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Wednesday, June 10, 2015 |

How to Read Your Paystub

You can call it a pay stub, a paycheck, pay slip, or, for those of us in the government sector, a LES (Leave and Earning Statement). Whatever you call it, you need to make sure you are taking the time after each of your pay periods, whether that is weekly, biweekly, or monthly, to look it over and make sure it’s accurate. Most of us can remember the excitement of getting that first paycheck back in our teenage years. I clearly remember opening my first paycheck, glazing over the pay stub breakdown and then quickly tearing off the actual check and tossing the stub in the back seat. I had done some quick, mental math before I got the check and had a rough idea of what my gross pay was supposed to be and I just chalked up the difference between that and my actual paycheck amount to “taxes and stuff”. I have to admit this became a habit throughout my string of summer jobs in high school. It wasn’t until I was out living on my own that I actually sat down and tried to understand all of the abbreviations and numbers spread across my pay slip.

Well a few years down the road, and six years into a career in governmental finance, I really wish I had made it a habit from that first paycheck till now to take a few minutes and review each of my pay stubs. It’s a message we (as finance Airmen) are taught and expected to relay to our customers. In our career field, we encounter so many issues that could have been avoided or at least minimized if our customers had taken the time at least once a month to review their LES.

Regardless of what sector you work in, government or commercial, your pay stub contains so much vital information.

Of course the first section, and what most of us at least glance at, is the calculation of our gross pay. And you definitely should take the time to ensure your hours and wage or salary are accurate. Personally I would recommend actually doing the math on your own calculator, just to double check. Although just about all pay is calculated through an automated system of some sort, sometimes it only takes a zero or a decimal in the wrong part of an equation to throw off your entire paycheck.

Once you have verified your gross pay, you should review your deductions. These include your taxes (federal, state, social security and Medicare), allotments, retirement/savings, and any other automatic deductions you have set up. Ensure your number of dependents and any additional tax withholding is accurate. Catching an error in your tax withholding at the beginning of the year, or even a couple of months into the year, could potentially save you a huge tax burden at the end of the year.

After verifying all of this, you should also look at your time off numbers. Your pay stub should accurately show not only what you’ve used this pay period, but also how much you have accrued. Finally, it is important to also make sure your year-to-date calculations (for taxes, other deductions, and your time-off days/hours) are accurate. Again these are all normally calculated by an automated system, but it could save you some headaches in the future to double check these numbers.

Taking ten to fifteen minutes each month or every other week, can help save you from some significant pay problems in both your short term and long term financial future. Making this a habit helps you avoid overpayments, underpayments, tax issues, and it’s one of the key components in creating an accurate personal budget.

-Carlos

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