One of the most accurate ways to determine your individual monthly income is through your gross monthly income. Knowing and understanding this will also help you to understand income funds, money income, your total monthly money, and monthly savings if you plan a little program for your retirement.
The first thing you should know is the definition of monthly income. After this, you should know about how gross monthly incomes work and how to create a scheme for computing your income – so you will no longer be tied to calculator and can immediately determine how much you are earning.
Gross Monthly Income: Definition
Gross monthly income is often mistaken as the net monthly income. Both are monthly income but the difference between them lies on the deductions. The gross monthly income is the sum total of monthly income funds you have earned. Meaning, this is the entire income you get without deductions for taxes, insurance plans, bills, social security, and other regular expenses. On the other hand, the net monthly income is the amount you receive after all your regular monthly expenses have been deducted from your gross monthly income.
What is included in the gross monthly income?
Every single way you earn money can be included in the gross monthly income. For your personal reference alone, you can include your monthly salary (without the deductions), income from part-time or self-employment jobs, overtime wages, compensations, bonds, social security benefits, allowance, birthday checks, bonuses, savings interest, and even alimony.
However, some of these sources are not accepted in case you need to file a loan. Only professional sources of monthly money are considered to be part of the monthly gross income if you are applying for a loan, since professional sources have documents and papers that can prove how much you make each month. The so-called “professional” gross monthly income is your paycheck or salary from full-time employment, part-time or self-employment income, pension, bonds, allowance, and interest from investment or savings.
How to compute for the gross monthly income?
It is easy to compute for the gross monthly income. All you have to do is add the average monthly income you get from your several sources. If you receive your income monthly, then computing will be easy. If not, you only have to do some computations. For instance, if you receive your salary every week, then you should compute your average weekly income by four. If your salary is bi-weekly, then you should multiply the average bi-weekly income by two.
Part time jobs
Most people have some other source of money income such as a part-time job or a business venture. These sources of funds cannot give you stable income the way your regular day-job can. The best you can do is to find the average monthly income from these sources. Just add all the income you get for a certain number of months and then divide the product by that number of months. So, if you are doing part-time jobs for three months already, then you should add all the income you get from it for the whole three months. When you already identified the sum, you have to divide it by three and you get the average monthly income from this part-time job.
Whatever computing scheme is fine as long as it can provide you with an accurate monthly gross income. This is how simple computing for gross monthly income is and that will become even simpler with a calculator. After knowing that, you can now decide how much monthly savings you should dedicate for your little program. Through these steps, you will even find out if your income satisfies the qualifications for loan application.