WEBVTT

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So...the moment finally comes when you get your first
paycheck,

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and... hmm... it's definitely less than you thought it would
be.

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And looking at your pay statement doesn't help;

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there are a lot of unfamiliar terms for a bunch of
deductions.

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It makes it hard to know where your money is going. 

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So let's get this all sorted out.

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When you get your paycheck, you'll likely also get a pay
stub.

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This will show you what deductions or withholdings have
been taken out of your paycheck. 

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Deductions and withholdings make up the money that your
employer takes from your total earnings to pay your taxes,

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such as federal income tax, and to pay for company
benefits, such as health insurance or a retirement plan.

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What you earn before deductions and withholdings is
referred to as gross pay or pre-tax income.

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What's left after your deductions and withholdings is your
take-home pay,

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also referred to as your net pay. 

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Net pay forms the foundation of your spending plan and
dictates what you can afford, 

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and that's why it's so important to understand the difference
between net and gross,

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because your $50,000 gross salary can quickly become
$36,000 in net pay after tax. 

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And you don't want to be living a $50,000 lifestyle if that's
the case.

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Many employers offer direct deposit. 

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That means your employer will deposit your paycheck directly
into your bank account.

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You'll still get a pay stub that outlines your pay and your
deductions,

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but you won't have to worry about depositing or cashing a
check.

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And it means you're much more likely to get your money
on time,

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no checks to get lost in the mail...

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...and no waiting in long lines at the bank to cash your check.