So, they’re not only paying less toward the joint bills, but they’re also saving much more toward retirement than Person A. Now you may be thinking that it’s not that big of a difference, but you have to remember that Person B also contributed 200% MORE to their retirement account. If we do the same calculation using the net income as we did with the gross income, we’ll find out Person A will be paying about 44% of the joint bills (about $880) and Person B will be paying the remaining 56% (about $1,120). After payroll tax deductions and the 15% retirement plan contribution, let’s say that Person B’s net income is $36,000. Therefore, let’s say that they can make a 15% contribution to their retirement plan. Person B makes $60,000 per year and will likely have more financial flexibility. After payroll tax deductions and the 5% retirement plan contribution, let’s say that Person A’s net income is $28,000 per year. Let’s say they can only afford to contribute 5%. Person A in that example makes less and they’ll likely have a smaller amount available for personal things like retirement contributions at work. Using the example above, let’s say that we’re now going to use net income instead of gross income. Since net income is what hits your bank account after taxes and other deductions, it’s easy to make your net income look “worse” than it actually is. So, why should you use gross income and not net income? It’s simple you can’t manipulate gross income. Divide Based on Gross Income, Not Net Income If you’re not comfortable making these calculations, be sure to read about my custom spreadsheet. Person B in this example would have a disproportionate amount of their income remaining to spend on other things. You can easily see in this example that it wouldn’t be fair to split all of the joint bills and expenses 50/50. Therefore, Person B would contribute 60% or $1,200 toward the monthly joint bills and expenses. That comes out to $800 per month ($2,000 x 0.4).įor Person B, we simply take the 40% that Person A is contributing and subtract that from 100%. So in this example, Person A would contribute 40% toward the $2,000 in joint bills. Of the $100,000 of total household income, Person A makes $40,000 or 40% of the combined amount. Starting with Person A, we can calculate what their share of the joint expenses will be. Let’s say Person A makes $40,000 per year as a school teacher and Person B makes $60,000 per year as a school principal. To determine who pays what toward that $2,000 per month, we need to review each person’s gross (pre-tax) income and do a small calculation. We’ll go over what bills and expenses to include in a later section. After reviewing all of the joint bills and joint expenses, they determine that they total $2,000 per month. Let’s say that Person A and Person B are in a romantic relationship and are living together. To understand why let’s look at an example. If you’re living together with your significant other, you need to split your joint bills and expenses proportionally, based on income to ensure financial fairness.
0 kommentar(er)
