Information–First Pay Check
Youth Finance – First Day on the Job
Unless you're a child actor, chances are your first job won't pay much. Starting at the bottom of the pay scale is normal and part of being in the working world.
If you have big plans, like buying a car, you'll have to make smart money management decisions. Fortunately, it isn't always about how much money you make, but how well you manage your spending.
Determine Your "Take–Home Pay"
The first thing to do is determine your "take–home pay." Many people are shocked when they see their first paycheck because it's a lot less than anticipated. Why? Your employer is required to deduct and withhold taxes, and then remit them to the proper government agencies.
For example, if you work 10 hours a week and are paid the federal minimum wage of $6.55 an hour, you would earn $65.50 per week. This is called your Gross Pay. However, you don't get the entire $65.50. Below is a list of typical deductions that you can expect.
- Federal Income Tax: These are "pay–as–you–go" taxes, meaning you only pay taxes as you earn money. Your employer will calculate the taxes withheld based on how you completed your Form W–4.
FICA: This is the Federal Insurance Contributions Act (the proper name of Social Security). This is divided in 2 parts – 1. OASDI (Old Age, Survivor and Disability Insurance and 2. Medicare (retirement health insurance)
Depending on where you live, you may also have these additional deductions: State Income Taxes, City Taxes and State Disability Insurance (SDI).
Subtract these deductions from your paycheck and the total is your Net Pay (also called, take–home pay).
Depending on the state you live in, as much as 10% of your pay goes to federal, state, and local income taxes, along with nearly 8% for FICA. In other words, your gross pay might be $242, but your take–home pay might be closer to $200.
Now that you have a better idea of your actual "take home pay," the next step is to determine what to do with your income. That's where AMFCU comes in! Give us a call or visit us today, and we'll help you find the account that best fits your goals.