net income
Net income is what actually lands in your account after every deduction, and it is the only number your life is really paid for with.
In plain English
Gross income is the promise. Net income is the delivery.
Net income is what remains after tax, pension and every other deduction has been taken. It is the money that actually reaches your account, and it is the only figure your rent, your food and your children's fees can be paid from.
This sounds obvious and almost nobody lives as though it is true. People negotiate on gross, plan on gross, and boast on gross, and then live on something considerably smaller and wonder where it went.
Build your entire financial life on the net figure. Your budget, your savings rate, your rent decision, your sense of what you can afford. If a landlord asks for a third of your income, they mean a third of the money that exists, not a third of the number in your contract.
For a business, net income is the same idea one level up. Revenue minus every single cost. It is the true bottom line, and the number that decides whether the enterprise is worth continuing.
Everything else is a headline. This is the money.
Your offer says ₦700,000 and ₦545,000 arrives. Your savings rate, your rent and every decision you make should be calculated against ₦545,000. Planning on ₦700,000 is planning your life with money that does not exist.
Questions people ask
What is the difference between gross and net income?
Gross is before deductions, net is after. The gap is tax, pension and anything else taken before the money reaches you.
Which should I use for budgeting?
Net, always and without exception. It is the only money that actually exists.
What is net income for a business?
Revenue minus every cost, including tax and interest. It is the true bottom line, and it is what the owners are left with.
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