Nearly 65 percent of people have no idea how much money they spent in the previous month.
This can be a dangerous road to go down, especially if you are working to get your financials in order.
Those who create budgets and stick to them are more likely to get out of debt and have more financial stability than those who do not have a budget.
This begs the question: How do you budget effectively? How can you start calculating monthly income to create an accurate monthly budget?
Today, we’re sharing the details you need to know. Here is your quick guide on how to budget filled with basic beginner budgeting tips that can help you learn how to calculate your monthly and yearly income.
The Best Method For Calculating Monthly Income
For those that work in the restaurant industry or are freelancers, calculating your monthly income can be difficult. Your take-home pay can vary from month to month.
One way to calculate your monthly income accurately is to use check stub creator to prove your monthly income.
This is a helpful tool to help you collect all your pay stubs in one easy place that you can refer to when creating your monthly budget.
Calculating Gross and Net Income
It is important to know the difference between gross income and net income.
Gross income is the total of all your income before taxes, benefits, or 401K contributions are taken out.
Net income is basically your take-home pay. Once all the taxes and other deductions are taken out, your net pay is what you are left with. That is what your budget will be made out of.
Knowing your gross income is helpful if you are looking to buy a house, car, or borrow any amount of money from a lender.
Divide your annual salary by the 12 months of the year to find your monthly gross income.
If you are an hourly worker, add up all the hours you work every week. Multiply that number by your hourly salary. That final number will be your yearly gross income.
Creating Your Monthly Budget
Use your net monthly income to calculate your budget. First, write down all of your essential expenses. These include rent or mortgage payments, utilities, food, and transportation costs.
Then budget for any extra costs you may have. This can be subscriptions, your entertainment, and debt payments you owe.
If you currently have no debt, it is important to create a savings fund. Put some of your monthly net income into a savings account.
Learn More Budgeting and Financial Tips Today
If you are ready to take control of your finances and get yourself on a budget, there is no better time to start than today.
Take advantage of the payroll and budgeting tools available to you to get started on calculating monthly income. Want to learn more? Be sure to subscribe and follow along to get all the latest on budgeting and financial trends.