There are 157 million Americans in the U. S. workforce. Learning how to read your pay stub gives you more control over your finances.
The service sector employs more American works than any other field. Nonetheless, pay stubs keep you informed no matter what industry you work for.
The last thing you want to do is find yourself in an inconvenient situation where you’re asking, “How do I read my pay stub?” That’s unprofessional and embarrassing. By educating yourself, you’re less likely to face that scenario.
Here’s what to know about reading a pay stub:
Gross Pay
Gross pay is the amount of money you made during a pay period before taxes and deductions get taken out. This number includes your salary or hourly pay along with overtime pay and bonuses.
Your YTD gross is how much money you’ve made from this year so far. (YTD stands for “year to the date,” a term you’ll find multiple times on a pay stub.) A good pay stub example will include both of these gross pay numbers in its format.
Taxes
Real pay stubs tell you exactly where your money goes. That’s because legitimate pay stubs list all taxes and deductions that get taken out of your check.
At the very least, your pay stub will account for what you’ve paid in Federal Income Tax, State Taxes, and FICA. FICA includes the percentages you pay to fund Medicare and Social Security. For the record, you must put 6.2% of your paycheck toward Social Security.
Deductions
Other deductions include insurance, health savings, and other medical accounts. If you have a 401K, IRA, or other retirement savings plan, you’ll have another deduction.
Deductions also have a YTD total. It tells you how much you’ve paid in deductions throughout the year so far.
Net Pay
Net pay is the number you arrive at after subtracting taxes and deductions from your gross pay. This is the actual amount of cash you’re getting paid at the end of a given pay period.
Your YTD net pay tells you how much net pay you’ve made during the year so far. This is the amount of money that actually gets deposited into your bank account.
Always Make and Review Pay Stubs
For those who don’t receive pay stubs, it’s easy to create pay stubs online. Use a paystubcreator to make pay stubs by yourself. It’ll do wonders for your financial record-keeping.
Always doublecheck your pay stub to make sure it’s accurate. You might spot an error that would otherwise cost you.
My Pay Stub Is My Financial Best Friend
At least 30% of Americans are self-employed. Self-employed workers especially benefit from making their own pay stubs.
More people are working from home, which means doing more financial record-keeping than usual. Unlike many people who work from home, you’re now able to confidently say, “I know how to read my pay stub!”
Start doing business the smart way—read more of our business articles. It’ll help you with honing your business sense.