Wage and Salary
Do you earn a wage, or make a salary? You’ve more than likely heard the terms wage and salary used inter-changeably, but they both mean different things. You should know the difference as you head into the job market.
Wage is employee payment dependent on the number of hours worked multiplied by the hourly rate of pay. For example, if I work 20 hours with an hourly rate of $12, then I receive a check for $300. If I worked 40 hours the following week, then I’d earn $480.
Salary is employee payment based on an annual payment. It is not dependent on the number of hours worked. For example, if the salary being earned is $120,000 per year and they get paid twice a month, the amount they receive is constant; $5,000 every half month. If someone has a lower salary, they are entitled to overtime pay by their employer.
Wage is employee payment dependent on the number of hours worked multiplied by the hourly rate of pay. For example, if I work 20 hours with an hourly rate of $12, then I receive a check for $300. If I worked 40 hours the following week, then I’d earn $480.
Salary is employee payment based on an annual payment. It is not dependent on the number of hours worked. For example, if the salary being earned is $120,000 per year and they get paid twice a month, the amount they receive is constant; $5,000 every half month. If someone has a lower salary, they are entitled to overtime pay by their employer.
Navigating your Paycheck
There are few things as exciting as receiving that first paycheck. You eagerly open that envelope to see what you’ve earned and you’re faced with a lot of deductions and pieces you didn’t know were there! Here’s a handy little guide to what you’ll find on that paycheck.
1. Gross Pay (Grs): total amount of money earned during a pay period. This period is generally set on a bi-weekly or monthly basis. This is before any deductions are made.
2. Net Pay (Net): The amount of money you really earn after all deductions have been made to the Gross Pay. It is always less than the Gross Pay.
3. Federal Tax Amount (FWT/FT): There’s a little form known as the W-4 form which you signed upon employment. This covers any taxes you may owe to the Federal government. The deduction from your paycheck is dependent on how many exemptions you claimed on the form.
4. State Tax (SWT/ST): Dependent on each state, a tax which is deducted. It works the same as the Federal Tax but on a state level.
5. Local Tax: This is a rare occurrence on a paycheck, it is sometimes applied in certain cities, counties, or school districts.
6. Social Security (Fica): The amount of your money deducted for social security purposes. The social security check is sent monthly to citizens who have entered into retirement.
7. Medicare (Med): The amount of money deducted for retired citizens which goes towards medical expenses. Like Social Security it is a required deduction.
8. Year-to-date (ytd): This field of the paycheck shows how much you have paid towards the categories above or any other expenses during the calendar year. This bit of information is very useful for those of you who are planning a budget as well as saving for long term goals or expenses.
2. Net Pay (Net): The amount of money you really earn after all deductions have been made to the Gross Pay. It is always less than the Gross Pay.
3. Federal Tax Amount (FWT/FT): There’s a little form known as the W-4 form which you signed upon employment. This covers any taxes you may owe to the Federal government. The deduction from your paycheck is dependent on how many exemptions you claimed on the form.
4. State Tax (SWT/ST): Dependent on each state, a tax which is deducted. It works the same as the Federal Tax but on a state level.
5. Local Tax: This is a rare occurrence on a paycheck, it is sometimes applied in certain cities, counties, or school districts.
6. Social Security (Fica): The amount of your money deducted for social security purposes. The social security check is sent monthly to citizens who have entered into retirement.
7. Medicare (Med): The amount of money deducted for retired citizens which goes towards medical expenses. Like Social Security it is a required deduction.
8. Year-to-date (ytd): This field of the paycheck shows how much you have paid towards the categories above or any other expenses during the calendar year. This bit of information is very useful for those of you who are planning a budget as well as saving for long term goals or expenses.
Not everyone’s paycheck will look exactly the same. In fact, in some cases there will be additional deductions made to your paycheck. They may or may not appear on your paycheck as they are not required to be there. However, it’s good to know what additional items you might find.
1. Insurance Deduction: Monthly payments made for types of insurance such as life insurance.
2. Retirement Plan: Should you have a retirement plan such as a 401(K) this deduction will show here.
3. Leave Time: If you have taken leave whether for vacation or due to sickness, some employers may notify you how many you’ve used and how many you have left.
4. Childcare Assistance: If your employer offers this the amount may appear on the paycheck.
5. Important Updates: Some employers use the paycheck as a means to share important information such as wage increases or information about tax filings.
2. Retirement Plan: Should you have a retirement plan such as a 401(K) this deduction will show here.
3. Leave Time: If you have taken leave whether for vacation or due to sickness, some employers may notify you how many you’ve used and how many you have left.
4. Childcare Assistance: If your employer offers this the amount may appear on the paycheck.
5. Important Updates: Some employers use the paycheck as a means to share important information such as wage increases or information about tax filings.