How to Use the Rate of Pay Affordability Calculator
Understanding whether a specific expense—such as rent, a car payment, or a major subscription—is affordable depends entirely on your gross rate of pay. This calculator helps you determine if your income supports your lifestyle goals based on standard financial health ratios.
Key Definitions
Pay Rate: The dollar amount you earn before taxes.
Pay Frequency: How often you receive that pay (e.g., hourly wage vs. annual salary).
Affordability Threshold: The percentage of your gross income you are willing to spend on a specific category. Financial experts often suggest spending no more than 30% of your gross income on housing.
Realistic Example Calculation
Suppose you earn $22.00 per hour and work a standard 40-hour week. You are looking at an apartment that costs $1,200 per month.
Verdict: Since $1,200 is higher than $1,144, the apartment represents 31.4% of your income, slightly exceeding the 30% rule.
Why Gross Pay Matters
Most financial institutions and landlords use Gross Income (before taxes and deductions) to determine eligibility. While your "take-home" pay is what you actually spend, the gross rate of pay provides a consistent benchmark for affordability metrics used across the financial industry.
function toggleHours() {
var period = document.getElementById("payPeriod").value;
var hoursWrapper = document.getElementById("hoursWrapper");
if (period === "hourly") {
hoursWrapper.style.display = "block";
} else {
hoursWrapper.style.display = "none";
}
}
function calculateAffordability() {
var payAmount = parseFloat(document.getElementById("payAmount").value);
var payPeriod = document.getElementById("payPeriod").value;
var hoursPerWeek = parseFloat(document.getElementById("hoursPerWeek").value) || 0;
var expenseAmount = parseFloat(document.getElementById("expenseAmount").value);
var targetPercentage = parseFloat(document.getElementById("targetPercentage").value);
if (isNaN(payAmount) || isNaN(expenseAmount) || isNaN(targetPercentage) || payAmount <= 0) {
alert("Please enter valid positive numbers for all required fields.");
return;
}
var annualGross = 0;
if (payPeriod === "hourly") {
annualGross = payAmount * hoursPerWeek * 52;
} else if (payPeriod === "weekly") {
annualGross = payAmount * 52;
} else if (payPeriod === "biweekly") {
annualGross = payAmount * 26;
} else if (payPeriod === "monthly") {
annualGross = payAmount * 12;
} else if (payPeriod === "annually") {
annualGross = payAmount;
}
var monthlyGross = annualGross / 12;
var maxAffordable = monthlyGross * (targetPercentage / 100);
var actualPercent = (expenseAmount / monthlyGross) * 100;
document.getElementById("resMonthlyIncome").innerText = "$" + monthlyGross.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resAnnualIncome").innerText = "$" + annualGross.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resMaxAffordable").innerText = "$" + maxAffordable.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resCurrentPercent").innerText = actualPercent.toFixed(1) + "%";
var statusBox = document.getElementById("statusBox");
if (expenseAmount <= maxAffordable) {
statusBox.innerText = "VERDICT: AFFORDABLE";
statusBox.style.backgroundColor = "#d4edda";
statusBox.style.color = "#155724";
statusBox.style.border = "1px solid #c3e6cb";
} else {
statusBox.innerText = "VERDICT: STRETCHED BUDGET";
statusBox.style.backgroundColor = "#f8d7da";
statusBox.style.color = "#721c24";
statusBox.style.border = "1px solid #f5c6cb";
}
document.getElementById("results").style.display = "block";
}