What to Consider When Looking at Your Income


In the U.S., and many other parts of the world, your current income determines your tax rate, and this puts you in a tax bracket. where certain thresholds of your income are taxed at different rates. For example, if your starting salary is $45,000 per year, the first $9,700 of your salary will be taxed at 10%, the income you earned between $9,701 and $39,475 would be taxed at 12%, while your remaining income will be taxed at 22% as it falls into the third bracket of the above chart.

There are certain pre-tax deductions you can take to reduce the amount of your income the government deems as taxable, including deductions for 401(k) plans, disability, insurance, child care, and more.


Insurance can provide reassurance that protects your assets in the event of unforeseen circumstances. There are insurance plans that cover home, life, health, auto, and more, so you will need to figure out what plans will work for you, and what plans you can hold off on.

Paying for many different insurance plans can chip away at your total income, though without insurance, disasters can put you in a much deeper financial hole. That is why it is essential to come up with a balance between making sure you stay insured and having an adequate income. In some cases, health insurance plans can even be tax-deductible. Getting professional help to take advantage of tax deductions can make a big difference in your net income – especially when you are first learning the ropes.


The amount you put away towards saving for the future will impact the amount of money you have to spend freely in the present. While it is imperative to save your money for retirement and rainy days, you must also make sure you have enough cash to cover both your current expenses and have some leftover to use now.

By saving your money wisely and having a savings plan in place, you can make sure you are efficiently utilizing your income to its maximum potential. It’s helpful to group savings into these four categories:

1. Emergency
2. Retirement
3. Long/short-term savings
4. Investing

Emergency savings cover you when unplanned life events come up, so by building up a fund; you can set it and forget about it until you need it.

Many employers offer retirement programs where they will match contributions to 401(k) plans. By maximizing your contribution limit for these plans, you can take advantage of essentially “free” money from your employer. After maximizing your contribution there, you can then spread your savings to private investments, and long/short-term savings.