It’s payday, and you’re ready to go out and celebrate with your coworkers, friends, and family. For bloggers and internet marketers, the concept of a ‘paycheck’ might be something totally new — or something they actually issue to themselves on a monthly basis. However, even for those in the workplace, fewer people are getting actual paychecks and paystubs, as automation is now key.
If you’re asking, “What is a pay stub?,” then congratulations on getting paid via direct deposit. As of 2016, 82 percent of American workers received their paychecks that way.
With direct deposit, you only have to check your bank account to make sure the money was credited. You should still receive a payroll stub from your employer, though, and you need to pay attention to it.
Read on to find out more about why paycheck stubs are important — even for bloggers.
What is Gross vs. Net Pay?
The biggest and most obvious thing displayed on a pay stub is the amount of money you made. But looking at your pay stub also allows you to figure out how you made that money.
There are two types of pay displayed on that stub: gross pay and net pay. The gross wages are the overall amount of income you earned over that pay period, regardless of if it’s biweekly or monthly.
Do you get paid hourly? If so, you would take the number of hours you worked and multiply that by your hourly rate. Both of those things should also appear on your paycheck stubs.
In the world of blogging and affiliate marketing, you might be getting paid a $100 commission on every new hosting referral made, but after taxes, you could be looking at another 30% cut in actual profit made.
As an example, let’s say a worker named Bob makes $20 an hour and worked precisely 80 hours the last two weeks. That means the “gross pay” amount on his check should be $1,600.
What if Bob has an annual salary of $50,000 instead of an hourly wage? Then he would need to divide $50,000 by the total number of paydays in the year. If he’s paid every two weeks, then that adds up to 26 annual pay periods.
Net pay is how much money you’re actually going to see in your bank account after various deductions get applied. Those deductions can include things like taxes, health insurance, and your 401(k).
Employer Contributions
When looking at your payroll stub, you’ll also see a space for something called “Employer Contributions.” What does that mean?
If you work a full-time job with benefits, then your employer pays for a significant portion of your health insurance. You might pay $50 every two weeks, but your employee might pay the other $100. This will be on your stub as “health insurance” or maybe “medical.”
If you’re lucky enough to work at a company that provides 401(k) matching for your retirement, then that will be under “Employer Contributions” as well.
Generating pay stubs used to be more complicated, but nowadays, companies can use an online pay stub generator. It may take a while to create a pay stub for everyone in the building, but the actual process isn’t nearly as arduous as it could be.
Most Bloggers Will Probably Ask ‘What is a Pay Stub?’
Answering the question “What is a pay stub?” is critical, but it isn’t all you’ll need to do to stay on top of your finances. More often then not, pay stubs are still being used, but since we are living in an electronic age, it’s usually all happening behind the scenes.
Avoid the temptation to throw away your pay stub as soon as you look at it. Keeping your pay check records will help you look for any patterns or problems at work. It’s also the best way to provide proof of income.
Don’t forget to put some of that paycheck in a savings account, too. For more on that topic, be sure to check out our top finance and stock market blogs to follow online.