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Pay and a budget

Gross pay is pay before tax, and net pay is what remains after the tax deduction. In a simplified model, net pay is gross times 1 minus the tax rate. A budget lists planned income and expenses. The surplus is income minus expenses. If the difference is negative, you spend more than you receive. The budget does not say what actually happened, only what you planned.

net=gross⋅(1−s)\text{net} = \text{gross} \cdot (1 - s)simplified tax
surplus=in−out\text{surplus} = \text{in} - \text{out}budget

Symbols

sstax rate as a decimal

Example

Gross 30,000 NOK and a 30% deduction: 30 000⋅0.70=21 00030\,000 \cdot 0.70 = 21\,000 NOK.

Income 18,000 NOK and expenses 16,500 NOK: surplus 18 000−16 500=150018\,000 - 16\,500 = 1500 NOK.

Compare loans by the effective rate. It includes fees, not only the nominal rate.
Practise personal finance for free →

← Compound interest · Interest on a loan →

Part of Mathematics 1P: Personal finance.