1. What is Net Disposable Income?

Definition: Net Disposable Income (NDI) is the amount of money an individual has available for spending and saving after taxes and debt payments have been deducted from gross income.

Purpose: It helps individuals understand their true financial capacity for discretionary spending, savings, and investments.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( NDI \) — Net Disposable Income (USD)
• \( GI \) — Gross Income (USD)
• \( T \) — Taxes (USD)
• \( D \) — Debt payments (USD)

Explanation: The calculator subtracts taxes and debt obligations from total income to determine available funds.

3. Importance of Calculating Net Disposable Income

Details: Understanding your NDI helps with budgeting, financial planning, and making informed decisions about expenses and savings.

4. Using the Calculator

Tips: Enter your total gross income, estimated taxes, and all debt payments (loans, credit cards, etc.). All values must be ≥ 0.

5. Frequently Asked Questions (FAQ)

Q1: What's included in gross income?
A: All income before deductions - wages, bonuses, investment income, rental income, etc.

Q2: Which taxes should I include?
A: Include all income taxes (federal, state, local) and payroll taxes (Social Security, Medicare).

Q3: What debt payments should I include?
A: Include all regular debt obligations - mortgage, car loans, student loans, credit card minimums, etc.

Q4: How often should I calculate this?
A: Ideally monthly, as part of your budgeting process, especially if income or expenses change.

Q5: What's a good NDI percentage?
A: Generally, 20-30% of gross income is considered healthy, but this varies by individual circumstances.