Are you trying to learn how to read a pay stub? If yes, you should check out our guide here on the vital things to understand.

Personal finance can be a touchy topic for many. If you don’t understand how to manage your money, you might find yourself in a sticky situation at tax time or at the end of the month.

Learning how to read a pay stub is one of the most important parts of understanding your income as an employee. What are these deductions that are coming out of your paycheck?

Continue reading this article, and we will help you understand more about your paycheck, so you can take control of your finances.

What Is a Pay Stub?

Some people might not be sure if they have pay stubs or not. If you have a W-2 job, you most likely get pay stubs along with your checks each pay period.

If you work for a small business, your boss might use a check stub maker to generate your pay stubs. Pay stubs include things like how many hours you work, gross income, net income, and deductions, and withholdings like taxes and insurance costs.

Reading Your Pay Stub

Now that you know what a pay stub is, let’s get into how to read it. You know the basics like your employer’s address, your employee number, and social security number, but what about the money?

Your earnings section show earnings both gross and net. Gross income is your income before everyone else sticks a hand in it. Your net income is how much money you have left after all deductions come out of your check.

The rate on your pay stub is how much you’re getting paid per pay period. Some people are paid hourly, and others are paid a salary. The current amount you see on your pay stub is how much you’ve earned during a pay period before deductions and withholdings.

Where you see the term year-to-date deductions is where you’ll see itemized deductions from the beginning of the year until the wherever you are in the year. Year-to-date earnings are the same, but it is that year’s earnings vs. deductions.

Saving Pay Stubs

You might be wondering if you should save pay stubs. It’s a good idea to keep your pay stubs as a record. You never know when you might need proof of income or proof of employment.

Not only are pay stubs good for proof of income and proof of employment, but they also help you keep track of your earnings, deductions, and withholdings. If you don’t like tracking those numbers in an app, keeping your pay stubs for a year is a good practice.

How to Read a Pay Stub – Now You Know

Now you know how to read a pay stub. Understanding how to read a pay stub will help you as you’re planning out your personal finances.

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