Know Your Income: The Foundation of All Financial Success

You Can’t Budget What You Don’t Know


Let’s be blunt.


You might think you make $100,000 a year. But if you're not actually seeing $100,000 in your bank account, you’re budgeting on a lie—and that’s dangerous.


Understanding your real income—the amount you actually take home after taxes, deductions, and surprises—isn’t optional. It’s the bedrock of everything: budgeting, saving, investing, and yes, even sleeping better at night.

Because how can you confidently design your financial future when your starting point is a mystery?


This issue of The Good News-Letter is a wake-up call—and a practical guide—to help you take the first step toward clarity, control, and ultimately, prosperity: Knowing Your Income.

It’s Not Just Your Salary—It’s Your Income Ecosystem

When people are asked, “What’s your income?” most blurt out their gross salary like a badge of honor.


That’s like saying your favorite food is cake but forgetting to mention you’re gluten intolerant.


Your income isn’t just your job. It’s the totality of what’s flowing into your life on a consistent (or even occasional) basis. The clearer you are about it, the better decisions you make.


Let’s break it down:


1. Primary Income


  • Your salary or wages.
  • If you’re self-employed, this includes business revenue minus expenses.
  • If you’re paid hourly, calculate your average monthly hours to get a stable picture.


2. Secondary Income


  • Freelance gigs, consulting projects, tutoring, Uber driving, or dog-sitting—anything that brings in side cash.
  • This income can often be inconsistent, so look at monthly averages across several months.


3. Investment Income


  • Dividends from stocks, interest from savings or bonds, and profits from selling assets.
  • Capital gains may be irregular but still count as income if you're relying on them.


4. Passive Income


  • Rental income, royalties, affiliate income, annuities, or pensions.
  • These streams often get overlooked but can make a huge difference in your financial strategy.


Pro Tip: Create a simple spreadsheet that lists every income stream, how often you receive it, and how much it averages per month. Just doing this will feel like a financial breakthrough.


Why AFTER-TAX Income is the Real MVP


Let’s say your job pays you $90,000 a year. You proudly build a budget based on that number—housing, groceries, car, savings goals, maybe even a vacation.


But there’s a problem.


Your actual after-tax income (the money that lands in your account) might only be around $66,000. And that’s before we even talk about health insurance premiums, retirement contributions, or other deductions.


Budgeting based on gross income is like planning a road trip without checking the gas tank.


Here’s What Gets Subtracted from Your Paycheck:


  • Federal Income Taxes (based on your income bracket)
  • State & Local Taxes (depending on where you live)
  • Social Security & Medicare (typically 7.65%)
  • Health Insurance Premiums
  • 401(k) or Retirement Plan Contributions
  • Union Dues or Other Employer Deductions


These are not “optional” costs. They are guaranteed. Which means your actual, usable income is far less than your offer letter would suggest.


Why Does This Matter?


Because it affects everything:


  • How much you can really afford in rent or mortgage.
  • What kind of car you should buy.
  • How aggressively you can save or invest.
  • Whether or not you’re setting yourself up for a cash shortfall or a cash surplus.


Knowing your after-tax income gives you clarity, and clarity leads to confidence.


What Happens When You Know Your Income?


When you’re clear about how much money you truly earn each month—after taxes and deductions—you instantly level up your financial life.


You make decisions based on reality, not hopes.


Let’s look at what happens when you know your income:


1. You Create a Budget That Works


A budget built on after-tax income is like using GPS instead of a hand-drawn map. It’s accurate, trackable, and leads to better outcomes.


You avoid the “why am I always short at the end of the month?” trap.


2. You Build Savings That Stick


You no longer over-commit. Instead, you fund your emergency account, Roth IRA, or investment accounts based on what’s real—not what you thought was real.


3. You Manage Debt Smarter


Knowing your income lets you set realistic debt payoff timelines and avoid high-interest traps.


4. You Feel Empowered, Not Anxious


Money anxiety often comes from the unknown. Knowing your income replaces that fear with a quiet confidence. You’re in control now.


Your 5-Step Plan to Know Your Income—For Real


Let’s make this practical. Here’s what you can do today:


Step 1: List All Sources of Income


Open a blank document or spreadsheet. Add the following rows:


  • Primary job income
  • Side gig income
  • Investment income
  • Passive income
  • Any irregular or seasonal sources


Be honest. Be thorough.


Step 2: Calculate Monthly Averages


Some income is weekly. Some is quarterly. Some is random. That’s okay.


Convert everything into a monthly average so you can compare apples to apples.


Example: If you earn $2,400 from a freelance project every 3 months, that’s $800/month on average.


Step 3: Subtract Taxes and Deductions


For W2 employees, look at your pay stub. Use your net pay, not gross.


For freelancers, use tax software or calculators to estimate federal, state, and self-employment taxes. Don’t forget to subtract business expenses before estimating.


Helpful tools:



Step 4: Finalize Your After-Tax Monthly Income


Tally it all up. This is your real, usable monthly income.


Write this number somewhere you’ll see it often. It’s your financial dashboard starting point.


Step 5: Adjust Your Budget


Now that you know your real income, tweak your budget categories.


  • Housing: 25-30%
  • Food: 10-15%
  • Savings: 10-20%
  • Transportation: 10-15%
  • Fun & Misc: 5-10%


If your budget doesn’t fit, your income or expenses must adjust. That’s the truth—but it’s also your power.


Final Word: Know Your Income—And Take Back Control

Money isn’t just about numbers. It’s about peace of mind. It’s about knowing—not guessing—where you stand.


And it all starts with a simple but often overlooked truth: You must know your income.


Not your job title. Not your gross salary. Not the fantasy numbers you tell people at dinner parties.


Your real, after-tax, monthly income.


Get that number. Write it down. Use it.

That one move might just be the smartest financial decision you make all year.


Want Help Putting It All Together?


If you’re tired of feeling financially fuzzy and want a clear, custom roadmap, consider scheduling a GPS Evaluation Call with us. The Call is FREE and Important. We’ll help you map out where you are today financially and where you want to go tomorrow—using numbers you can trust. Don't hesitate, your future depends on it.


When you know your income, you control your outcome.

Remember "More Money, More Options!"