These days, most people are paid via direct deposit, and their paychecks enter their accounts automatically. Unfortunately, that also means they don’t review their pay stubs.
Understanding your pay stub is essential to verifying that you were paid correctly, and there are no errors. If you need help understanding the importance of reading your paycheck stub, take a look at the information below.
Understanding Your Earnings
Perhaps one of the most essential aspects of your paystub is the section that details your earnings. If you work on an hourly basis, there’s a section on your check stub that’ll show how many hours you worked and the hourly rate. You should make it a point to look over this information to verify that you were paid for all of the hours you worked.
Also, most employers pay time and a half for overtime. So, if you worked overtime hours, you’ll also want to verify that you were paid properly for that.
If you’re new to reading check stubs, you may not understand the difference between gross pay and net pay. Gross pay is the amount that you earn before taxes and other deductions.
For example, if you make $15 an hour and you work 40 hours per week, your gross pay would be $1,200 for a biweekly check. However, after federal taxes, and sometimes state taxes, you can expect to have about $200 or more deducted from your check. The amount you pay in taxes depends on how much money you earn.
There will be a section on your pay stub that shows your marital status, as well as your exemptions and allowances. Look over that information to make sure that is correct. If it’s not, it can completely affect the way that you get paid.
Deductions for Benefits
In addition to your taxes, if you have any other deductions coming out of your check, those will post as well. Most people have insurance through their employer, and a 401K plan.
Depending on the type of insurance policy that you have, the amount that comes out will vary based on your individual plan. Just make sure that your employer is deducting the correct amount.
The same goes for your 401k. Your employer will deduct the percentage that you selected when you created your retirement plan.
Verifying Your Identity
At the very top of your pay stub, your name, address, and the last four of your social security number will be listed. Although mistakes are rare, they can happen. Look at your pay stub to verify that the check amount you received was actually for you.
If you are self-employed or own a business, check out this cool paystub maker.
Reviewing Your Pay Stub
As you can see, there’s a lot that goes into play when reading your pay stub. However, it’s essential that you do so because if not, it could affect your pockets!
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