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How to Calculate Percentage of Net Monthly Salary

Original post by Matt McGew of Demand Media

Net monthly salary is the actual amount of money you earn on a monthly basis after your employer has deducted all withholding and voluntary contributions from your gross income. When qualifying for various obligations such as loans, rentals and leases, financial institutions and businesses commonly consider a specific percentage of your net salary for qualification purposes. You can manually calculate this qualifying percentage of your net monthly salary.

Step 1

Determine the percentage calculation used by a particular financial institution or company. For example, a bank might require you to have a ratio less than 28 percent. You can obtain this information by asking the financial institution or business for the qualifying ratio or percentage used.

Step 2

Determine your net monthly salary. This is the amount of money you actually receive after your employer has deducted taxes and other withholdings from your gross pay. You can find this information on your pay stub.

Step 3

Multiply the qualifying ratio by the monthly net pay amount. For example, if your net monthly pay is $3,000 and the qualifying percentage is .28, then $3,000 multiplied by .28 is $840. This figure represents your net monthly salary percentage. For qualifying purposes, the financial institution or business would require a monthly payment less than this amount.

                   

References

  • "Principles of Accounting"; Belverd Needles et al; 2010

About the Author

Since 1992 Matt McGew has provided content for on and offline businesses and publications. Previous work has appeared in the "Los Angeles Times," Travelocity and "GQ Magazine." McGew specializes in search engine optimization and has a Master of Arts in journalism from New York University.

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