It is important to distinguish between your gross and net income. By doing so, you can determine how much extra you have for your daily needs as well as luxuries. When talking about your salary, you want to use every bit of it to achieve the lifestyle that you wanted. However, the pay isn’t always this simple. There are various factors to consider, like Medicare, tax, and superannuation. To properly budget and handle your finances, it’s vital to understand what your gross and net income is, and how to calculate it. If you are not a massive fan of Math, then you might’ve overlooked the calculations of your superannuation and tax. Good thing there are innovative tools that you can use to handle your salary without the need to spend money hiring an accountant. Your best buddy would be a pay calculator – an all-in-one tool to manage your payroll and design your budget. Today’s article is brought to you by Perfect Payday, where you can get a payday loan in an emergency.

How to Calculate your Gross and Net Income?

Solving the difference between your gross and net income is the initial step to understand how your salary works completely. Your gross income is your income that doesn’t have any deductions. While net income is your total income right after deductions are made, like superannuation and tax. Unluckily, solving your net income can be pretty complicated, since it is smaller than your gross income. Usually, your employment automatically carries out these deductions for you and write it on your payslip.

However, solving your annual net income is more morbid since it comes with a lot of deductions. These include Medicare levy, tax, and extra taxes. A pay calculator will use the newest tax laws and deduction schedule to compute for your yearly salary. And display information in various categories, such as annually, monthly, fortnightly, and weekly. To make sure that the pay calculator you select is suitable with the newest numbers, look for the ones with a government seal of approval. Once the pay calculator solves your net income and categorizes it into different expenses, you can then analyze your spending.

How to manage your income?

Once you know your income, the next step you need to take is to budget it. Last 2012, cars were the most significant expense, then entertainment and alcohol. You might notice that your spending habits per week might be the same. When designing your budget, the first thing to consider is your present spending habitats. Where and how do you spend your hard-earned cash? What is the biggest rack on your salary? Living life one paycheck after another is somehow like running on a treadmill – you are not going anywhere. To handle your payroll wisely, creating a budget will rescue you from living from payslip to payslip. Or you can ask an artificially intelligent bot to do it for you.

What should you include in your budget?

  • For you to precisely maneuver your finances, solve a budget from your net income. And here are the costs that you should include in your budget:
  • Emergency fund – this is useful during emergencies that demand urgent cash flow.
  • Housing – this includes your mortgage or rent payments, as well as repairs and general maintenance, like pool cleaning or gardening. Set 25-30% of your net income to your housing.

Savings – witnessing your savings expand and grow is like taking care of a planet and watching it transform. When you have savings, your confidence will also increase towards having financial freedom. Spend your savings wisely by preserving a certain amount for your future needs, and then saving for luxury. An ideal saving is around 10-15% of your net income.

Household utilities – these include heating, cooling, gas, electricity, and water. Invest in appliances that are long-lasting and more efficient. You should set no more than 10% of your net income for your household utilities.

Entertainment – having a salary is all about affording the lifestyle that you desire and using it to make life more enjoyable. Since day to day, life is stressful enough, and it’s essential to set money and time for things that you love doing. It could be anything from drinks with friends, weekly yoga class, or weekend trip.

Consumer debt – if you have consumer debt it is essential that you should fulfill your repayments so that the interest won’t drag you down in the future. Don’t allow your debts to get the most out of you. Handle them wisely by including repayments and other extra costs in your weekly budget.


The standard budgeting rule is 50/20/30. The 50% is for your essentials, 20% for savings, and 30% for recreation or personal. Using the figures from your pay calculator, set a budget following this rule to get the most out of your income. With the right budget, you no longer have to struggle to live with payslip to payslip.