G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 1 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona An Earthlings Guide to Understanding Paychecks Family Economics & Financial Education Planet Paycheck

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Methods for Paying Employees 1.Paycheck Paper check with stub Least secure payment method because the employee is responsible for handling the paycheck 2. Direct Deposit Employers directly deposit employee’s paycheck into the authorized employee’s bank account 3.Payroll Card A payroll card electronically carries the balance of the employee’s net income

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Payment Method Pros and Cons Paycheck –Pros: Employee controls when the check is deposited –Cons: Least secure, employee responsible for getting it to the bank Direct Deposit –Pros: No direct handling of check Employee knows exactly when he/she will be paid Payroll card –Pros: Wages automatically loaded onto a card –Cons May charge fees for use of the card

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Reading A Paycheck Stub Items on a paycheck stub include: Personal Information -The employee’s full name, address, and social security number or employee identification number Pay Period -The length of time for which an employee’s wages are calculated –Most businesses pay employees either weekly, bi-weekly, bi- monthly or monthly

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Reading A Paycheck Stub Gross Income– The total amount of money earned before payroll withholdings If a person earns an hourly wage, gross income is calculated by multiplying the number of hours worked by the wage

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Reading A Paycheck Stub Payroll Withholdings – The amount of money subtracted from the gross income for taxes. Typically about 30% of your paycheck! –Withholding Tax – The amount required by law for employers to withhold from earned wages to pay taxes –FICA-Federal Insurance Contribution Act Fed OASDI/EE (Federal Old Age Survivors Disability Insurance Employee Employment Tax) or Social Security - helps provide retirement income for the elderly and pays disability benefits Fed MED/EE (Federal Medicare Employee Employment Tax) or Medicare - health care program for the elderly and disabled

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Reading A Paycheck Stub Net Income– The amount left after all payroll deductions have been taken from the gross income –Net income is also referred to as “take home” pay

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Reading A Paycheck Stub Year-to-Date- Totals all of the deductions which have been withheld from an individual’s paycheck from January 1 to the last day of the pay period indicated on the paycheck stub

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Sample Paycheck Stub Terrific Tacos Employee Smith, Sam SSN/Employee Identification Number Check # 164 Check Amount (net income) $ Employee Address 293 Michael Grove Billings, MT Pay Type- Gross Income DeductionsCurrentYear-to-date $180.00Federal Withholding State Withholding FICA $14.10 $5.45 $13.77 $ $ $ Totals$33.32$ Pay Period 6/11/2007-6/25/2007

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Remember to Review It is important to review each paycheck stub to identify any possible mistakes! –If a mistake is found, contact the employer for clarification

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Let’s Review Calculating Pay If I am paid Bi-monthly, how often am I paid? –Twice a month. How many paychecks is that in a year? –24 If I make $50,000 salary, what is my Bi-monthly pay amount? –$

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Review Calculating Pay This past pay period you worked 48 hours this past week and 43 hours the week before, how often do you get paid? –Bi-weekly What will be your gross pay if you are paid $8 an hour? –80 x $8 = $640 OT= 11 x ($8 x1.5) =$132 –$640 + $132 = $772

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Review Calculating Pay If my annual salary is $48,000, what is my gross pay by pay period: Monthly –$4000= $48,000 / 12 Bi-monthly –$2000= $48,000/24 Bi-Weekly –$ =$48,000/26 Weekly –$ =$48,000/52

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Thanks for Visiting Thank you for visiting planet paycheck. Good luck with all of your future paycheck journeys!