Checking your pay stub is not just a financial task, it’s a habit that can transform your financial journey. You may be used to the rhythm of your paydays, knowing when that deposit hits your account. But how often do you actually scrutinize your paystub? Let’s start building this crucial habit together.
In today’s episode, I underscore the importance of checking your pay stub. If you want to spend drama-free, you have to know your numbers. The first step is understanding every detail about your paycheck, noticing fluctuations or unexpected deposits, and staying informed. Whether there are changes in payroll processors, shifts in benefit deductions, or misunderstanding a bonus structure, building the habit of checking your pay stub puts you in control of your numbers.
Stay tuned for insights on these topics:
- [01:09] Make a habit of checking your pay stub
- [02:10] check at the beginning of the year
- [04:30] check every payday
- [06:46] check for bonuses and overtime
- [08:35] Noticing fluctuations in pay
Tune into this episode of Money Files to why it is important to build the habit of checking your pay stub.
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Transcript for “Paycheck Series: Build the Habit of Checking Your Pay Stub”
Intro: Hi and welcome to Money Files. I’m Keina Newell from Wealth Over Now. I work everyday with professional women and solopreneurs to help them get out of financial overwhelm and shame so they can experience more flexibility and ease with their finances. Are you ready to gain confidence and learn to manage your finances intentionally? Tune in and grab financial tips that will help you master the way you think about and manage your finances.
Keina: Hello and welcome back to another episode of Money Files. So I hope you enjoyed the last series about underearning. I’m going to switch a little bit because a part of you being an earner in general is that you have a pay stub. And as a W2 employee, I want you to intimately know your numbers. I think one of the things that a lot of people overlook is their pay stub. You know your pay dates, like you know when you get paid. I get paid on the 15th and the 30th. I get paid every other Friday. I get paid once a month. I get paid every week and you know that it’s going to drop and hit your account, unless, the reason you know something is different is when you wake up that next day and you’re like, hold on wait, where’s my money?
I actually want you to build the habit of checking in with your pay stub and you’re probably like Keina, but my money hits my account. Yes. However, you’ve heard me talk about fake math and if you haven’t you should go back and listen to that episode. But being knowledgeable and aware of what’s happening with your pay stub is vital. And it’s vital because it literally is the easiest way to put you in control of your numbers. It’s an opportunity for you to ask questions. It’s an opportunity just to make sure that everything is working in the way that it’s supposed to work. And it doesn’t have to be something that is mentally taxing or draining for you, but we want to make sure the things that you think are happening are actually happening because y’all payroll processors like ADP, your HR department, they can mess up.
And so we’re just going to talk through like what should we be looking for on your pay stub? The first thing that I actually want to go through, and I want you to build a habit around is checking your pay stub at the beginning of the year. Keina, why do I need to check my pay stub at the beginning of the year? The beginning of the year, you’ll notice a fluctuation in your pay. Generally speaking, this always happens because there are tax related shifts, one. Two, you’ve already gone through open enrollment with your company, so things have also shifted in terms of your healthcare. They’ve shifted in terms of your deductions for your FSA or if you changed any of your 401k contributions. And so at the beginning of the year, your numbers are going to look different.
So I always want you to be looking at your pay stub throughout the month of January and really into February. Some of you will have like two to three pay periods that I really want you checking in with your pay stub. And that’s because generally speaking, let’s just say you get paid on January 8th, how things are calculated could still be using 2023 calculations just based off of pay period cycles. So it’s not just enough to be like, oh yeah, I checked my first paycheck or my first pay stub at the beginning of the year. I want you checking it throughout the beginning of the year. And so I want you checking the first, at least the first three pay stubs. I experienced this with a client where we knew she was going to be getting a raise and we also knew that there were some other fluctuations that she was experiencing.
And so it wasn’t until probably February that we could really reset her budget based off of the new pay, based off of new deductions, etcetera. And so it was good for us to be checking every single time that she got paid and wondering like, oh, okay, what’s happening? The second thing that I want you to do if you haven’t done it is check your pay stub today. I want you to build the habit of literally looking at and let me actually, I’m going to back up just a little bit here. It’s checking your pay stub. But once you’ve actually looked at the paper version of your pay stub or I shouldn’t even say the paper version, it’s the, like, PDF version of your pay stub. I want everytime that you get paid, I want you to look at the number that hits your bank account.
