Topic guide · Earning
Earning: what actually lands in your account
Gross pay is the promise. Net pay is the deposit. Learn every line that sits between them.
When someone offers you $15 an hour, that is your gross pay — the amount you earned before anything is taken out. The amount that reaches your bank account is your net pay, and it is always smaller.
Nothing about this is a trick. Each deduction has a name and a reason, and once you can read a pay stub you can predict your deposit before it arrives.
Three things that actually help
Idea 1
Read your pay stub once, carefully
Find four things: gross pay, Social Security and Medicare (often labelled FICA), federal income tax withheld, and net pay. Every stub has them, and they rarely move much from one period to the next.
Idea 2
Know what your W-4 does
The W-4 you fill out at hiring tells your employer how much federal income tax to withhold. It does not change what you owe — it changes how much is taken out along the way. Too little withheld means a bill later.
Idea 3
Budget from net, never gross
Plan around the number that hits your account. Building a plan on gross pay is the single most common way a first budget falls apart in week two.
A two-week paycheck, line by line (hypothetical)
- You work 18 hours a week at $15/hour for two weeks: 18 × 15 × 2 = $540 gross.
- Social Security and Medicare are withheld at a combined 7.65% of wages: 540 × 0.0765 = $41.31.
- Suppose federal income tax withholding for this period is $22.00.
- Net pay: 540 − 41.31 − 22.00 = $476.69.
About 12% of that paycheck never reached the account. State and local taxes, where they apply, would make the gap wider. Amounts here are illustrative.
Think about it
If your next paycheck is 12% smaller than you expected, which of your planned spends gets cut first?
Educational simulation only. Figures are hypothetical and illustrative, market data is mock data, and nothing here is financial advice.