First payslip
You agreed $12 an hour and worked about 20 hours. You expected $240. The payslip says $202, and you do not recognize two of the lines on it.
What do you do?
Step 1: What Would You Do?
There is often more than one good answer. Pick one and see what happens.
Step 2: What That Was
The name for what you just worked out.
Gross pay is what you earned. Net pay is what reaches your account. The gap is deductions, and it is normal — but it is worth knowing what is in it.
Net pay is what actually arrives after everything is taken off.
What is usually taken off
Income tax, a national insurance or social security contribution, and sometimes a pension payment. The names and rates differ by country; the shape is the same everywhere.
Check the hours, every time
The most common payslip error is not tax. It is hours. Count them against what you worked, because nobody else will.
Asking is normal
If a payslip does not make sense, asking payroll is an ordinary thing to do and not a complaint. Errors are usually clerical and usually fixed.
Step 3: Try It
These ones do have right answers.
What Is That Line?
Match each payslip line to what it means.
Match the term to its meaning.
Tap a card on the left to start.
Step 4: Quick Check
Two questions, then you are done.
Question 1 of 1
Which number should you use when working out what you can afford each month?
Step 5: Your Life Mission
Something to do away from the screen. Nobody is checking.
Work out your real hourly rate
- Take a gross figure and the deductions from any payslip, real or invented.
- Divide the net pay by the hours worked.
- Compare that with the rate you were quoted.
Why: The take-home rate is the number to use when deciding whether a shift is worth it.
Step 6: What You Learned
- Gross is earned; net is what arrives.
- The gap is deductions, and it is normal.
- Check the hours yourself, every time.
- Budget on net, never gross.
For the grown-up
The gross-to-net gap surprises almost every first-time earner, and the surprise is worse if the first payslip is the first time anybody mentions it. Ten minutes in advance prevents it.
Watch for budgeting against the hourly rate times the hours. It is the natural sum to do and it is wrong by the deductions, which at low incomes is still material.
If you have an old payslip you are comfortable showing, a real one with the figures covered teaches this faster than any example.