So you want to handle your finances a bit better. Great! This is a wonderful place to start. I have A LOT of first hand experience with almost every financial issue you can think of. Well, except for “what to do if you have too much money”. That is not something I have experienced as of yet! But anything else….I’m your woman!
I also taught the Four Cornerstones of Financial Literacy in my past life. 😉 A wonderful curriculum, and if you are looking in to taking a class, I’d start with your local community action agency.
The first step towards better money management is knowing where your money comes from.
This may sound easy, but it is often times more than just a regular income from a day job. You need to consider all of the income you bring to the household, not just your wages from your nine to fiver. Do you work a second job? Moonlight? Are you laid off for part of the year and bring in unemployment? Do you babysit? Mow lawns? Have a yearly garage sale? Refund? Have your own business?
Do you receive disability? Social Security? Food Benefits? Fuel Assistance? Financial Assistance? These types of benefits also need to be considered as income, since they do cover some of your expenses. How about dividend checks? Any odd ball income you have coming in on a regular basis that can be counted on for quite some time needs to be considered.
Other income you may receive that does not come in regularly would not be considered in your monthly income. For example, I just sold my house. I would not consider the profit I made on my house as part of my monthly income. Sometimes I receive AFLAC checks or refunds from somewhere. They also would not be considered as part of my monthly income, because I do not receive them on a regular basis.
What about a Christmas Bonus, you ask? That one is iffy. If it comes every year, without fail, you could possibly rely on it and include it. I would only consider it as income around the time you receive it though, because otherwise you’d have to break it down to what you would receive on a monthly basis and that would really be hard to work with. Better yet, though, is to not consider it as income at all. I would call it a “Windfall”.
A “Windfall” is that “oh look at what just came in the mail!” money you get as a bonus. That is money not included in your budget. That is money you can’t rely on, so you don’t want to put it towards any expenses. That is lucky money that, if you have no debt, and all your expenses are covered, you get to play with. 😉 That is where I would put the Christmas Bonus. If you ever want to know why, just ask the Griswolds!
Once you have a list of all of your regular income, come on back, for what to do next. 🙂