Gross income is the amount of money earned before any payroll deductions for taxes, insurance, retirement contributions, and such. To calculate gross monthly income from a biweekly paycheck, find the gross amount listed on the pay stub (usually the starting number). Multiply that figure by 26 (the number of paychecks received in a year), then divide by 12 (months in a year).
The calculation for gross monthly income can differ depending on paycheck frequency. Below we’ll show you how to calculate your gross pay for different payroll schedules.
How to Calculate Monthly Pay From Biweekly Pay
There are two different monthly pay figures to understand, gross and net. Each is useful in different situations. When you’re applying for a loan, most lenders use gross monthly income to determine your debt-to-income ratio (DTI). However, many people find it easier to budget based on net or take-home pay. A budget planner app can help you decide the best approach for your situation.
As we spelled out above, if you’re paid biweekly (every two weeks), the formula for gross monthly income is:
(Gross pay amount × 26) ÷ 12
Hourly workers can also use this next formula, if they work a consistent number of hours per week:
(Hourly salary × weekly hours worked × 52) ÷ 12
To find net monthly pay, substitute the actual amount of your paycheck for the gross amount in the first formula.
Check your score with SoFi
Track your credit score for free. Sign up and get $10.*
Recommended: Does Net Worth Include Home Equity
How Many Bi-Weeks in a Year
There are 26 biweekly pay periods in a year. Employees who get paid biweekly will receive 26 paychecks from January to December.
It’s important to note that receiving pay biweekly differs from receiving pay twice a month on the same dates. Workers who receive biweekly checks can’t just multiply one paycheck by two to find their monthly salary.
Employees who get paid twice a month — for instance, on the 15th and 30th — can find their monthly gross income simply by adding together the gross figures on their two monthly paychecks.
Recommended: What Is the Biweekly Money-saving Challenge?
The Different Types of Payment Periods
The most common pay periods for employees are:
• Biweekly: Paid every other week, or 26 paychecks per year.
• Semimonthly: Paid twice a month on the same dates, or 24 checks per year.
• Weekly: Paid once a week, or 52 checks per year.
• Monthly: Paid once a month, or 12 checks per year.
Employees who receive biweekly pay get two checks or direct deposits each month, except for two months of the year when they receive three paychecks. Employees who are paid biweekly might get a paycheck every other Wednesday or Friday, or whatever day their employer chooses.
With semimonthly pay, an employee might get paid on the 15th and 30th of every month. So there are always two paydays, for a total of 24 per year instead of 26.
An employee who gets paid twice a week is on a semiweekly schedule. This would entail eight paychecks each month.
Pros and Cons of Biweekly vs Semimonthly Pay
For employees, there are pros and cons to biweekly pay. Depending on their expenses and savings strategy, someone might prefer a biweekly or semimonthly schedule.
For most workers, the main pro to biweekly pay is the third “bonus” check they receive two months out of the year. By budgeting for two paychecks every month, workers can designate the occasional third check for special line items like vacations, holiday gifts, paying off debt, or boosting savings.
For others, biweekly checks just make budgeting and managing expenses more challenging. Semimonthly pay is preferable because it offers an accurate reflection of real monthly income.
Also, each semimonthly check can be dedicated to particular expenses. For example, the second check of the month can go to rent, utilities, and other housing costs, which are often due the first of the month.
Compared to weekly paychecks, both biweekly and semiweekly checks require better cash management on a weekly basis. For someone who lives paycheck to paycheck, biweekly pay periods might mean they run out of money before the next check arrives.
The Takeaway
To calculate gross monthly income from a biweekly paycheck, find the gross amount listed on the pay stub, multiply by 26, then divide by 12. (Do not use this formula if you’re paid twice a month on the same dates, rather than the same days of the week.) For your monthly net pay, substitute your net or take-home pay for the gross amount in the same calculation.
Understanding your monthly income is key to budgeting and saving. If you’re looking for help keeping track of your income and expenses, one great money tracker tool is SoFi.
FAQ
How do you convert biweekly pay to monthly income?
To calculate gross monthly income from a biweekly paycheck, find the gross amount listed on the pay stub (usually the starting number). Multiply that figure by 26 (the number of paychecks received in a year), then divide by 12 (months in a year).
How do I calculate my gross monthly income?
Gross monthly income is the total of all paychecks and income received in a month, including any side hustles, rental income, etc., but before taxes and other deductions.
How do you calculate gross income from a W-2 form?
Gross wages cannot always be found on a W-2 form, due to various pre-tax deductions. Instead, look at the gross amount listed on the employee’s final paycheck for the year.
Photo credit: iStock/Eva-Katalin
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
*Terms and conditions apply. (Must click on the link to be eligible.) This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the Rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed into SoFi accounts such as cash in SoFi Checking and Savings, SoFi credit cards or loan balances, and fractional shares subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SORL0522040
