Financial Capability Step 7: Make Your Money Count

 

To develop an accurate picture of the amount of money you will have in the future, take a look back.  Decide if your income will be from the same or from different sources and the amount of income you can expect to earn in the future.

In our uncertain economic time, it’s very important to take stock of what you have and that includes your income. Much like how you got a clearer picture of your finances when you reviewed your credit history and credit score, reviewing your income and your income sources will be very important in establishing a baseline so you can make smart money decisions going forward.

If you are currently working, the largest source of monthly income will be from your job. The easiest place to look for that information is on your paycheck. Your paycheck will tell you your gross income for that pay period. If you’re paid monthly, then you have the numbers you need for the income worksheet. If you’re paid every two weeks or every week, you will need to do some math so that you get an even and reliable monthly figure. If you are paid every two weeks, multiply all the numbers by 26 (there are 52 weeks in a year, so you’re paid 26 times a year) and then by 12 (the number of months in a year). This will give you monthly figures you can use in the income worksheet. If you are paid weekly, multiply it by 52 and then divide by 12.

If you have multiple jobs, you will want to combine all the numbers you get and fill out that chart.

If you have some irregular income from side jobs you may do, you can add that under Additional Periodic Income.

When you’re done, you should have a good picture of how much money you put into your pocket each month. This is important because when you go to create your budget, you will want to ensure that your total spending is less than your total income. If you spend more than you earn, then you’re going in the wrong direction. You’ll only know that if you do the homework up front and figure out how much you earn.

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