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Find out where your money can take you with a pay calculator!
●February 13, 2018●7 minute read
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Income is precious: it provides us with both necessities and luxuries. Our take-home pay ultimately can determine the lifestyle we lead. Income, however, isn’t always simple. This is why it is so crucial to look into a pay calculator. There are several factors to consider, such as tax, superannuation, and Medicare.
To budget correctly and manage your finances, it’s important to understand your gross and net income. Understanding what each of these figures looks like doesn’t have to be overwhelming, and we may even be able to manage our income without paying an accountant. A pay calculator is a one-way ticket to managing your finances and planning your budget.
Australia’s average salary
In Australia, the average full-time income is complex and varies widely. For starters, it differs from state to state. Tasmania’s average annual income is $69, 477, making it the lowest in Australia. Western Australia is highest at $88, 327 and Queensland falls in the middle with $75, 936. If you’re a male in Australia, your average income is $83, 902 and if you’re women, it’s $70, 392. Yes, even in 2020. Gender politics aside, this is a basic breakdown of income in Australia, and you can use it to gauge where you sit on the spectrum.
To understand your income, it’s helpful to know where you stand with the rest of the country. However, it’s not important to dwell on it, as many different factors are contributing to wage variances.
How to use a pay calculator and understanding Gross and Net income
First things first, if you’re unsure where to find a pay calculator, a quick Google search will remedy that. Or, you can use the ATO tool here.
Calculating the difference between your gross income and net income is the first step to understanding your income. A salary offer or increase will be usually be presented in gross income. Gross income is your income without any deductions made. The reality is your net income will be less than your gross income. Net income is your total salary after all deductions, such as tax and superannuation. Typically, your employer will automatically make these deductions for you and record it on your payslip.
Calculating your annual net income, however, is more complicated. There are more deductions to take into account that may not necessarily have come out of your recurring payslips. These could include income tax, the Medicare levy and additional taxes relevant to your situation. Here is where a pay calculator will save the day. A pay calculator will apply the latest tax laws to your annual income. And present the figures in different categories, like weekly, fortnightly, monthly and annually. To concur that the pay calculator you choose complies with the latest figures, hunt for the government seal of approval.
After the pay calculator works out for net income and breaks down individual costs, you can begin to dissect and see where your gross income goes.
Where does your income go?
To further understand what net income is, take a look at some of the figures in your pay calculator.
Breakdown of income: for Queensland’s average earner; single, with no dependents
Average annual income in Queensland is 75, 936
They will contribute $48.85 a day to taxes.
8% of this daily contribution goes to the Medicare levy.
The super contribution is $138.73. Super guarantee currently is 9.5%
After net income is calculated, this average Queenslander generates $159.75 in income per day.
Tips for managing salaries
Super and tax aren’t the only things that eat into your paycheck. In 2012, vehicles were the largest expense, followed by recreation and alcohol. Your weekly spending habits may be similar. How and where do you spend your money? What is the greatest strain on your income? Living pay-to-pay is like running on a treadmill; you are never truly going anywhere. To manage your income, compiling a budget will save you from living paycheck to paycheck.
Not sure where to start breaking down your expenses? Maybe ask an Artificially Intelligent bot.
What to include in your budget?
To accurately manage your finances, calculate a budget from your net income.
- Emergency fund: A pile of gold in your backyard may seem like an old-fashioned idea; however, the concept is sound. You don’t have to take it so literally of course, but having an account you don’t touch or have daily access to works just as well. When accidents happen, you don’t want to be stressing about money.
- Housing: Consider either rent or mortgage repayments. It is also a good idea to budget for repairs and general maintenance, such as gardening or pool cleaning. Expert tip: Allocate 25-30% of your net income to housing.
- Savings: Watching your savings grow and mature is much like nurturing a plant and seeing it transform. Having savings boosts confidence in your financial control. It is a good idea to schedule obtainable saving goals. Expert tip: The ingredients for a successful saving account is feeding your account with 10-15% of your weekly income.
- Household utilities: These utilities include, water, electricity/gas, heating and cooling. Of course, it’s always a good idea to set up your house with better and more efficient appliances. Take in factors like higher electricity use in Summer. Expert tip: No more than 10% of your net income should contribute to utilities.
- Recreation: Earning an income is about affording a lifestyle you want and enjoying your life. With the stress of daily life, it’s important to allocate money and time for activities you love. Whether it’s a weekly yoga class, drinks with friends or a weekend getaway.
- Consumer debt (if you have any): Take care of your repayments; otherwise the interest payments will cost you more in the future. Don’t let your debts overwhelm you, manage them by including repayments and other additional fees in your weekly budget.
How to set up a budget?
The Minimalist Budget, or 50/20/30 rule, is a simple budget layout to follow. Using the information from your pay calculator the rule allocates 50% of your net income to essentials, 20% to savings and 30% to personal. Find out more about minimalist living.
- Essential expenses are necessary to your quality of life. They include expenses such as electricity, transport and rent/mortgage. A laptop and smartphone now play crucial roles in workplace productivity. They were once seen as a luxury item, yet now have emerged as essential.
- Personal expenses are flexible and will depend on your leftover income after essentials and savings are accounted for. Spending your income is about deciding what you want to spend your hard-earned coin on. What brings you joy? What improves your quality of life? These questions are important to consider when allocating money to personal expenses.
What happens if your income changes or unexpected expenses come up?
Your net income will not increase very often; however, your life may force you to tighten your belt. There are plenty of unforeseen challenges life can throw at you. Adjusting your budget weekly to fit whatever is complicating your life can give you clarity in your finances and halt unwanted expenditure.
Need a loan to deal with unexpected or emergency costs? Consider applying for a fast cash loan from Jacaranda Finance. We’re able to offer approved applicants loans between $300 and $10,000. Our handy online calculator at the top of this page will let you know what your weekly, fortnightly, or monthly repayments could look like.
Expert tip: Always pay yourself! Saving is key to financial growth and stability.
Apps to help manage your money
You don’t have to enter the realm of income management by yourself. Apps are here to help!
Why apps for money management?
- Can extract real-time data from your financial accounts.
- Apps cannot move money from your bank on your behalf.
- Protect your income: Don’t let your income go to waste by missing fraudulent translations.
Top income management apps
There are plenty of apps out there, each with different purposes and benefits. Jacaranda Finance has looked at six of the best apps here.
When you need a helping hand
Centrelink aids families or individuals that require financial support. Benefits are means-tested and will vary depending on your income and social situation. Students can typically receive rent assistance and an income for textbooks. Explore the Centrelink website to see if you can apply for benefits.
Do you need a short-term cash injection or temporary funds? Whether it’s for a fender bender, your next holiday, a new laptop or any of life’s little incidentals. You may want to consider a small loan today from Jacaranda Finance.
Your Income, Your Choice
Your income is your hard-earned lifeline. Countless hours, tears and sweat go into your paycheque, so why not understand where your income can take you. How to manage your income and to understand the difference between gross and net incomes, are vital to optimize your income. Your income works for you to give you the lifestyle you desire and help you lead a good quality life. Get started with a pay calculator today to jumpstart your income management journey!
Need cash now? Even if you have poor credit, we may be able to provide you with a loan. Consider getting a bad credit loan from Jacaranda Finance and learn more by clicking the link.
Jacaranda has the Millennial’s Guide To Buying A Home: Part 2
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Written by Jacaranda Team