How to Understand Your Pay Stub

Do you remember the last time you received an actual physical check on payday? It was a thrill to receive that envelope at the end of the week, revealing the tangible reward for dedicating much of my time and talents. The pay stub featured dozens of valuable insights, but most of us simply glanced at the check amount and thought “yeah, that sounds about right.” As electronic pay stubs and direct deposit have replaced this old school approach of getting paid by physical check, many employees neglect to access and review their pay stubs at all – sometimes for months, even years! Shocking, I know.

I review employee pay stubs as part of the financial planning process, and I have discovered that each document tells a story. Upon review, I can tell you about an employee’s daily commute, numbers of hours worked, utilization of paid time off or overtime work, group insurance benefits, automated savings contributions, and total compensation. You may be surprised about how much personal information can be gathered by reviewing a household’s pay stubs and tax returns.

For this article, I examined over 40 real pay stubs across multiple industries to help guide you through an interpretation of your own story. Before we dig deep, open a new browser window to access a recent pay stub so you can follow along!


Budgeting 2.0: How to Align Your Money with Your Values

Budget [buhj-it] noun
1. an estimate, often itemized, of expected income and expense for a given period in the future
2. an average adult’s worst headache

Before you pull the plug on this article, please know that I am not going to tell you to stop buying your daily cup of coffee. Budgeting isn’t about cutting expenses on the things you love; it is about evaluating and realigning your spending and savings with your personal values. Personal finance is personal, so don’t feel the need to compare your financial goals and progress with others. The destination is different for everyone.

The best way to begin your path to financial independence is by assessing your current financial landscape. You must know where you are before determining where to go (and how to get there). This exercise of reviewing how money flows in and out of your accounts can verify if your spending and savings accurately align with your current values. Budgeting on purpose takes a little bit of concentrated work up front, but it makes future cash flow and investment decisions less daunting.

Take a deep breath; we’ll get through this and out the other side with a sense of clarity and ease – then you can go get your coffee.