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Today, in our ongoing effort to manage money better, we're going to start talking about income and expenses.
I don't know about you, but when I hear those terms, I automatically think of business owners who have to keep track of those kinds of numbers every day – not only to pay the correct amount on their taxes, but also to see if they are turning a profit. Otherwise, they wouldn't be in business very long!
But it's not just businesses who need to do this.
I cannot stress enough how essential it is to know how much is coming in, so you know how much can actually go out. And if you are looking to save some of the excess for future goals, vacations, remodels, or even for retirement, you need to technically turn a profit each and every year.
So, from now on, it's time to start looking at your personal finances as a business. Trust me, it will totally change your life!
More Than a Paycheck
The most common way your family receives income right now, is likely to be weekly paychecks from full-time, part-time, and seasonal jobs. However, income is so much more than a pay stub. Once you start digging, you will find multiple ways to increase your bottom line!
Some income source examples:
- Monetary gifts
- Side business (what you pay yourself)
- Garage sales
- Craigslist, eBay, and Amazon sales
- Cash back and online rewards
- Bank interest
- Tax refunds
- Rent (if you own investment properties)
To keep track of these income sources separately, I would highly encourage you to start a new file or folder specifically for this purpose. Start saving all pay stubs, online sales receipts, or any other income sources you might have.
Then once or twice a month, enter all those amounts into an online or printable income tracker. (Which is exactly what we are going to discuss next!)
How to Use an Income Tracker
Before I started using Excel, I used to write down all our income amounts in a small notebook according to each month. Then I would manually calculate the final number at the end, and determine how much we could save (after expenses), and what we needed to tithe or give to charity.
This past year though, I finally upgraded to an Excel spreadsheet, and seriously, I may never go back! I keep the file right on my desktop, and enter each amount as it comes in. When the year is over, I can simply print out my income sheet and place it in my financial notebook.
I love that I have an at-a-glance view of our final income for each month and year, however, if you're the paper and pen type, not to worry! I also have a printable version of the spreadsheet to download as well.
In this income tracker, you will see spaces for all your income sources, columns for each month, and gross vs net pay. I like to keep track of gross and net for not only for tithing purposes, but also to see what we actually “take home”. Although, that final number can be a little depressing!
How to use the income tracker:
- Enter in all slips from your income folder according to each month and income source.
- Add up each column for the final total (Excel can do this automatically) and take a good look at the net column. The total found there is the exact number we'll be using when talking about income from now on.
- Repeat these steps every month, until it's time to figure out the grand total of what you and your family made income-wise at the end of the year.
That's all there is to it!
Tracking income might not make much sense now, which is why so many “How to Budget” articles skip right over this part and go straight to the expenses and monthly budget amounts. But when we pull all the final numbers at the end of this series, you will start to see a pattern and why it's so important to write down and track your income.
Plus, it's fun to find new and creative ways to start adding to your income sources!
Have you ever kept track of income before?
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