Are you trying to figure out your finances and are asking “What are pay stubs?” Read this article to learn more about what pay stubs are.
At the end of 2019, the National unemployment rate sat at 3.5%. That means only 5.8 million Americans were without a job when at the same time in 2018, that number was 6.3 million.
A higher employment rate is great for the national economy. But, it’s even greater for your personal finances. If you’ve recently joined the world of employment, you may be anxiously awaiting your first paycheck.
Instead of running straight to the bank, you should first ask, “What are pay stubs?” Keep reading to this article to start understanding pay stubs.
What Are Pay Stubs?
This article will include the basics of pay stub 101.
Pay stubs and paychecks are essentially the same things. A pay stub is a document provided with earnings information while the paycheck is the actual money that you receive.
An employer will provide a pay stub to you at the end of each pay period. This document will show how many hours you worked and how much you earned for that work.
What Information Is Included?
Now that you know what a pay stub is, you need to know how to read a pay stub. When you receive your first one, it may just look like a bunch of numbers. But, each item on your pay stub is pretty self-explanatory once you understand what they represent.
Here are the items most-traditionally featured on a pay stub:
- Your identification information
- Your employer’s identification information
- Gross wages earned during pay period
- Tax and benefit deductions
- Net pay, the amount of money you’ll receive after the deductions
If you are not traditionally employed, you may not receive a pay stub. But, that doesn’t mean you don’t have access to this information. Instead, create your own pay stub by entering the necessary information into a pay stub generator.
What Can You Do With Your Pay Stub?
Now that you know what information reading a pay stub provides, what do you do with this information?
First and foremost, a pay stub is for your personal benefit. It allows you to keep track of your earnings and ensure your withholdings are correctly accounted for.
But, paystubs are also important when it comes to receiving a loan. Lenders look for proof of employment and the amount of your income before issuing a loan. Most commonly, you’ll be asked to provide a few months of pay stubs.
For this reason, it’s a good idea to always keep your pay stub documents handy. If you receive digital pay stubs, start a folder on your computer to store each document in. Or, if you receive physical copies, find a spot in your filing cabinet to store the documents.
Financial Success Is All About Knowledge
After reading this article, you can stop asking, “What are pay stubs?” Instead, you now know what pay stubs are, what information is included, and what to do with this document.
In order to gain control over your financial future, always strive to learn more about your money and where it goes. Never be afraid to ask a question about your tax withholdings or seek help when it comes to retirement savings.
To learn more about the ins and outs of personal finance, visit the How To section of this site.