TABE Practice Test 6

How to Read Your Pay Stub

Every payday, you get a pay stub along with your check or direct deposit. The stub is a record of how much you earned and where some of that money went. Many workers glance at the bottom number and toss the rest. Taking five minutes to read the whole stub can help you catch mistakes and plan your budget.

Step 1: Check Your Information

Start at the top. Make sure your name, address, and employee number are correct. Then find the pay period. These are the first and last days of work that this payment covers. If you worked during those dates but some hours are missing, you will know to ask.

Step 2: Look at Your Hours and Gross Pay

Next, find the hours you worked and your rate of pay. Your gross pay is the total you earned before anything is taken out. If you are paid by the hour, multiply your hours by your rate to check this number. For example, 30 hours at $16 an hour is $480. Overtime hours should be listed on their own line, usually at a higher rate.

Step 3: Read the Deductions

Deductions are amounts taken out of your gross pay. Your stub may list each deduction for this pay period and for the year so far. Some are required by law, such as federal income tax and FICA, which pays for Social Security and Medicare. Others are choices you made, like health insurance or savings for retirement. If a deduction looks new or larger than usual, find out why.

Step 4: Find Your Net Pay

Your net pay is what is left after all deductions. This is the amount you actually take home. When you plan a budget, use your net pay, not your gross pay. Planning with the bigger number can leave you short at the end of the month.

Step 5: Keep Your Stubs

Save your pay stubs in a folder or take a photo of each one. You may need them to apply for an apartment or a loan. They can also help you check the W-2 tax form your employer sends you early each year.