**: Gross vs. Net Pay (Income)**

Gross vs. Net Pay Graphic

You have a job earning $12.75 an hour.  You work 20 hours a week (assume exactly 4 weeks in the month).  First, calculate your monthly gross pay. Next, calculate your net pay by subtracting 25% for taxes.  How much will you earmark for savings if you save 10% of your ***net pay***?

a) Monthly Gross Pay

b) Monthly Net Pay

c) Monthly Savings





You have a job earning $17.25 an hour.  You work 35 hours a week (assume exactly 4 weeks in the month).  First, calculate your monthly gross pay. Next, calculate your net pay by subtracting 25% for taxes.  How much will you earmark for savings if you save 10% of your ***net pay***?

a) Monthly Gross Pay

b) Monthly Net Pay

c) Monthly Savings

Let's calculate the monthly gross pay, net pay, and savings for both scenarios.

### Scenario 1: Earning $12.75 per Hour

**Given:**
- **Hourly Wage**: $12.75
- **Hours per Week**: 20
- **Weeks per Month**: 4
- **Tax Rate**: 25%
- **Savings Rate**: 10% of net pay

#### a) Monthly Gross Pay
\[
\text{Monthly Gross Pay} = \text{Hourly Wage} \times \text{Hours per Week} \times \text{Weeks per Month}
\]
\[
\text{Monthly Gross Pay} = 12.75 \times 20 \times 4 = \$1,020
\]

#### b) Monthly Net Pay
\[
\text{Monthly Net Pay} = \text{Monthly Gross Pay} - (\text{Monthly Gross Pay} \times \text{Tax Rate})
\]
\[
\text{Monthly Net Pay} = 1,020 - (1,020 \times 0.25) = 1,020 - 255 = \$765
\]

#### c) Monthly Savings
\[
\text{Monthly Savings} = \text{Monthly Net Pay} \times \text{Savings Rate}
\]
\[
\text{Monthly Savings} = 765 \times 0.10 = \$76.50
\]

### Scenario 2: Earning $17.25 per Hour

**Given:**
- **Hourly Wage**: $17.25
- **Hours per Week**: 35
- **Weeks per Month**: 4
- **Tax Rate**: 25%
- **Savings Rate**: 10% of net pay

#### a) Monthly Gross Pay
\[
\text{Monthly Gross Pay} = \text{Hourly Wage} \times \text{Hours per Week} \times \text{Weeks per Month}
\]
\[
\text{Monthly Gross Pay} = 17.25 \times 35 \times 4 = \$2,415
\]

#### b) Monthly Net Pay
\[
\text{Monthly Net Pay} = \text{Monthly Gross Pay} - (\text{Monthly Gross Pay} \times \text{Tax Rate})
\]
\[
\text{Monthly Net Pay} = 2,415 - (2,415 \times 0.25) = 2,415 - 603.75 = \$1,811.25
\]

#### c) Monthly Savings
\[
\text{Monthly Savings} = \text{Monthly Net Pay} \times \text{Savings Rate}
\]
\[
\text{Monthly Savings} = 1,811.25 \times 0.10 = \$181.13
\]

### Summary of Results

#### Scenario 1:
- **a) Monthly Gross Pay**: **$1,020**
- **b) Monthly Net Pay**: **$765**
- **c) Monthly Savings**: **$76.50**

#### Scenario 2:
- **a) Monthly Gross Pay**: **$2,415**
- **b) Monthly Net Pay**: **$1,811.25**
- **c) Monthly Savings**: **$181.13**

Would you like more details or have any questions?

### 5 Related Questions:
1. How would an increase in the hourly wage impact the monthly net pay and savings?
2. What would be the impact on net pay if the tax rate were increased to 30%?
3. How can budgeting your net pay help in managing expenses effectively?
4. What are the benefits of saving 10% of your net pay every month?
5. How does overtime (extra hours worked) affect gross pay, net pay, and savings?

**Tip:** Regularly review your budget to adjust your savings goals, especially if your income or expenses change.

Learn how to calculate monthly gross pay, net pay after taxes, and savings using examples. Solve problems involving hourly wages, tax rates, and savings percentages. Useful for understanding personal finance calculations.

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