Budgeting Step 2: Total Annual Household Income
Do you really know your annual household income? You may not! No judgement, lots of people do not know what their total annual household income is.
If you are a budgeting beginner, It is one of the 7 pre-budget steps you need to know before you write your first budget.
When I started to budget in 2017 I hadn’t a clue what my total annual household income was. Some incomes were fixed and reliable and some variable and irregular. Moreover I was discounting some incomes as irrelevant and others as more important because of an emotional value I was attaching to some of the income. Once I analysed it correctly I discovered that my income was higher than I realised. I removed my feelings from my budgeting decisions and gained clarity. This is how I ended up calculating my annual household income properly and learning how to budget for success.
Working out your annual household income involves gathering the details of all incomes that come into your household for any reason and from any source each year. Add that income together to get your total annual household income. Whether you are someone with a stable income or irregular or variable income, this post will be helpful for you.
In this post we will talk about:
Defining annual household income for your family.
Why you might not know what your total annual household income is.
How to calculate annual household income including irregular or variable income.