Calculate Affordability In Ghana | 2023 Salary

      How To Calculate Affordability In Ghana | 2023 Salary Increment

      Loan affordability refers to the consumer’s ability to repay the loan at the agreed time. This means that the consumer should be able to service all existing obligations, plus the new loan, and still have enough money to sustain him/herself for the rest of the month. This brings us to the issue of over-indebtedness. A 30% salary increment announced on the 12th January, public sector workers will like to know how to calculate affordability in Ghana after the 2023 salary increment.

      Generally, in order to complete an affordability assessment, a lender will review how much you earn (your income) and how much you spend on bills and other regular payments (your committed expenditure). This is the same whether it’s a joint or sole application.

      After the announcement of the 2023 salary increment, our team showed readers how to calculate the salary increment that would be added to their existing salaries. Readers should, therefore, be able to determine the salary increment that will be added to their salary with this article, which is very easy to appreciate.

      See also: How To Calculate 2023 Salary Increment

      Rule for calculating loan affordability

      Due to the inability of financial institutions to determine the general expenditure of workers, the financial institutions resort to using a standard rate of between 40% and 50% of a worker’s monthly net salary as the affordability amount that the worker can afford to pay-off loans regularly.

      However, after readers find the 40%-50% of the salary increment that will be added to their existing, they must be aware that will not be a definite figure of the affordability that will be added. The reason being that the government usually modifies the tax bracket and rates every year, which could affect the OVERALL salary that is received by the worker. The assertion, however, does not affect our calculation of the salary increment to be added. This is because the percentage salary increase falls within the 17.5% tax bracket used, which has been like that since the fourth republic. The same thing applies to the 5.5% pension deductions.

      The bottom point is that, workers should expect an affordability in Ghana equivalent to 40% – 50% of the salary increment to be added, but could be drastically less depending on the new tax brackets or taxable amounts.

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