Start by taking your list of major expenses from Step 1 and listing them for one month. Create a column and place your expense rows near the bottom half of the page.
Now, let’s move to the top of the column and list your income for the month. Typically, this will include your paycheck and your spouse’s paycheck. If you have other significant sources of income like rent from a property, side business earnings, dividends, or cash-back rewards, create a row for each of these income streams.
For smaller or less consistent income sources, add a category called “Misc. Income” to capture all additional money coming in.
Next, calculate your Monthly Net Exchange by subtracting your total expenses from your total income:
– Total Income – Total Expenses = Monthly Net Exchange
Normally, you’d stop here with a regular budget. However, in the next section, we will elevate our budgeting process.
