The full explanation
Your pay stub lists each deduction, which is why what you receive can be quite a bit less than what you earned. The CFPB suggests basing your monthly budget on net income, not gross income, to cover your necessary expenses realistically.
An example
Rafael earns the same every two weeks, but less reaches his account because of taxes and other deductions. He builds his budget on what actually arrives: his net income.
You will see it in…
- Your pay stub, as net pay
- The deposit that reaches your account each payday
- Budget worksheets, on the income line