And that’s important because you want to understand if there’s fluctuations and if there’s a fluctuation, I want your first question to be why? What’s accounting for this fluctuation? And there can be a number of different things that can happen. So there are, your employer can say, hey, you’re going to get a raise. And just because they tell you that you’re going to get a raise doesn’t mean that the raise is going to hit exactly how it should hit. We place trust in the fact that we work for companies that like, yes, they have told us that we’re going to get a raise and then maybe you don’t actually get the raise that you think you’re going to get.
And so don’t just trust in your employer saying that you’re going to get a raise, actually develop that follow through. And so when they tell you you’re going to get a raise, ask follow up questions. When can I expect to see the raise reflected in my paycheck? And so if they tell you, oh, it should happen in May. So all of your May paychecks should be reflective of your raise. You want to go and you actually want to know, okay, what does my April pay stub look like and what does my may pay stub look like? And being able to compare those side by side. What is my gross amount that I received? What’s my net amount that I received? And for those of you who are like, I never can remember what gross versus net is, gross is the number that is bigger.
Gross also has more letters, that’s how I remember it. And net is the number that is smaller, that is after taxes, after your healthcare deductions, et cetera. And net is also the smaller number. So you want to be paying attention to those things just to make sure, like that gross number, if I multiply it by my 24 pay period or my 26 pay period, does it actually equal the amount that they said that I was going to get paid? And so that is one time that I definitely want you to be able to check your pay stub is when you know that you’re going to be getting a raise. Another opportunity for you to check your pay stub is when you know that you’re getting a bonus or you know that you’re getting overtime. It’s like looking at your pay stub and making sure does the number of hours they said that I worked overtime, is it accurately reflected on my pay stub?
The bonus that they said that they were going to give me, is this accurately reflected on my pay stub? Once again, it’s not that we don’t trust our employer, it’s that you want to be in control of your numbers and you want to have ownership. Checking your pay stub is one of the easiest way for you to be able to know and own your numbers and making sure things look right. If they don’t look right, then you can go to HR and you can ask questions and be like, hey, I was supposed to get a $10,000 bonus. I only see that it’s reflected that I got a $7,000 bonus. Can you walk me through this? You’ll also see if you develop this habit that when you get bonuses you are like, dang, y’all took all my money in taxes. But you’ll even be able to notice that, oh, I’m getting a $10,000 bonus. I’ve learned that basically only about 50% of that number hits my account because I’m taxed at a higher percentage.
So that is some of the muscles that you’ll build, like your financial muscles that you’ll build by building the habit of checking your pay stub because you’ll start to realize what’s happening when you receive certain things at work, when you get compensated for overtime, when you get compensated with a bonus. Or even on the flip side of that, like if you have, not an opportunity, but if you have to actually reduce your hours for some reason, maybe you are using FMLA because you need to take care of a family member, you need to take care of your own health or maybe maternity leave even. You’ll be able to know what’s going on and you’ll be able to ask questions. And I want for you to be a very informed employee.
I want you also to be very informed about your own numbers. So that’s why checking your pay stub is one of the most important habits that you want to build in your financial journey. Part of checking your pay stub is that also, we’re wanting to make sure that we’re checking for fluctuations in our pay. And fluctuations can also happen because of the fact that you are a high income earner. So in 2024 when I’m recording this podcast, the limit for social security is that it is 6.2% of your gross salary and the limit is $168,600. Keinaw why are you talking about this? Because I have a client right now who his pay fluctuates throughout the year. He didn’t realize this prior to working with me. Like he knew it, but he didn’t really know it. And so as I was looking through his pay stubs, I noticed like, oh, he hits his social security limit like by the middle of the year because of the bonuses that he gets. So his paycheck come like June, July will fluctuate upward.
This was important to know because if he plans his paycheck based on the higher amount that comes more towards the middle of the year, it is a significant difference from his paycheck that is in January of the year. January or the beginning of the year. And so just knowing those things, like if he had have already had the habit of checking his pay stub, he would’ve been like, oh, I know exactly why this happens, like that’s a conversation he could have had with HR. Also, just the conversation he could have had with himself because he would’ve noticed like the different trends with what was shifting. But for you, if you are someone who makes over, $169,000 a year, this is important to note that after you hit the $10,453 limit for social security, that you’re going to see a shift in your pay.
