Final answer:
When preparing a monthly budget, it is generally recommended to base it off your gross income. Gross income is the total income you earn before any deductions, such as taxes or other withholdings, are taken out. By starting with your gross income, you have a clear picture of your total earnings and can allocate your budget accordingly.
Step-by-step explanation:
When preparing a monthly budget, it is generally recommended to base it off your gross income.
Gross income is the total income you earn before any deductions, such as taxes or other withholdings, are taken out. By starting with your gross income, you have a clear picture of your total earnings and can allocate your budget accordingly.
For example, let's consider Mary Ann's situation. Her after-tax monthly income is $2,589.10. If she wants to save 10% of her after-tax income, she would need to save $258.91 each month. Given her monthly expenses, which total $2,090, Mary Ann would have enough money to save 10% of her after-tax income.