What is paystub tracking? Understand what paystubs are and how they’re a key component when organizing your personal finances.
Money isn’t everything, but when it comes to making important lifestyle decisions it’s a good idea to know where you stand financially. There’s a major difference between your annual salary and your take-home pay.
Learn to manage your paystubs to create a realistic monthly budget. What is paystub tracking?
Take a look at this overview of how paystub tracking is the key to a solid financial future.
One of the biggest mistakes people make in financial management is spending according to their gross income instead of their net income. You might be offered a six-figure job coming out of college, but the amount of taxes taken out of each paycheck could leave your paychecks at half the amount you expect each month. You can ensure accuracy by using one of the many W4 calculators available online, most of which are free.
The amount you actually take home each week should be the amount you shape your lifestyle around. Take a good hard look at your paystub for the past few months to see where your income falls.
If you have direct deposit, it might be helpful to get a pay stub maker that allows you to create your own records.
What is Paystub Tracking?
When you apply for financing or new housing, most creditors want to see your paystub history. This shows them that you’re responsible enough to keep steady employment and that you have enough income coming in to sustain the payments.
Consider the person who thinks of himself as a high earner because he has a six figure income. When a landlord views his paystubs and the net income is tax heavy, he might not get approved for a house.
Look at your paystubs each year to see how tax heavy your paychecks are. You might need to redo your W-4 to bring in more money up front and opt to pay taxes at the end of the year.
This gives you more lifestyle options by allowing you to pay more money for everyday items. The downside is that the burden of tax payments rests on you unless you have deductions.
Claiming dependents is one of the top ways tax payers save money. If you’re single and unmarried, it can be difficult to find ways to lower your tax liability so that your take-home pay is higher each paycheck.
Before you make any changes with your employer, track your paystubs to see whether the amount you’re bringing in is reasonable for your lifestyle goals. If you can make it work, it’s better to adjust your spending than adjust your tax status so you don’t have a heavy tax burden at the end of the year.
Paystub Records for Financial Success
People have endless copies of bills but rarely think twice about tracking their income. What is paycheck tracking?
It’s a strategy that shows you how much you’re bringing in each paycheck so that you always know where you stand financially.
Know your buying power before making big decisions like how much to spend in rent each month. It’ll make your long term financial success much smoother if you’ve got a good paycheck tracking system in place.
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