month from the previous year. I don’t know how this would work for a new business owner without all of that income history to refer back to. I suppose people who find themselves in this scenario should err on the side of caution and be ultra conservative with their spending until they have a better grasp on how much they are actually drawing in every month.

Regardless of your situation, knowing how much money you have to begin with is an essential part of creating a budget. And it’s a great place to start.  

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Now, I am stopping here for this week.


Well, if you’re anything like me, this process will take some research and number crunching. If you’re married, and your spouse is on board with creating a working budget, then it’ll give you a chance to discuss both of your actual incomes. If you have absolutely no idea how much money gets deposited into your account every month, it’ll give you time to pull some old pay stubs, or even stop and talk with the payroll person at your job.

Don’t be shy! It’s  your money and you have the right and responsibility to know how it’s spent.


Next Tuesday, I’ll talk about the importance of tracking your spending when beginning a new budget. Spoiler alert: it’s really important.

I hope this post was helpful in some way! If you took value from it, be sure to “like” or comment! I’d love to hear from you.


*Because I want to be as transparent as possible, I’ll reiterate what I said in yesterday’s post. My knowledge of budgeting comes from my own experience as well as from personal research fueled by my interest in the topic. If you’re in a really difficult financial situation and you find yourself completely overwhelmed by it, don’t hesitate to seek the advice of a professional financial counselor or advisor.

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