WHAT HAPPENED TO MY PAYCHECK?
GROSS PAY (earnings): Taxable income before any adjustments TOTAL COMPENSATION: DIRECT + INDIRECT COMPENSATION DIRECT COMPENSATION: payments in $ (wages, bonuses, commission) INDIRECT COMPENSATON: FRINGE BENEFITS: benefits paid by the employer (insurance, time off etc.)= additional 40% above direct compensaton
NET PAY=GROSS PAY-MANDATORY AND VOLUNTARY DEDUCTIONS MANDATORY DEDUCTIONS: must be deducted (laws) Income Tax: 28% Federal % State 3.5% City
FICA: Social Security, Medicare Unemployment Insurance NYS Disability NYS Workmen’s Compensation VOLUNTARY DEDUCTIONS Insurance premiums Pension, 401K, IRA contributions Savings plans, savings bonds Transit check
NET PAY “Pay yourself first” Financial goals: Short term <1 year Intermediate 1-3 years Long term >3 years Needs vs. Wants Emergency fund: 3-6 months salary
BUDGETING DISCRETIONARY INCOME (surplus)=NET PAY – necessities Fixed vs. variable expenses