So...the moment finally comes when you get your first paycheck,
and... hmm... it's definitely less than you thought it would be.
And looking at your pay statement doesn't help;
there are a lot of unfamiliar terms for a bunch of deductions.
It makes it hard to know where your money is going.
So let's get this all sorted out.
When you get your paycheck, you'll likely also get a pay stub.
This will show you what deductions or withholdings have been taken out of your paycheck.
Deductions and withholdings make up the money that your employer takes from your total earnings to pay your taxes,
such as federal income tax, and to pay for company benefits, such as health insurance or a retirement plan.
What you earn before deductions and withholdings is referred to as gross pay or pre-tax income.
What's left after your deductions and withholdings is your take-home pay,
also referred to as your net pay.
Net pay forms the foundation of your spending plan and dictates what you can afford,
and that's why it's so important to understand the difference between net and gross,
because your $50,000 gross salary can quickly become $36,000 in net pay after tax.
And you don't want to be living a $50,000 lifestyle if that's the case.
Many employers offer direct deposit.
That means your employer will deposit your paycheck directly into your bank account.
You'll still get a pay stub that outlines your pay and your deductions,
but you won't have to worry about depositing or cashing a check.
And it means you're much more likely to get your money on time,
no checks to get lost in the mail...
...and no waiting in long lines at the bank to cash your check.