Paychecks Decoded: Understanding Your Pay Stub

Let’s be honest: most people glance at their pay stub just long enough to make sure the deposit hit their bank account. But there’s so much more it can tell you—and understanding your pay stub is one of the simplest ways to take control of your finances.

This week in our financial wellness through payroll literacy series, we’re unpacking the real MVP of paycheck confusion and clarity: the pay stub.

Why Your Pay Stub Matters

Your pay stub isn’t just a receipt for getting paid. It’s a detailed breakdown of how your gross wages become net pay—and a key tool for spotting errors, budgeting smartly, and understanding your financial picture.

Think of it as the story of your paycheck: where it came from, where it went, and how what’s left fits into your bigger financial life.

What You’ll Typically See on a Pay Stub

While formats vary, most pay stubs include the following:

1. Earnings

• Regular wages (hourly or salaried)

• Overtime or shift differentials

• Bonuses, commissions, or incentive pay

  
  

2. Taxes Withheld

• Federal income tax

• Social Security & Medicare (FICA)

• State and local taxes (if applicable)

  
  

3. Pre-Tax Deductions

• Health insurance premiums

• 401(k) or 403(b) contributions

• Flexible Spending or Health Savings Accounts

  
  

4. Post-Tax Deductions

• Union dues

• Garnishments

• Roth retirement contributions

  
  

5. Employer Contributions (Informational Only)

• Employer-paid benefits like healthcare or retirement matches

  
  

6. Year-to-Date (YTD) Totals

• Cumulative figures for earnings, deductions, and taxes

What Payroll Pros Can Do to Help

For payroll professionals, pay stubs are more than just output—they’re educational tools. Here's how you can help employees understand them better:

✔ Use clear language on stub templates; ditch the cryptic codes

✔ Offer walk-throughs during onboarding or with new benefit enrollments

✔ Provide digital access so employees can review their full history

✔ Encourage questions and make yourself approachable

Your pay stub tells a powerful financial story—one worth reading. The more you understand about how your paycheck is calculated, the more confidently you can manage your money and advocate for yourself.

Next week, we’ll explore how adjusting your tax withholding can help you avoid refund surprises (or dreaded tax bills). Until then, go give that pay stub a second look!