Understand your paycheck

Gross is the offer. Net is your life.

Gross pay is hours × rate before anything is taken. Net pay — "take-home" — is what actually lands. The gap is usually 20–30% for an entry-level role. Budget from net, always, or you will be short every month.

Line by line

Every pay stub, whatever the format, has the same anatomy.

• Pay period and pay date — the weeks this covers, which is often not the weeks just worked.
• Hours and rate — check these against your own record first, every time.
• Gross pay — basic, plus overtime, vacation pay or tips shown separately.
• Federal, state and local income tax — withholding depends on your W-4 and where you live.
• Social Security and Medicare (FICA) — payroll taxes shown separately on most pay stubs.
• Retirement contribution — yours and any employer match, if your workplace offers a plan.
• Student loan, union fees, salary sacrifice — only if they apply to you.
• Net pay, and year-to-date totals.

The pension line is not a deduction, it's a payrise

If your employer matches contributions, opting out to get a slightly bigger take-home means turning down free money. Before you opt out, find out the match rate. It is usually the highest guaranteed return you will ever be offered.

How to spot an error

Payroll mistakes are common and usually innocent — but nobody will find yours for you.

• Keep your own hours log: date, start, finish, breaks. A phone note is enough.
• Check hours and rate first, then the tax code, then the total.
• Missing overtime, unpaid trial shifts and vacation pay are the usual culprits.
• Raise it in writing, politely, with the pay stub and your log attached.
• Keep every pay stub for at least two years — they are proof of income for renting and lending.

First pay stub surprises

A first pay stub is often smaller than expected: an emergency tax code, a part-period start, or a pay cut-off that pushed a week into the next cycle. Usually it corrects itself within two cycles. If it doesn't, ask.