Do you base the 60 / 40 division on your net income or your gross income?

This is a personal choice. My family and I use our net income to figure 60 / 40, because we never see the other monies that are involuntarily ''tithed'' directly to the government. For employees of corporations, your net income is your take-home pay plus any money you divert to savings accounts (like the 401k or bond purchase programs). But if you choose to use your gross income, go right ahead. The major consideration is that all three arms of the money cycle - Living, Saving, and Giving - are being serviced at a consistent proportion from all your income sources.