And that impacts how you decide to budget, it impacts how you decide to spend. And it’s knowing that at certain times of the year, I’m making more money, but I know exactly why I’m making more money. There are people in the world that they’re like, yeah, I’m making more money, but I don’t know why. And I want you to be someone who’s really informed with knowing why there’s a fluctuation in your pay. If I ask you like, hey, why is your pay fluctuating? I want you to be able to tell me why there’s a fluctuation with your pay. Is it because you took time off work? Is it because you worked more hours? Is it because you got a bonus? Is it because of social security? Is it because you have a 401k loan? Is it because you increased your 401k contributions or maybe you decreased your 401k contributions? Like there are so many different reasons why your pay can fluctuate. So I want you to know that.
In another example, one of the clients that I worked with last year, her pay had fluctuated, it got higher. And what happened is at her job, they had changed payroll processors in their HR department. She worked for a smaller nonprofit, which that’s the other thing too, if you work for like a Fortune 500 company versus a startup company, like things can change on the HR end, which can impact what you’re seeing. But what we were noticing is that like her 401k contributions weren’t being withheld and then there was like a blackout period, but there were all of these different things going on. And so because we were looking at her pay stub, she had actually told me like, Keina, this is happening. We knew how to pivot and adjust her budget because we knew that at a certain point in time we should actually expect to see her paycheck decrease once they were done with their blackout period.
Having that information makes you really informed. And in her case, like we made sure that we knew exactly how much was being withheld for 401k prior to the switch with the HR/payroll processor. And so we were able to flag that in her spending plan so that way that money just wasn’t like consumed and we didn’t know exactly where that money went. So when she went back to the blackout or went past the blackout period, it was like, okay, now that money is actually being put into your 401k and we know exactly what’s happening. So it’s just really, really important. I know you are like Keina, but why do I need to check my pay stub? Because there are so many different things that can happen. And what you don’t want is that you’re expecting one thing to be true and then what you realize is that it’s not true.
You think you’re contributing to your FSA, but the only reason you’ll really know if you’re contributing to your FSA is if we also make sure that we check the pay stub after you actually make those elections. Let’s make sure that that money is being withheld. You think you enrolled into a certain healthcare plan, how do we check that? We check and make sure that’s what’s being deducted from your account or not from your account, but from your paycheck and understanding things that there are going to be things that happen. You’re like, oh my goodness, I didn’t realize that was like a per pay period deduction versus a monthly deduction. Or not realizing that your social security limit is met by the time September comes and then your pay fluctuates upward.
So just being in a position to understand your paycheck and monitoring what’s happening with your paycheck is going to equip you to have conversations that are important with your boss, with your HR department, with yourself. And so in the paycheck series, I am going to be giving you little nuggets that I want you to be implementing as you’re thinking about your paycheck. I’m going to be talking about fluctuating pay, what does it look like if I’m a $10.99 contractor or a freelancer? So really helping you think about what do I need to be understanding about my paycheck or even the timeline in which I’m paid so that you can put yourself in a position to feel really confident about how you manage your finances.
Alright, excuse me for my twisty tongue today. But thank you so much for tuning in and if you want to take this work deeper and you’re like, Keina, how does this relate, like how does knowing your pay stub relate? It really goes into not doing fake math. We want to know exactly what you’re paid. We want to know exactly what that looks like. We want to help you leverage your deductions. We want to help you leverage when you get bonuses or when you’re compensated for your time. And so that starts with looking at your pay stub and then we translate that into helping you create a plan that is going to allow you to have surplus and allow you to have more money and to not be thinking about money day in and day out or just feeling like you’re on a hamster wheel. So if you want to take this work deeper, go to my website, Wealthovernow.com/appointment and you can book a call there. But in the meantime, thank you so much for tuning in and I look forward to talking to you next week.
Outro: Thank you so much for listening to Money Files. If you’re ready to take the next step to reach your financial goals, head to www.wealthovernow.com/appointment and let’s get started.
