Methods to help you to figure out your gross pay better than before to make better financial decisions.
Every employee’s favorite day is payday. While you may not get the day off, you will be paid for all your hard work. While we all know that the pay you take home has been reduced due to taxes, debts, and other factors, it is useful to go over what are gross wages. Gross wages or pay is the total amount of monetary compensation before deductions. It is like the gross profit of a business. While we are usually more concerned with the net pay we get to take home, there are many uses for knowing your gross pay. For example, you might want to calculate just how much of your pay is reduced by various factors, or how much you should be aiming to make in order to bring home sufficient cash. To find out how to do this, read below.
Method 1: Determining your hourly gross pay hours
Add up your work hours to find out your desired time period
By adding up your work hours you can easily figure out your gross pay in a year, month, week, or day. It will also help you to find how many hours you have worked during that period of time. As an example, let’s say you have worked for 30 hours in a part-time job for last week. Let’s continue to calculate your pay.
You should multiply your hours by your hourly pay rate
If you do not know your hourly pay rate yet then consult your employer or stub.
For example, let’s say your pay rate is $15.60 per hour. Therefore, 30 x $15.60 = $468. And that means over the past year or 52 weeks, the total earned is 52 x $468 = $24,336.
Online gross pay calculators are a great tool to assist you with math.
You should compare your calculations to your payment documents
If you are an employee with legal hours in the U.S., you must receive a paper or electronic document with your payments every time, be it weekly, monthly, or yearly payments. These documents will show your gross pay for the period.
Each year when you’ll be doing your taxes, you will get a W2 form from your employer which you will use while filing for your federal, state, and local taxes. This will also help you to calculate your total gross pay at your job last year.
Method 2: By determining your salaried gross pay
Find out your base salary
Employees who are salaried generally work under a contract for a fixed amount of pay over a set period of time, without taking into factor the number of hours they have worked (unless there is overtime involved). Generally, your salary refers to the base amount of pay you get for a year.
For example, let’s say you are earning a $30,000 base salary per year.
You should divide your annual base salary by 12 (monthly), 26 (bi-weekly), 52 (weekly), or 365 (daily)
Follow this only if you’re calculating your gross pay for a time period that is shorter than a year.
For instance, if your base annual salary is $30000. Then it will be $577 per week ($30,000 / 52 = $577).
You should add on any tips, commissions, or bonuses you get during the chosen time period
Remember that your gross pay includes everything you earn from your work, so you shouldn’t be deducting anything in this calculation.
Compare your calculations to your pay documents
So as you are a salaried employee, you are going to receive a paper or electronic document of your payment; generally, you will get it after every one or two weeks, or monthly. This document will have the details of everything from your gross pay to your net pay, while also including your taxes and other deductions.
In the U.S., you will get your federal W-2 form before tax season, and in that your gross pay for the last calendar year will be listed.
Method 3: You should determine a target gross pay
Set a target for your net income
Defining a net income will help you maintain your lifestyle and improve your financial situation. The purpose of this exercise is to determine how much gross pay you need to earn in order to take home your targeted amount of net pay.
For example, let’s say that you have decided that you will need $2,100 per month to pay your monthly expenses and will have something left over to save or to spend. Let’s also assume that your current net pay is $1,800 monthly.
Use a recent payment document to establish a rough net-to-gross pay percentage
For instance, let’s assume your gross pay is $600 per week or $2,400 per month, and your take-home is $450 per week or $1,800 monthly, so that means your net pay is 75% of your gross pay.
So the calculation will be: 450 / 600 = .75 per weekly, or 1800 / 2400 = .75 per month.
Divide your target net pay with the percentage
If you need to or want to bring home $2,100 monthly, and you already know that you will bring home is 75% of your gross pay, then you can easily determine your gross pay target.
So, the calculation will be $2,100 / .75 = $2,800. As you want to have a $2,100 take-home each month, your target should be to earn $2,800 per month or $700 weekly in gross pay.
But you need to keep in mind that it varies with tax rates; for example, the figures don’t match if your current net pay is $1,500 is per month and you desire $15,000.
If you follow these methods I’m sure you will easily figure out how much your gross pay is so you can better handle your finances well.