Understanding Gross Monthly Income: A Paycheck Guide

When talking about monthly income, people use two major categories. Gross income is the total money you are paid before deductions. Net income, on the other hand, is what you actually receive after your employer deducts federal and state income taxes and other expenses, such as health insurance premiums. Knowing your gross income not only helps you get a sense of how much your total salary is, but it also can help you when planning your personal finances. For example, most mortgage lenders do not allow your payments to exceed 28 percent of your gross monthly income.

Step 1

Look up the amount listed on the paycheck stub before anything is subtracted. This might be listed as your base pay. If you work an hourly job, your base pay will be the number of hours you work times your hourly wage.

Step 2

Multiply this by 2.17 to find your gross monthly income if you are paid every two weeks. This is the number of pay periods in the average month, given that a 365-day year has 52.14 weeks.

Step 3

Multiply your base pay by 4.35 to calculate your gross monthly income if you are paid weekly. The average month has 4.35 weeks.

Step 4

Multiply the base pay by 2 to calculate your gross monthly income if you are paid twice per month.

Step 5

Repeat the process for each additional job you have. Add your gross monthly income from each job together to find your total gross monthly income.

Tip

If your base pay varies depending on the number of hours you work or commissions, use your average base pay in the calculations. Calculate the average by adding the base pay from your last few paycheck stubs and dividing the total by the number of pay periods you added together. Your take-home pay will usually be at least 10 percent less than your gross income because of taxes and deductions. If you make retirement contributions, pay for your health insurance through work or are in a high tax bracket, your take-home pay could be significantly more than 10 percent less than your gross income.