You just landed your first job — yay! But when payday rolls around, your check is smaller than expected. What gives? Let’s break down how paychecks actually work.
Gross Income vs. Net Income
- Gross Income: This is the total amount you earn before anything is taken out. It’s what your job says they’re paying you.
- Net Income: This is the money you actually take home after taxes and deductions. Also called “take-home pay.”
Example: You earn $100 for working 10 hours, but after taxes, you take home $85. That $85 is your net income.
Where Does the Rest Go?
- Federal & State Taxes – A portion of your earnings goes to the government.
- FICA Taxes – This includes Social Security and Medicare.
- Other Deductions – If you have health insurance or retirement savings, those may be taken out too.
Your Pay Stub
Your pay stub shows you exactly what’s been taken out and how your pay was calculated. It might look confusing, but learning to read it helps you:
- Make sure you’re being paid correctly
- Understand how much you’re really earning
- Plan your budget based on actual income
TL;DR:
Gross income is what you earn, net income is what you keep. Taxes and deductions take a bite out of your paycheck, so always check your pay stub to know what’s really going in your wallet.
Next up? Let’s talk about taxes!
Her Financial Future 
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