How to Calculate Spendable Income
- 1). Figure out your gross income before taxes or any kind of deductions. Your gross income is how much money you make before anything comes out. This is the amount in your job description, company salary list or pay stub.
- 2). Subtract taxes and tax-sheltered deductions to determine your net spendable income. Tax-sheltered deductions include 401K payments, insurance payments or other withdrawals that you don't pay taxes on. If you receive Social Security or disability payments, you don't have to subtract anything.
- 3). Plan your budget according to your spendable income. Figure up your monthly bills for utilities, rent and insurance. Then, estimate how much you spend per month on groceries, travel, entertainment or clothes.
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