Adulting 101: 3 Tips for Reading a Pay Stub
Self-employment has several benefits. For one thing, you won’t have to listen to anyone—after all, you’ll be your own boss!
That’s not all, you’ll also get more freedom. For example, you’ll be able to determine your own hours.
That’s not to say that there aren’t any disadvantages, though. First and foremost, you’ll have to pay your own taxes. And as part of that, you might have to create your own pay stubs.
Is that what you’re dealing with now? Need for some tips for reading a pay stub? Well then, you’re on the right page because that’s what we’ll be talking about below.
Keep reading to learn more!
What Is a Pay Stub?
A pay stub, sometimes called a payslip, is a document that lists details about your pay. To be more specific, it includes your gross wage, withholdings, and net wage.
What can you use it for? Several things. For starters, you can use it as proof of income. For example, you might need it if you’re signing up for a loan or trying to rent an apartment.
Not only that, but you can use it to keep track of your finances. If anything, it can come in handy during tax season.
3 Tips On How to Read a Pay Stub
A pay stub includes various information, as mentioned earlier. Here’s an overview of the different sections.
1. Gross Wages
Gross wages refer to the full amount that you receive prior to taxes and other withholdings. For hourly employees, this is calculated by multiplying the numbers of hours that you’ve worked by your hourly wage.
For salaried employees, it refers to the amount of their annual salary.
Deductions are any withholdings that are taken from your gross wages. For example, it might include federal, state, and local taxes, depending on where you live.
In addition to that, you might have to pay a premium for employment insurance, among other things.
3. Net Amount
The net pay is your take-home amount. In other words, it’s the amount that you’ll get after all the deductions.
Note: Most pay stubs will list both the current and year-to-date net pay at the bottom of the document.
How to Create Your Own Paystub
Wondering how to produce a paystub? Well, as it turns out, there are several options. For example, you can use Microsoft Excel or another spreadsheet program.
Want something that’s easier to use? You can always use a pay stub generator. Just input the information and it’ll produce the slip!
Reading a Pay Stub The Right Way
As you can see, reading a pay stub is quite straightforward. If anything, you just have to familiarize yourself with all the terms on the document.
Looking for more tips like this? Then make sure to visit the rest of our blog!