Where Your Money Goes: How to Read Your Pay Stub


Presented by Paystrubmakr.com      By John Wolf and Tom Cullen CPA

If you’re like most of your colleagues, then your paycheck means only one thing, money in the bank! But if you want to step up the game and improve your money management skills, you need to pay close attention to the portion of your paycheck, known as the paycheck stub (also called the explanation of payment).

Tax money and paystubs

What is a paycheck stub?

The additional form attached to your paycheck is called the pay stub. It shows the details of the amounts you have earned and what amounts have been deducted during the pay period.

What to do with pay stubs

Educating yourself on how to read your pay stub and understanding the content it contains can play a vital role in effective money management and proper budgeting. Knowing where your money is going will not only help you stay on top of your finances but also helps you make the most of your hard-earned paycheck.

Why You Should Know It

Learning how to read your pay stub can help you track your income in a better way. Once you understand the terminology and layout of the paycheck stub, you can accurately track how much money you earned, how much of your earnings were removed for each withhold, and how much money you took home (yes, the most important part). Many people tell you to watch what you spend, but keeping a track record of your earnings is a key role in improving your overall personal finances.

Here is the detailed overview of how to read your pay stub:

  • Look at the top of your pay stub

At the top, you will find basic information such as the name and address of the employer and the date at which the paycheck was issued. You may also find information about the company that processed payroll for your company. There will be a check number at the top of your paycheck stub which is useful for entering all your financial records to track income amount and sources.

If something is wrong with your paycheck, then it will likely be the fault of your payroll company. You can get in contact with human resources if you spot an issue in the paycheck stub.

  • Find the area labeled ‘Gross Pay.”

Gross pay is the total amount of the salary that you have earned before any withholding has been taken. The gross pay will usually be over a certain period, called a pay period.

Any taxes or other withholding will not be shown in your gross pay.

A pay period will differ in length, depending on your employer. These pay periods may cover weekly, bi-weekly, or monthly periods. Other pay periods are not as a common stub.

  • Look at the top of your pay stub

Find the amount written next to the labeled net pay to learn how much of your earnings are yours to take home. An amount written next to the net pay has already taxes and withholding removed from it. Net pay is the actual amount of your earrings that you will receive.

Learn what some abbreviations mean:

YTD: Year-to-Date

FT or FWT: Federal Tax or Federal Tax Withheld

ST or SWT: State Tax or State Tax Withheld

SS or SSWT: Social Security or Social Security Tax Withheld

MWT or Med: Medicare Tax Withheld

To know more, visit Paystubmakr.com.

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Disclaimer: John Wolf and paystubmakr.com are making a total effort to offer accurate, competent, ethical HR management, employer, and workplace advice.  We do not use the words of an attorney, and the content on the site is not given as legal advice. The website has readers from all US states, which all have different laws on these topics. The reader should look for legal advice before taking any action.  The information presented on this website is offered as a general guide only.




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