Analyzing Your Paycheck

Analyzing Your Paycheck

Personal Finance

Types of Pay Your pay can be calculated in a number of

ways – make sure you know which way it is being calculated.

Types of Pay:

Salary: Set amount of money earned per year – or another set time.

Wages: Set amount of paid per hour or day or item of work. Piecework: Usually involves manufacturing/ assembly

items

Types of Pay Commission: Fixed percentage or amount of

profit given for making a sale Sales, Marketing, Real Estate, Retail jobs

Bonus: Sum of money paid in addition to regular pay for job performance/meeting goals.

Tips: Money given to employee by customer in exchange for a service

Waitresses, Bartenders, Hair stylists, Caddies

Regulations Affecting Pay Fair Labor Standards Act – standards governing

employee payment and compensation.http://www.dol.gov/elaws/flsa.htm

Equal Pay FSLA forbid employers from paying one person less than

another person for the same work. Work in same establishment Work under same/similar conditions Perform work requiring skill, effort, and responsibility

Often used to prevent discrimination against women, minorities, and older workers.

http://www.dol.gov/elaws/flsa.htm

Regulations Minimum Wage: Lowest hourly rate employer

may legally pay most workers. Raised periodically for inflation. (Just raised)

http://www.dwd.state.wi.us/dwd/publications/erd/pdf/erd_9247_p.pdf

Subminimum Wage: A wage paid under certain conditions to certain categories of workers, such as trainees, that is less than the established minimum wage.



Over Time

Work in excess of 40 hours per week. Usually 1.5 times normal wage For example $8.00 * 1.5 = $12.00/hr

Not paid to salaried employees – weigh the loss of overtime pay before changing to salaried position.

Where Does My Money Go? Almost 31% of an individual’s paycheck is

deducted Taxes are the largest expense most

individuals will have Therefore, it is important to understand the

systematic deductions U.S. tax system operates on an ongoing

payment system Taxes are immediately paid on income

earned

Reading a Paycheck

Family Economics & Financial Education

Paycheck Stub

Paycheck Stub A document included each pay period which

outlines paycheck deductions

On-The-GoEmployeeBeakens, Joe

SSN201-92-4856

Check #164

Check Amount$1,102.98

Employee Address293 Michael GroveBillings, MT 59102

Pay Type-Gross Pay

Deductions Current Year-to-date

$1,353.33 Federal WithholdingState WithholdingFed OASDI/EE or Social SecurityFed MED/EE or MedicareMedical401K

$106.00$40.82$83.91$19.62$0.00$0.00

$503.46$117.72$636.00$244.92$0.00$0.00

Totals $250.35 $1,502.10Pay Period 6/11/2004-7/11/2004

Personal Information

Personal Information States the employee’s full name, address, and Social Security

number Always check to ensure this information is correct

Pay Period 6/11/2004-7/11/2004$1,502.10$250.35Totals

$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00

Federal WithholdingState WithholdingFed OASDI/ EE or Social SecurityFed MED/ EE or MedicareMedical401K

$1,353.33

Year-to-dateCurrentDeductionsPay Type-Gross Pay



Check #164

SSN201-92-4856

EmployeeBeakens, Joe

On-The-Go


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go

Pay Period

Pay Period The length of time for which an employee’s wages are calculated; most

are weekly, bi-weekly, twice a month, or monthly The last day of the pay period is not always payday to allow a business to

accurately compute wages


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go

Gross Pay

Gross Pay The total amount of money earned during a pay period before

deductions This is calculated by multiplying the number of hours worked by the

hourly rate If a person is on salary, it is the total salary amount divided by the

specified time period


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go

Net Pay

Net Pay The amount of money left after all deductions have

been withheld from the gross pay earned in the pay period


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go

Deductions

Deductions The amount of money subtracted from the gross pay earned for

mandatory systematic taxes, employee sponsored medical benefits, and/or retirement benefits


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go

Federal Withholding Tax

Federal Withholding Tax The amount required by law for employers to withhold from earned wages to pay

taxes The amount of money deducted depends on the amount earned and information

provided on the Form W-4 Largest deduction withheld from an employee’s gross income


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go

State Withholding Tax

State Withholding Tax The percentage deducted from an individual’s paycheck to assist

in funding government agencies within the state The percentage deducted depends on the amount of gross pay

earned


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go

FICA (Federal Insurance Contribution Act)

