If you don’t know how to read a pay stub, you might not have a full grasp on your finances.

These days, most employers are paying their employees through direct deposit. Although this is the more convenient option, as it saves the employee a trip to the bank to deposit the check, there’s an element of uncertainty – unless the employer issues a pay stub.

Basically, a pay stub is what indicates how much you’ve made and how much taxes and other deductions have been removed. In this post, we’re going to show you how to read a pay stub so that you can finally understand where your money is going and why. 

Employee/Employer Information

When you open up your pay stub, you’ll see your personal information, the employer’s information, and the payment information at the top. It’ll have your name and your SIN, the business name and ID number, and the date range for which you’re being paid, as well as the issuing date of the pay stub.

These things let you know is that it’s your pay stub, you’re being paid by your employer, and everything that comes after is issued for the time period noted at the top (weekly, bi-weekly, monthly).

Payment Information

Your earnings are probably where your eyes will dart to next. This is a relatively simple calculation made by your employer and if they’re using a paystub creator, it will likely have generated automatically when they punched your hours worked and your wage in.

To read it, just look at the number of regular hours worked, which should appear in one column. Make sure this matches up with the actual amount that you worked during that period, then multiply it by the hourly wage that’s displayed and add any bonus wages. This is your gross wage, but it’s not how much money you get.


As a person working in the US, federal and state taxes, social security, medicare, and other optional payments will be deducted from your check. Here’s a quick breakdown of what it all means:

Federal taxes depend on which tax bracket you’re in and your marital status. It ranges from 10% to 37%.

Not every state withholds income tax, but if yours does, how much is deducted will also depend on your income.

Medicare is a benefit system that pays for medical treatment of Americans over the age of 65. You’ll pay 1.45% of your gross income to this fund, which is matched by your employer.

6.2% of your gross income will go to the national social security fund.

If you’ve signed up for medical or dental insurance through your employer, you should see it deducted.

Any retirement savings plan (401k plan) you’ve signed up for will also appear in the deductions.

Add up all of these deductions and remove the total from your gross earnings and you’ve got your net income for the pay period.

Learning How to Read a Pay Stub Helps You 

It’s important to learn how to read a pay stub because it tells you where all the money you’ve earned is going. You should always double-check to make sure that the numbers have all been calculated correctly by your employer so that you can budget properly.

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