How to Calculate Gross Monthly Income [With Examples]

Are you confused about what your gross monthly income is? Want to know how much money you bring in each month total?

Your gross monthly income is worth knowing, even if some money is removed for taxes before receiving your paycheck. Understanding your gross monthly income amount is part of staying on top of your finances.

Being informed about your money will help you make the best decisions possible for your life and financial future. 

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What is Gross Monthly Income?

The easiest way to understand your gross monthly income is as the amount of money you make in your paycheck or from every job before any of it is deducted for taxes or other things.

It is the total amount you actually earned before any money is taken out. Your gross monthly income is significant because even though it isn’t the amount you see in your paycheck, it is the amount you earn in total. 

Gross Pay Vs. Net Pay: What’s the Difference?

Is there a difference? Yes! How do you know what the difference is between your gross pay and net pay? 

gross pay vs net pay explanation with dollar sign and light pink background

Gross pay is calculated by how much you make before taxes or payroll deductions are taken out.

But what matters most is your net pay or the amount you get to spend. It’s the amount you earn after taxes and deductions.

Before deductions, you can think of gross pay as your total income on paper. And think of net pay as the amount you actually make – what shows up in your account each month.

Is Salary Gross or Net?

Generally, if someone offers you a salary amount, they will tell you the gross pay. This is the amount before taxes, or other expenses are subtracted from it.

You might make an annual salary of $40,000.00. But remember that you will take home less than this. Your take-home pay is your net pay.

When discussing salary, if you are unsure whether the compensation you are being told about is gross or net, just ask. While it is likely gross because your taxes and other expenses are personalized for you, it still helps to know for sure.

And before you accept an amount of money for a job, make sure you understand the net salary. Since it’s less than gross, you need to see if it will be enough for you to live on or not before accepting.

How to Calculate Gross Monthly Income From a Paycheck Stub?

You will see a number on your paycheck stub that shows the amount before anything else is subtracted from your paycheck. This is your gross pay, and it’s an easy way to find the total before taxes. If you get paid once a month, then you have the amount already.

But suppose you are paid bi-weekly. You’ll need to multiply your gross paycheck amount by 2.17 (the average number of monthly paychecks throughout the year) to get an accurate monthly income answer. 

How to Calculate Gross Monthly Income From Annual Salary?

If you are just presented with an annual number instead of a monthly one, how can you tell your gross monthly income?

First, make sure the yearly amount is the gross pay. Then, divide that amount by twelve. This is your answer.

calculate gross monthly income from annual salary
Formula for calculating gross income per month from an annual salary.

How to Calculate Gross Monthly Income From Weekly Paycheck?

To calculate your gross monthly income, do a little bit of math if you are paid weekly. You need to multiply your total weekly earnings by 52.

Then, divide this amount by 12. For example, if you make a gross income of $1,000 a week, you will multiply this by 52, equaling $52,000. Then divide it by 12, equaling $4333.33. 

formula to calculate gross income per month from weekly paycheck
Formula for calculating gross income per month from a weekly paycheck.

How To Calculate Gross Monthly Income from BiWeekly Paycheck?

What are the steps to calculate your gross monthly income if paid twice a month? You multiply your total earnings by 26 to start.

Then, divide that amount by 12. Then you’ll have the correct amount of gross monthly income.

Related: How to Budget Bi-Weekly Paychecks

calculating gross monthly income from biweekly paychecks
Formula for calculating gross income per month from biweekly paychecks.

Why You Should Know Your Monthly and Annual Salary

It’s essential to know your monthly and annual salary for a few reasons. You will probably be told the gross yearly salary when you are initially offered a job before taxes are taken out. This is good to know because it’s the total.

If you are not told the monthly gross salary, you should work it out for yourself using the above math. This is because you need to know how much you are making each day, week, and month, or how much you make per hour before subtractions. 

But it’s also important to know your net monthly and annual salary. This situation will be different for every person because it depends on your taxes and what amounts come out of your paycheck each month before the money is given to you.

You must calculate these as well to know how much you actually have to live on. Otherwise, you’ll just be guessing, and it will be challenging to pull together a budget.

When budgeting, always budget using your net monthly income or net annual income. That way, you are working with the real numbers you will actually receive each paycheck.

If your job does not automatically subtract taxes, make sure you know what tax bracket you are in and set aside the money you’ll need to properly pay your taxes each year. It’s a lot better to have a plan for the future than to be stuck trying to understand where you will find the money when you need it most.

If you’re unsure about taxes, speak with a licensed CPA or tax professional because there’s no “one size fits all” when it comes to taxes. Each person’s situation can be wildly different, even if you’re earning the same amount of money.

Your gross monthly income is the total amount of money you earn from all sources every month before any deductions are subtracted.

Your gross monthly income is the simple amount that you will earn before any taxes. It’s important to know this, as well as your net monthly income, so you know how to budget and how much is being taken out in taxes.

Make sure to take the time to figure out both your gross and net income and yearly salary before accepting a job. Also, be sure to keep track of your paychecks, taxes, and any other money that is subtracted from your gross monthly income. 

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Steffa Mantilla

Certified Financial Education Instructor

Steffa is a Certified Financial Education Instructor (CFEI) and the founder behind Money Tamer. Her 12-year background in operant conditioning and positive behavioral change training is used to help people find effective motivators to change their harmful money behaviors. Steffa explains the reasons “why” behind people’s financial behaviors and how to successfully change them. After paying off over $80,000 in debt through budgeting, she now teaches families how to get their own finances in order. You can learn more about her here.

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