Cash Course: Reading Your Paystub

[Music] hey what's wrong just received my first paycheck that's awesome it always feels good to see money in your bank account on payday after all that hard work yeah but it looks like some of my money is missing uh well as anyone who has ever had a job knows you don't get to keep all the money that you earned what it's kind of annoying I know and if you want to understand where all that money went you'll need to take a closer look at your pay stub when it's payday your employer will probably pay you with a paper check or through a direct deposit which is Money Paid directly into your bank account whichever method is used they will also provide you with a pay stub that breaks down how much money you earned but also how much money has been deducted here are a few things to look for on your pay stub the pay period tells you the time period you're being paid for usually pay periods cover two weeks half the month or a whole month of work make sure you know how long your pay period is so that you know when to expect each paycheck your gross pay tells you the total amount you've earned according to your salary during that pay period for example if you worked 40 hours at 15 per hour your gross pay will be six hundred dollars you know what I think I think it's gross that I don't get to keep all my pay oh right and that part you keep is called your net pay this is the money you actually end up taking home net pay is your gross pay minus your deductions which is money that's removed deductions can vary by company and by employee but they break down into three General categories first taxes these are paid to the federal government and depending on where you live you'll most likely also pay some to your state and local government for the federal government you'll pay an income tax plus a social security tax and a Medicare tax both of which are federal Insurance contributions taxes and go to pay for specific government programs the amount you pay for income taxes usually depends on your income generally speaking the more money counted as income the more taxes you'll pay taxes also vary depending on where you live some states charge a heavy state income tax some have lighter taxes and some have none taxes can range anywhere from seven percent in Cody Wyoming all the way to over half of your income in New York City second retirement retirement but that's like 100 years away well just remember the sooner you start saving for retirement the more money you'll have when you get there some employers offer accounts such as a 401k where you can set aside a certain amount of your salary per pay period to save for your retirement plus contributions to certain accounts are pre-tax which will lower your taxable income and reduce the amount of income tax you pay also a lot of companies will match your contribution which means that they'll give you the same amount of money that you are putting into your retirement account up to a certain percentage it's optional and the 401K is just one of the ways you can start saving for your retirement finally Insurance employers often offer various insurance plans that cover your health care dental vision and other similar expenses if you opt to sign up for any of these plans the premium or your monthly portion of the health care plan contribution will be deducted directly from your paycheck now that you know what to look for on your pay stub there are just a few things you need to do number one review make sure you understand all the sections on your pay stub and check it each time you're paid errors can happen and if you see any be sure to report them right away to your supervisor or the payroll department number two consider you've got a lot of control over your deductions whether it's opting into retirement or insurance plans or voting on local and state taxes make sure you carefully consider which options are best for you and number three Clan once you know the length of your pay period you can start planning on how many hours you need to work each week to meet your budget and to meet your personal goals and now that you know how to read your whole pay stub you'll know how to make sure to use your net pay when planning your budget and not your gross pay that's a mistake you only want to make once if at all earning a paycheck is super rewarding and satisfying and understanding your pay stub will really help make that hard work pay off the more you know all about your deductions and take responsibility for them the better choices you can make about your financial future and even how you might vote someday and that will help you make the most out of every hour you work [Music] watch more at priggeryoukids.com and parents don't forget to subscribe