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Understanding Your Paycheck: Where Does Your Money Go?

Learn about the components of a pay stub, such as gross pay, net pay, deductions, and important personal information. Understand federal and state withholdings, social security, and Medicare deductions as well as optional deductions like insurance and 401K contributions.

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Understanding Your Paycheck: Where Does Your Money Go?

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  1. Understanding Paychecks Where Does Your Money Go?

  2. Pay Check Stub Check Stub -the part of a paycheck that lists deductions from your salary

  3. Personal Information • Personal Information: • Name • Social Security Number • Address

  4. Pay Period • Pay Period • The length of time for which an employee’s wages are calculated; most are weekly, bi-weekly, twice a month, or monthly • The last day of the pay period is not always payday to allow a business to accurately compute wages

  5. Gross Pay $1,353.33 • Gross Pay • The total amount of an employee’s earnings BEFORE deductions are taken out • This is calculated by multiplying the number of hours worked by the hourly rate

  6. Net Pay $1,102.98 • Net Pay • The amount of a paycheck AFTER all deductions are taken out (sometimes referred to as take home pay)

  7. Deductions • Deduction • The amount of money taken from an employee’s gross pay for taxes, insurance, social security, and other benefits

  8. Required Deductions Federal Withholding: taxes taken for federal funding State Withholding: taxes taken for taxes for state funding Social Security: retirement/disability benefits Medicare: health care program for elderly/disabled Income Tax: the part of earnings that people must legally give to the government to pay for government services

  9. Optional Deductions (Medical) Insurance: Can get insurance through employer 401K: Personal retirement

  10. Current vs. Year to Date $250.35 $1,502.10 Current: the amount paid for each deduction THIS pay period Year-to-Date: the amount paid for each deduction so far THIS YEAR

  11. Pay Check Math GROSS PAY: $1,533.33 TOTAL DEDUCATIONS: $250.35 NET PAY: $1,102.98

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