Paychecks and Paystubs

Having a job has its rewards. When you have a job, you start earning money or what is referred to as earned income. Income is the payment people receive for working and comes in the form of wages. A worker’s wage is most often based on how many hours a person works and their hourly wage or pay scale. Your wages will be paid to you through a paycheck at the end of each pay period. A pay period is the time period in which an employee worked and is being paid for.

What is income?

• Payment you get when you quit a job.

• Payment received for working.

• Payment you get when you are first hired.

Having a job has its rewards. When you have a job, you start earning money or what is referred to as earned income. Income is the payment people receive for working and comes in the form of wages. A worker’s wage is most often based on how many hours a person works and their hourly wage or pay scale. Your wages will be paid to you through a paycheck at the end of each pay period. A pay period is the time period in which an employee worked and is being paid for.

What is a wage?

• Pay based on how many hours you worked during a pay period.

• Pay based on how many hours you were supposed to work.

• Pay based on your yearly salary.

Having a job has its rewards. When you have a job, you start earning money or what is referred to as earned income. Income is the payment people receive for working and comes in the form of wages. A worker’s wage is most often based on how many hours a person works and their hourly wage or pay scale. Your wages will be paid to you through a paycheck at the end of each pay period. A pay period is the time period in which an employee worked and is being paid for.

What is a pay period?

• The time during which an employee worked.

• The last day an employee worked.

• The first day an employee worked.

However, not all employees are paid an hourly wage, as some employees receive a salary. Employees that are in management positions often earn a salary. A salary is a fixed regular payment based on an agreed amount between the employer and the employee. For instance, a manager may earn a salary of $120,000 a year, which means they would be paid a monthly salary of $10,000. A person that earns a salary, in most cases, doesn’t get paid overtime, though more than likely they work over 8 hours a day and forty hours a week.

What is a salary?

• An amount that can change based on how many hours you work.

• Overtime payment.

• Fixed regular payments based on a contract (agreement) between a worker and their employer. Stays the same even if you work more hours.

Regardless, if you are paid a salary or wages, your paycheck comes from your employer. When and how often you are paid or receive a paycheck depends on your employer. Every business decides which payroll schedule works best for them and their employees. The most common payroll schedules used by businesses are monthly, semi-monthly (twice a month), and biweekly (every two weeks).

When and how often you are paid or receive a paycheck depends on what?

• How many hours you worked.

• Your employer.

• What state you live in.

When your first paycheck arrives, you may be surprised or confused to see it is not the amount you expected and actually earned. It may be much less. Why is this? It is because the amount you see on your paycheck is your net pay, not your gross pay. Net pay is the amount you receive after all deductions are taken from your total earnings. A deduction is any amount of money subtracted from your check. And, as you will notice, there will be many deductions made from your wages. Before these deductions are made, the total amount of your pay or wages is referred to as your gross pay.

What is gross pay?

• The amount you receive after deductions are subtracted.

• Any amount subtracted from your check.

• The total amount of your pay or wages.

When your first paycheck arrives, you may be surprised or confused to see it is not the amount you expected and actually earned. It may be much less. Why is this? It is because the amount you see on your paycheck is your net pay, not your gross pay. Net pay is the amount you receive after all deductions are taken from your total earnings. A deduction is any amount of money subtracted from your check. And, as you will notice, there will be many deductions made from your wages. Before these deductions are made, the total amount of your pay or wages is referred to as your gross pay.

What is net pay?

• The amount you receive after deductions are subtracted.

• Any amount subtracted from your check.

• The total amount of your pay or wages.

When your first paycheck arrives, you may be surprised or confused to see it is not the amount you expected and actually earned. It may be much less. Why is this? It is because the amount you see on your paycheck is your net pay, not your gross pay. Net pay is the amount you receive after all deductions are taken from your total earnings. A deduction is any amount of money subtracted from your check. And, as you will notice, there will be many deductions made from your wages. Before these deductions are made, the total amount of your pay or wages is referred to as your gross pay.

What is a deduction?

• The amount you receive after deductions are subtracted.

• Any amount subtracted from your check.

• The total amount of your pay or wages.

Every paystub tells a story. A paystub is attached to your paycheck. It contains valuable information. The paystub will explain how much you earned, the time period you are being paid for, how much you paid in taxes, and what deductions have been made.

What is a paystub?

• Explains how much you earned, the time period paid for, taxes, and deductions.

• It pays you for your work.

• Shows just how much you earned.

Many people are unaware or don’t understand all of the different deductions taken from their paycheck. Types and amounts of deductions can vary greatly. They may vary depending on your income, place of employment, personal allowances, benefits offered, as well as many other factors. Some common deductions made from most people’s gross pay are health insurance, disability insurance, state taxes, federal taxes, FICA-Social Security and Medicare, and retirement plans. In order to make sure you are being paid correctly and the correct deductions are being taken, you will need to be able to read your paystub.

Types and amounts taken out of paychecks...

• are always the same.

• are easy to understand.

• can vary greatly (meaning they can be very different for each person).