Budgeting a Paycheck with Deductions and Irregular Hours
A part-time worker earns $17.50 per hour and is paid every two weeks. In a typical two-week period they work 60 hours, but one period in five they work only 48 hours because of scheduling. Deductions are 15% for income tax, 5.8% for Canada Pension Plan, and 1.7% for Employment Insurance, all calculated on gross pay. Fixed biweekly expenses are $420 rent contribution and $95 for a bus pass. Variable spending averages $140 per two-week period. The worker wants to build a $900 emergency fund within one year and asks whether their typical pay supports this, and what happens in a short-hours period.
1. Calculate net biweekly pay in a typical 60-hour period and in a 48-hour period. Show each deduction.
Read the worked answer
Typical 60-hour period: Gross = 60 × $17.50 = $1,050. Tax = 0.15 × 1050 = $157.50. CPP = 0.058 × 1050 = $60.90. EI = 0.017 × 1050 = $17.85. Total deductions = 157.50 + 60.90 + 17.85 = $236.25. Net = 1050 - 236.25 = $813.75.
Short 48-hour period: Gross = 48 × $17.50 = $840. Tax = 0.15 × 840 = $126.00. CPP = 0.058 × 840 = $48.72. EI = 0.017 × 840 = $14.28. Total deductions = 126.00 + 48.72 + 14.28 = $189.00. Net = 840 - 189 = $651.00.
Note: the combined deduction rate is 22.5%, so net pay is 77.5% of gross in both cases.
2. Determine the biweekly surplus in each type of period and whether the $900 emergency fund goal is achievable in one year (26 biweekly periods, of which about 5 are short).
Read the worked answer
Expenses per period = 420 + 95 + 140 = $655.
Typical surplus = 813.75 - 655 = $158.75. Short surplus = 651.00 - 655 = -$4.00 (a small deficit).
One year has 26 biweekly periods. If 5 are short and 21 are typical: savings = 21 × 158.75 + 5 × (-4.00) = 3333.75 - 20 = $3,313.75. This far exceeds $900.
Even in a pessimistic case with more short periods, the goal is achievable. For example, 10 short periods: 16 × 158.75 + 10 × (-4.00) = 2540 - 40 = $2,500. The goal of $900 is met well within the year.
3. The worker wants to know the minimum number of typical periods needed to reach $900 if every period were typical, and how many extra periods a short period adds.
Read the worked answer
With all typical periods, divide the goal by the typical surplus: 900 / 158.75 ≈ 5.67, so 6 typical periods are needed (6 × 158.75 = $952.50).
A short period contributes -$4.00 instead of +$158.75, a swing of $162.75. Replacing one typical period with a short one therefore delays the goal by roughly one additional typical period (162.75 / 158.75 ≈ 1.03). So each short period costs about one extra pay period of saving.
This shows the goal is realistic but sensitive to scheduling: the worker should treat short periods as setbacks that require one extra typical period to recover.