FICA This tax includes two separate taxes: Fed OASDI/EE or Social Security

and Fed MED/EE or Medicare These two taxes can be combined as one line item or itemized separately

on a paycheck stub


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go

Social Security

Social Security Nation’s retirement program, helps provide retirement income for elderly

and pays disability benefits Based upon a percentage (6.2%) of gross income, employer matches the

contribution made by the employee


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go

Medicare

Medicare Nation’s health care program for the elderly and disabled,

provides hospital and medical insurance to those who qualify Based upon a percentage (1.45%) of gross income


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go

Medical

Medical The amount taken from the employee’s paycheck for medical

benefits Occurs when the employer has a medical plan for employees but

does not pay full coverage for his/her benefits


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go

Retirement Plan

Retirement Plan The amount an employee contributes each pay period to a

retirement plan A specified percentage of the contribution is often matched by

the employer May be a 401K, a state, or local retirement plan


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go

Year-to-Date

Year-to-Date Total of all of the deductions which have been withheld from an

individual’s paycheck from January 1 to the last day of the pay period indicated on the paycheck stub


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go


$503.46$117.72$636.00$244.92$0.00$0.00

$106.00$40.82$83.91$19.62$0.00$0.00


$1,353.33




Check #164

SSN201-92-4856


On-The-Go

Types of BenefitsBe sure to consider benefits when choosing a

job!!

Insurance Benefits: Group health care plans offered by employers

Other insurance plans: Vision, dental, disability, long-term care, flex plans

Savings and Retirement Benefits: Employers deduct money from the employee’s paychecks to deposit in a savings or investment account.

Some or all deducted on a pre-taxed basis Tax sheltered annuities, 401K plans

Types of Benefits Other benefits:

Paid Holidays Vacation Days Sick Leave Flex Accounts Pay for addition education/training Paid maternity leave or money towards childcare Gym memberships Addition perks

Unions Important Part of American History

Developed in early 1900’s Protect Worker’s Rights

Collective Bargaining: Meeting with employers and elected officials to negotiate the terms of a contract Pay Benefits Work Environment

Currently hot topic in politics

Professional Organizations Professional Organization:

a nonprofit organization seeking to further a particular profession, the interests of individuals engaged in that profession, and the public interest.

Keep up to date with current trends in the profession

Further education or credits

Workplace or employee pays fee to belong Resources Classes Conferences

Budgeting

Personal Finance

Why Budget? A budget is helpful no matter how large or

small your income is. It is ALL about saving.

If created efficiently, a budget can help you:

Avoid running out of money between paychecks Evaluate your spending habits and making better

choices Set aside savings for unexpected costs (They WILL

happen!) Work toward a financial goal

Budgeting

Although a budget can be created for any time period, most create on for a year Divided it up into months (by 12)

Creating a budget involves three main tasks: Estimating Income (Gross vs Net -- irregular) Estimating Expenses (Fixed vs Variable) Bringing the two into balance – saving

Estimating ExpensesGroup expenses into general categories

Groceries, dining out, gas, cable bill, miscellaneous, etc.

Fixed Expenses: Regular payments that do not vary from month to month. (Rent, car payment)

Variable Expenses: Normally increase and decrease from month to month. (Groceries, Dining Out)

The MORE accurate you are – the more effective your budget.

Estimating ExpensesYou can estimate your expenses using several

ways –

Your past spending. Information from bank statements, receipts, tax forms.

Expert recommendations Percentages of income to allow for various expenses.

National Averages Consumer Expenditure Survey – shows how consumers

spend their money. Published periodically by the Bureau of Labor Statistics

Pie Chart

Saving Money

PAY YOURSELF FIRST!! 10% of household income – more if you can. Treat savings as another FIXED expense. Necessary to reach long-term savings goals and have

emergency fund.

Balance Your Budget

Income – Expenses = Zero

If result is a positive number, add money to savings.

If result is a negative number, adjust your budget.

Decrease expenses, do not cut out savings.

Adjusting Your BudgetLook at discretionary expenses – categories that aren’t

necessary. Shopping “Fun” money Add-ons to other expenses (Cell minutes, HD or Tivo, Internet

Speed)

Think of ways to trim expenses Coupons Eating in more Buy sale items

Reduce Fixed Expenses – Less expensive car, lower rent, better deal on auto insurance.

Using Your Budget

Establish a budget – use discipline!! Monitor it each week

Compare actual expenses vs. budgeted amount Analyze if overspending – Make adjustments.

Revise budgeted amounts, if needed.

Date post:	25-Feb-2016
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Analyzing Your Paycheck

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