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MODULE 3

Your Income, Honestly

Most people budget the wrong number. They use their gross salary - the number before taxes. That single mistake makes every budget feel impossible from day one.

Gross vs Net
THE NUMBER ONE MISTAKE

You Are Budgeting the Wrong Number

If you earn $60,000/year, your gross monthly income is $5,000. But after federal taxes, state taxes, Social Security, Medicare, and benefits - your actual take-home might be $3,600 to $4,100.

That is a $900 to $1,400 difference every month. Budgeting from $5,000 when you only receive $3,800 is why the math never works.

78% of first-time budgeters use gross income. That is why 78% of first budgets fail in month one.
WHERE YOUR MONEY GOES FIRST

Your Paycheck Has Roommates

Before you see a cent, these deductions take their share:

Federal Income Tax
10-22%
State Income Tax
0-13%
Social Security
6.2%
Medicare
1.45%
Benefits (health, 401k)
5-15% optional

Together these take 25-35% before you see a cent.

Calculator
YOUR CALCULATOR

Find Your Real Budgeting Number

Irregular Income
VARIABLE INCOME

Your Income Changes - Use This Method

If your income varies, budgeting from last month is a trap. One good month fools you into overspending.

The Worst Month Method: Budget from your lowest income month of the last 6. Everything above that baseline is a bonus - save it.
Multiple Income
SIDE HUSTLES

Multiple Income Streams - Simple Rules

RULE 1
Primary income - your budget baseline. This is the number you plan around.
RULE 2
Side income - only count it after you receive it. Never budget from projected freelance income.
RULE 3
Passive income - include at 70% of your 6-month average (only if consistent).
Pro tip: Keep side income in a separate account. Move to main account after receiving it.
Your Real Number
YOUR TURN

Enter Your Monthly Budgeting Number

Your monthly budgeting number
SELF-EMPLOYED?

Set Aside Taxes Before Budgeting

If you are self-employed, your income arrives gross with no taxes withheld. Set aside 25-30% for taxes before budgeting the rest.

Gross payment x 0.70 = your budgeting income

Example: $4,000 invoice
Set aside $1,200 for taxes
Budget from $2,800
WATCH OUT

3 Mistakes That Break Budgets

Tap each card to reveal the fix

Mistake 1: Annual bonuses
Never budget daily expenses from irregular bonuses. Use bonuses for debt or savings goals only.
Mistake 2: Using gross income
Always use net. This is the most important lesson in this module.
Mistake 3: Forgetting annual bills
Car insurance, subscriptions, memberships hit once a year. Divide by 12 and add to your monthly budget.
QUICK CHECK

Test What You Learned

Q1: You earn $4,500 gross/month. What should you budget from?

Q2: Your freelance income was $2k, $4k, $3k, $5k, $2.5k, $3.5k over 6 months. What do you budget from?

Summary
MODULE 3 COMPLETE

You Now Know Your Real Number

Your monthly budgeting number
Set in Module 3
✅
Gross vs Net
UNDERSTOOD
💲
Budgeting Number
SET
📈
Irregular Income
HANDLED

In Module 4 you will discover exactly where that money is actually going. Most people are shocked.

CONTINUE TO MODULE 4 → ← Back to Module 2