Your Salary is not your Income.

Salary is the total amount received for a task provided to you before taxes fees and obligations are removed. Income is a percentage or actual dollar amount left over after certain criterion have been financially met.

Study your paycheck stub, or yearly W2 form from the IRS and it can be sobering.  There several numbers will clearly stand out, of them being the largest item is your Federal withholding’s from your paycheck or yearly W2 salary. This deducted money you will never physically feel, see, lay with spread on your bed in Las Vegas or manipulate even though it’s your money. There are  many cases requiring you and I to contribute even more money to the Federal and State government during the American tax reporting season. On average 1/3 -1/4 of your income is directly removed from your hands in the form of taxes and fees. The more debt of certain types can offset the percentage, but who wants debt to save a few bucks. Debt to save actually sounds crazy, does it not?

You owe, you owe it’s off to work you go!

Yes there are methods to use the money withheld from your paycheck and have it in your pocket, but only for a briefly, since it must be paid to the Government agencies such as the IRS at some point. It is not your money, so stop thinking it is you money.  They say one thing is certain Death and Taxes. The more you make the more you relinquish, unless the category of super rich is your niche tax bracket. It is a good idea to understand what your true income or “OUTCOME” of money actually available to you, which is that monetary value you have at your disposal to do with as you please. What you will find is that it is lower than you thought.

Calculating your true Outcome from your Money Income.

Many of us obtain a paycheck monthly, bimonthly, or in the rare instance weekly basis. Paychecks are usually allocated for the various financial obligations for survival, living combined with the automatic deductions. I wonder how many of us truly understand how much income we have at our disposal with each passing pay period or month.

Here is a constant question, “How can the money you receive as income be income if it is outgoing before you decide it’s purpose”?

The income we report to the federal and state government is not a true indication of our personal income to do our bidding. So let’s break this down. We will use $2000 gross paycheck as the example. Your employer states in the form of paper tender or the form of a direct deposit stub you have generated for yourself $2000.00. So here is what you can expect.

$2,000 = Gross Pay a single two-week pay period, which means your salary is approximately $4,000.00 a month, or $48,000.00 -$50,00.00 a year depending on if it is bi-weekly or semi-monthly.

Now for the deduction before you obtain a dime.

• Federal Income Tax
• State Income Tax
• FICA (Medicare and Social Security)
• Voluntary Contributions (Health Insurance)
• Involuntary Items – Child support, defaulted student loans, taxes, and unpaid court fines.

What is left over is your Net Pay.

Example: Here is a shot of a downloadable Excel file to perform your audit.

Here is the Link:  what_is_your_income

Calculating your expense outcome.

From your net pay you still have a list of the most common financial obligations such as:

• Housing payment
• Transportation payment(s)
• Child Care
• Utilities (Gas, Water, Electric, Heat, Trash,)
• Student Loans and education bills
• Cable bill
• Cell phone
• Food
• Credit Cards
• Medical bills
• Miscellaneous
• Car insurance
• Gym/club memberships

If the listing of obligations are added together you may find your “OUTCOME” of your “INCOME” is  much lower than you think.

It is far easier to move towards a controllable money savings system once you are armed with the proper cash flow and accurate information. Typically you may find several areas to trim the fat in order to hold on to more of your outcome of cash.

Ignorance concerning money outcome is one reason credit cards will never away.

“It’s better to fully know where the water level is before the water gets deeper“.
The Billionaire Lifestyle

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