Gross? Net? What in the world do these words have to do with your money?
A look at your pay stub will show your pay divided into these categories: gross pay and net pay. Let's look closer at these seemingly unrelated terms.
Gross pay is what you are paid before any taxes or deductions. A good way to remember: it's just gross how much you get paid before taxes come along. The term gross actually comes from the Old French term gros, meaning 'large.' And compared to what you actually get to spend, your gross pay certainly is large.
Net pay is what you are paid after any taxes or deductions. In other words, it's what you get to take home and spend. A good way to remember: after they take out all those taxes, you run around with a net trying to catch what you can. In this case, the word net is a variation of neat, coming from the Latin nitidus, meaning 'clean, elegant.' And like that, your pay is neatly pared down to the surprising sum on your check.
Don't let strange jargon deter you from understanding your finances better. Ask someone today if they know why their income is called what it is. When they're scratching their head, then you can teach them something new.
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