You probably don’t spend a lot of time looking at your pay stub. After all, these days most people are paid by direct deposit. But if you take the time to log into your payroll website, you can find a wealth of useful information on your pay statement. Here are three things you can learn from your pay stub and what to do about it:
How Much Money You Take Home Each Month
While most people could probably tell you their salary or hourly rate off the top of their heads, they often don’t know exactly how much their paychecks are. When it comes to planning out your spending for the month, this is a much more salient number.
What to look for: “Net Pay.” This is how much you take home after subtracting everything that’s taken out of your paycheck, such as taxes, retirement contributions, and insurance.
What to do with it: Calculate your monthly take home pay by multiplying your net pay by the number of times you get paid each month. Use this number as your income when creating a budget.
How Much You Are Contributing to Retirement
Retirement contributions are set and forget it—emphasis on “forget it.” If you need a reminder of how much you are contributing to retirement, you can calculate it from your pay stub.
What to look for: “401(k) contribution” or “401(k) deferral.” This will show the dollar amount that you are contributing to your account each paycheck. If you receive an employer match, you will be able to find that as well. It might be listed as “ER Match,” “401(k) Match,” or “Matching Contribution.” You will also need to locate your “Gross Pay” or “Gross Earnings.”
What to do with it: Divide your 401(k) contribution by your gross pay. Multiply that number by 100 and you’ll have the percentage of your salary that you are contributing to retirement. This should be a whole number (no decimal points!). You can do the same calculation for your employer match. Your employer match might end in 0.25%, 0.5%, 0.75% because not all employers match your contributions one-for-one.
What Insurances You Have & How Much You’re Paying For Them
Your pay stub will also list any deductions for insurance payments. Health insurance is the most common but you (or your employer) might also be paying for life insurance or disability insurance.
What to look for: Health insurance may be listed under “Medical” or a plan name in the “Pre-Tax Deductions” section. Life and disability insurance would be listed under something like “After-Tax Deductions” or “Other Benefits.”
What to do with it: If you find that you or your employer are paying for insurance you didn’t know you had, ask your HR department for more information about your policies so you can find out about your coverage levels. If you are paying for something you don’t need (like supplemental life insurance even though you have a term life insurance policy that covers your needs), you can make changes during your company’s open enrollment.
