All Topics / Help Needed! / Saving percentages of 'pre-tax' Salary Question

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  • Profile photo of TG04TG04
    Participant
    @tg04
    Join Date: 2022
    Post Count: 0

    Hi There,

    I am currently in the midst of reading Steve Mcknight’s property investing book (From 0 to 130 Properties in 3.5 Years Revised Edition*) and on numerous occasions Steve refers to putting aside a percentage of your ‘pretax’ salary or wage to either pay off debts, invest or use for other purposes. An example of this is on the bottom of pg75.

    I was just wondering how this applies to me as an Australian? As tax is taken out of my wage each week before it is put into my account, if I were to base my percentages off my pre-tax salary, I would be in effect attempting to save more than 100% of my net salary. Does Steve actually mean ‘post-tax’? If not, I was wondering if someone could explain how you could possibly base saving percentages on your ‘pre-tax’ salary considering I will never have access to my gross salary (pre-tax), only my net salary (post-tax).

    Any help on this matter would be really appreciated.
    Thanks!

     

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,416

    Hi TG04,

    I had a look at that page, and it appears to me that those comments should have referred to after-tax income, not pre-tax.

    As you say, there is no way you could cover 100% of pre-tax income using after-tax monies.  Well spotted,

    Regards,

    Profile photo of TG04TG04
    Participant
    @tg04
    Join Date: 2022
    Post Count: 0

    Hi TG04, I had a look at that page, and it appears to me that those comments should have referred to after-tax income, not pre-tax. As you say, there is no way you could cover 100% of pre-tax income using after-tax monies. Well spotted, Regards,

    Awesome. I thought so. Thanks.

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