Financial Wellness

How to read your pay stub

What parts of your pay stub should you be looking at, and why do they matter?

3.5 minutes

When payday comes around, you probably know where your paycheck is going, and when to expect it. But how often are you looking at the pay stub that comes with your check?

Your pay stub shows you how much you earned each pay period, and includes important information about your employee benefits and contributions.

It may not sound too exciting, but learning how to decipher this (digital) slip of paper can give you a better understanding of your overall income, taxes, and benefits, which in turn can help you budget and save like a pro.

But first things first,

Where do I find it?

If your employer gives you a physical copy of your pay stub along with your paycheck, you can skip ahead to the next section. Otherwise, you can find your pay stubs by logging in to your account with your company's payroll system.

💸 Common payroll providers include ADP, Gusto, Paychex, Paycom, and Paylocity.

If you're not sure how to log in or what payroll provider your company uses, check with your manager or search your email history. Many payroll providers send a message when you first start your new job, with account information and details on how to access your payroll information.

Once you've logged in, look for a section called Pay, Paycheck, Pay History, or something similar. That's usually where your pay stubs live. In your payroll account, they might also be called pay statements, wage statements, or pay slips.

Pull up the most recent one, and let's check it out.

Decoding your pay stub

Your pay stub might look different than this, but it should include some version of the sections illustrated below.

1. Pay period

This is the timeframe for which you're being paid. It could be weekly, biweekly, semi-monthly, or monthly, depending on your employer.

For example, if your pay period started on January 28 and ended February 10, that covers two weeks of work and is considered a biweekly pay period.

The actual pay date refers to the date you get paid. It's usually a specific number of days after the end of the pay period, after your employer has processed payroll for that period.

2. Gross pay

Gross pay is your total earnings before any deductions. It includes the money you've earned from your base salary or hourly rate, and any additional income such as overtime, reported tips, and bonuses.

For example, if your hourly rate is $10 and you worked 80 hours, your pay for the period is $800. Let's say you also earned $75 in overtime pay. Add your regular and overtime pay together, and you get $875 in gross pay.

🗓️ The "Current" section of the pay stub tells you how much you've earned in this pay period, and the "Year to Date" (or YTD) section tells you how much you've earned in the year so far.

3. Deductions

Deductions are the amounts taken out of your gross pay for things like taxes, health insurance, and other benefits. What you see here will depend on your state and the benefits that your employer offers.

Most deductions are considered pre-tax deductions: they're taken out of your paycheck before taxes and reduce the amount of income you have that can be taxed. That's a good thing!

Some types of insurance (like life and disability insurance) and retirement contributions (like a Roth IRA) are deducted post-tax.

ℹ️ If you use Exhale, you may notice that there are no deductions on your pay stub for your Exhale Perks.

  • This is because contributions to Exhale are accounted for after your employer runs payroll and sends your paycheck to your bank account.
  • Your paycheck makes a pit stop at Exhale to check for any repayments you may owe for the pay period (for example, for Pay Access or advances), or for any savings contributions you have set up.
  • From there, the rest of your paycheck is sent straight to your bank account.

4. Taxes

Federal and state taxes are usually listed under your deductions.

Tax withholding is a normal and inevitable part of being employed. While it may not be fun to see a chunk of your paycheck deducted for taxes every pay period, this process helps ensure you don't need to make too big of a payment come tax season.

Here you'll also find deductions for Social Security and Medicare, which are contributions to government programs that provide benefits in the future.

5. Net pay

Net pay is the amount you take home after all the necessary taxes and deductions. This is the amount you can budget with, spend, and save. 🎉

A few parting tips

Now that you know where to find your pay stub and how to make sense of it, here are a few final tips:

  • Keep it handy: Make it a habit to review your pay stub when you can. In addition to staying informed about your pay, it also makes it easy to spot if something ever looks amiss.
  • Ask questions: If there's something you don't understand, don't hesitate to ask your HR department or a colleague. Every company handles payroll their own way, so it's normal if things work a little differently from your previous employer.
  • Plan ahead: Keep track of your net pay to make sure you're budgeting correctly and staying on track with bills and other expenses.

Reading your pay stub isn't just about the numbers or lingo, it's about understanding the bigger picture. Knowing how your paycheck is broken down and where your money's going can help you prepare for taxes, make better budgeting decisions, and save for the future.

In other words, it pays to know your pay.