Monthly Gross Income

Monthly Gross Income

Knowing your gross monthly income can be helpful when filing your taxes, applying for loans, mortgages, credit cards, or any financial product, as approval may depend on whether your monthly income exceeds a certain threshold. It comes in handy when budgeting for your daily expenses effectively. Therefore you must be aware of this number and how to calculate it.

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Let’s get into it.

What is gross monthly income?

Gross monthly income refers to the money you make before tax or other deductions, such as health insurance. All of which are outlined in your job offer letter. So what else can be considered part of gross monthly income? Income sources such as overtime, income from a second job, bonuses, commissions, allowances, and investments. Don’t forget to include them.

Gross vs. net monthly income?

It is also important to know that gross monthly salary differs from net monthly income. Net monthly income is the income you take home once necessary tax and other deductions are made. To easily remember the difference, gross income is your earnings pre-deductions, while net income is your take-home amount.

Note that your net monthly income may be significantly less than your gross monthly income, depending on the number of deductions you have.

A sample of some of the deductions made include:

  • Wage garnishments
  • Child support payments
  • Life insurance and Health insurance premiums
  • Retirement contributions
  • Travel costs relating to your job
  • Flexible spending account contributions
  • Benefits, such as disability, critical injury, sickness, and accident

Some of these deductions reduce your taxable income(pre-tax deductions) and others don’t(post-tax deductions.)

What is Gross Monthly Household Income?

Your gross monthly household income is the total monthly income of all household members. It can include Business income, income from a second job, Regular overtime, bonuses or commissions, Investments, Child support payments, Public assistance, or Social Security payments.

For example, if you make $2,000 a month at your full-time job, $1,000 a month with your side hustle, and your partner makes $3,000 a month, your gross monthly household income would be $6,000.


Why is Gross monthly income so important?

Let’s dig a little deeper into how knowing your gross monthly income can help you, as mentioned in the intro of this post.


If you’re one of those who DIY their taxes, you already know that they ask for your gross income, which they then use to calculate your accrued tax. It would be impossible to file your tax return if you didn’t know your gross income, so keeping records of your finances throughout the year is imperative.

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Credit limit

When you apply for financial products like credit cards, the issuer will look at your gross income and use this information to determine the appropriate credit limit.

Salary Negotiations

Knowing your gross monthly income will help you negotiate a higher salary, as you’ll know if your offer is improving your net worth. You’ll be able to present yourself as confident and knowledgeable about your worth.

Renting and Buying property

Landlords want to ensure you have sufficient earnings to meet your monthly rent implications. And accomplish that, they usually look at your gross income to figure out if you can reasonably cover the rent and utilities. Lenders will also want to know if you can make the monthly payments towards your mortgage.

Loan qualification

Finally, you’ll need to provide proof of your identity and ability to repay the personal loan you’re applying for on time. Your gross income determines whether you meet the thresholds qualifying you as a loan recipient. Typically, lenders won’t let you borrow more than 28% of your gross monthly income.

Calculating Your Gross Monthly Income for an annual salary

Calculating your gross monthly income is easy if you are paid an annual salary. Take your annual wages and divide them by 12.

For example, at her digital marketer job, Nancy is paid an annual salary of $48,000. To calculate her gross monthly income, divide her annual wage by 12. Nancy will have a monthly gross income of $48,000/12=$4,000

Calculating Your Gross Monthly Income for weekly pay

For those that receive a weekly income, take it and multiply it by 52 and divide it by 12. If your weekly pay varies, then use your average weekly income instead.

To get the best weekly average income, calculate it over as many weeks as possible but not more than 52 weeks / 1 year. Once you have it, repeat the process above.

For example,

Jane receives a weekly wage of £500 every week from her job as a customer service consultant. To calculate her gross monthly wage, multiply her weekly salary of £500 by 52 and divide by 12 to give £500 * 52 / 12 = £2,166.67.

In another example,

Steve receives a weekly wage of £230 as an assembly line operator but sometimes has to work overtime and is reimbursed for it. In the last four weeks, Steve has received £120 for overtime worked.

To calculate Jack’s gross monthly wage, multiply his weekly wages of £230 by 52 and divide by 12 to give £215 * 52 / 12 = £996.67 without accounting for overtime. Jack earned £120 in total from the last four weeks of overtime, so his gross monthly wage from overtime alone is £120 divided by 4, multiplied by 52, and divided by 12. Jack’s gross monthly wage from overtime alone is £120 / 4 * 52 / 12 = £130. Jack’s gross monthly, including his weekly wages and overtime, is, therefore, £996.67 + £130 = £1,126.67.

Take your hourly rate multiplied by the number of hours worked per week if you earn weekly. Then multiply that by 52 and divide by 12 to get your gross monthly income.

Final Words

Now you know the meaning of gross monthly income, its importance, and how to calculate it. It will help you make healthier investment decisions and look after your finances, remember, the main aim is to make the most of your hard-earned money.

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