By now, you’ve received your first few paychecks on Fridays, but do you understand everything on the pay stub? Knowing how you’re paid, and what is deducted, is important when trying to budget for the future – knowing your gross pay isn’t going to cut it!
Paycheck Explorer – Click the info hotspots for more information!
The left side of your pay stub shows all the money you earned in this pay period. Sum these up to get your “Total Earnings”, or “Gross Pay”.
Base Wage – Your “Base Wage” is the money you earned for the hours you worked at your job. This is simply your “Hourly Wage” x “Hours Worked”.
Tips – Your job is at a cafe, and working at a cafe means you’ll earn tips for good service. Your total tips earned will go up based on your hours worked.
Bonus Income – Occasionally you will have cards in the game that give you extra income from working (taking an extra shift, things like that). These “Bonus” cards are listed here on your paycheck.
Game Income – If you decided to “Work Extra Hours” over the weekend, the extra money you earned in the mini-game gets added to your next paycheck. You can see that “Bonus” income here.
These are the taxes that get taken out of your paycheck. Your “Net Pay” will be your “Gross Income” minus these deductions.
Federal Income Tax – This is going to be your biggest deduction – the Federal Income Tax. In the budget game, this is a 10% tax on your gross earnings.
State Income Tax – This reflects the income tax in your local area. The amount is always much smaller than the Federal Income Tax, and might even be 0 (depending on your state).
OASDI – “OASDI” stands for “Old Age, Survivors, and Disability Insurance” – in other words, Social Security or FICA tax. This is a 6.2% tax on your gross earnings. While you won’t see it on your paycheck, your employer also pays an additional 6.2% out of their pocket to match your contribution.
Medicare – Medicare gets an additional 1.45% of your gross earnings, which is used to pay for old age health insurance. Like OASDI, your employer is also paying an additional 1.45% to match your contribution.
Between OASDI and Medicare, you are paying out 7.6% of every paycheck – and you can’t get this back on your Tax Return. But keep in mind that your employer pays this too! For every $1,000 you earn, your employer is also contributing $76.00 to OASDI and Medicare.
When you subtract your “Deductions” from your “Earnings”, you will get your “Net Pay”. This is the amount actually shown on your paycheck, and how much gets added to your checking account.
Now that you know a bit more about your paycheck, close this lesson to continue the game!