Why does my paycheck look smaller than my salary?

Concerns & risks

You got your first paycheck from a new job and it's way smaller than your salary divided by 26.

Not understanding deductions can mess up budgets.

Causes & evidence

Taxes, Social Security, Medicare, insurance and retirement come out. See tax withholding.

What to do

1. Look at gross vs net pay.
2. Identify taxes.
3. Identify benefits.
4. Use net pay for budgeting.

Common mistakes: Common mistakes: not reading the pay stub. Taxes, Social Security and Medicare, health insurance and retirement contributions all come out. Check the stub and ask HR about anything you don't recognize. If something looks off, like withholding that seems too high or too low, use the IRS Tax Withholding Estimator to check your W-4. Look at benefit deductions too; you might be enrolled in coverage you don't need, or missing an employer retirement match you want. Your pay stub is a map of where your money goes before you even see it.

Speed Man tip: Budget with take-home pay, not salary.

Wrap-up: Deductions reduce take-home. Read your stub. Budget with net pay.