Understanding Gross vs. Net Income

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Simply put, gross income represents your full working wage, before any taxes or any other deductions are taken out. Net income is your gross income minus taxes and all deductions. If you have an employer (you are not self-employed), your net income is usually the actual value of your paycheck. In other words, net income is the actual dollar amount you are able to spend.

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Landlords typically look at gross income when approving applicants for apartments. For your own calculation, it's better to look at your net income and decide how much of your money should go toward rent. For example, if your net income is $3,000 per month and you want to spend no more than 30 percent of your money on rent, you should look for an apartment that costs no more than $900 per month.