Disposable income in the US

Gross income – taxes = disposable income

Say you live and work in New York with an annual salary of $100,000. Your disposable income is the result of $100,000 less the roughly $28,000 you’ll pay in state and federal taxes — which comes to about $71,876⁽³⁾.

Making your disposable income work for you

One simple budgeting rule people work to is 50-30-20. That is 50% of your income goes to needs, 30% on wants and 20% into savings.

Now, if you’re making $100,000 per year in New York you’re looking at a disposable income of $71,876 less any federal and state taxes, which means you got a savings goal of $14,375.20 per year ([$71,876 / 100] * 20 = 14,375.20).

Obviously, that doesn’t hit your account all at once but will trickle through in increments of $276.45 per week ($14,375.20 / 52 = $276.45). If we use the average the APY’s of the cards listed on Finder’s best savings accounts (at the time of writing), we get an average APY of 3.43%.

If we throw both the figures into a savings calculator you’ll see that you could make roughly $254.11 in interest after one year, $6,554.78 after 5 years and $27,777.14 over the next decade.

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Richard Laycock

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Richard Laycock is Finder’s NYC-based senior content marketing manager & insights editor, spending the last decade data diving, writing and editing articles about all things personal finance. His musings can be found across the web including on NASDAQ, MoneyMag, Yahoo Finance and Travel Weekly. Richard studied Media at Macquarie University, including a semester abroad at The Missouri School of Journalism (MIZZOU).

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