2.13.1.

G1

Double the Salary

An employee starting a new job has the option to choose how he
is paid for the first twenty days of work. He works five days a
week, for four full weeks. Make the best choice for the new
employee after comparing the two options.

Payment Option 1: Payment Option 2:

For the first twenty days of The pay will be $0.01 for the first
work, the new employee will day. Each day the pay will double.
be paid $500 a day. So, it will be $0.02 the second day,
$0.04 the third day, $0.08 the fourth
day, etc. By the end of twenty days,
how much money will the employee
have made?
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 1
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Double the Salary

Payment Option 1: Payment Option 2:
$500.00 a day * 20 days = Day 1 $ 0.01 Day 11 10.24
$10,000 Day 2 .02 Day 12 20.48
Day 3 .04 Day 13 40.96
Day 4 .08 Day 14 81.92
Day 5 .16 Day 15 163.84
Day 6 .32 Day 16 327.68
Day 7 .64 Day 17 655.36
Day 8 1.28 Day 18 1310.72
Day 9 2.56 Day 19 2621.44
Day 10 5.12 Day 20 5242.88
Total: $10,485.7
5
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 2
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Solution

Payment Option 1:
$500.00 a day * 20 days = $10,000.00

Payment Option 2:
This is a better choice for the new
employee as he will be making $10,485.75

This is $485.75 more than if he would have

chosen Payment Option 1

© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 3
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Family Economics & Financial

Education

Planet
Paycheck

An Earthlings Guide to Understanding

Paychecks
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 4
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Planet Paycheck
Navigation
Welcome to Planet Paycheck!

While visiting Planet Paycheck the

vast
world of paychecks will be explored!

© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 5
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

First Job!
• Miss Patty Paycheck has just received her first
paycheck from her new job!
– But, the paycheck amount seems a little lower than she
had figured. How could that be?
• Taxes – Required charges of citizens by local, state,
and federal governments
– Taxes are deducted from all employees paychecks
– Used to provide public goods and services
• Roads, police, schools, governmental agencies, fire and
emergency services
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 6
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Starting a New Job

To receive a paycheck, an employee must:
Complete a Form W-4
• Employee’s Withholding Allowance
Certificate
• Determines the amount of money withheld
for taxes

© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 7
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Starting a New Job

Complete a Form I-9
• Used to prove the identity of people
and avoid hiring non United States
citizens
• Must provide at least 2 of the
following
– passport
– driver’s license
– U.S. military card
– Social Security card
– birth certificate
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 8
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Starting A New Job

Form W-2 (Wage and Tax Statement)
• States the amount of money earned and
taxes paid throughout the previous year
• Used to file income taxes by April 15th
• Individuals may be exempt from filing
federal withholdings if they make less
than a certain amount per year

© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 9
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Methods for Paying

Employees
1. Paycheck
• Paper check with stub
• Least secure payment method because the
employee is responsible for handling the
paycheck
2. Direct Deposit
• Employers directly deposit employee’s paycheck
into the authorized employee’s bank account
3. Payroll Card
• A payroll card electronically carries the balance
of the employee’s net pay
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 10
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Payment Method
Pros and Cons
•Paycheck • Payroll card
– Pros: – Pros:
•Employee controls when • Wages automatically
the check is deposited loaded onto a card
– Cons: – Cons
•Least secure, employee • May charge fees for
responsible for getting it use of the card
to the bank
•Direct Deposit
– Pros:
•No direct handling of
check
•Employee knows exactly
when he/she will be paid
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 11
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Reading A Paycheck Stub

Items on a paycheck stub include:
• Personal Information -The employee’s full
name, address, and social security number or
employee identification number
• Pay Period -The length of time for which an
employee’s wages are calculated
– Most businesses pay employees either weekly, bi-
weekly, or monthly

© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 12
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Reading A Paycheck Stub

Gross Pay – The total amount of

money earned before payroll
withholdings
• If a person earns an hourly wage,
gross pay is calculated by multiplying
the number of hours worked by the
wage

© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 13
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

What is the Gross Pay?

If Miss Patty Paycheck worked at Terrific Tacos for

$6.00/hour for 15 hours a week what will her gross
pay be?
# hours worked x wage = gross
pay 15 hours x $6.00/hr = $90.00/week

What is Miss Patty Paycheck’s gross pay for a two

week pay period?
30 hours x $6.00/hr = $180.00 for 2 weeks

© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 14
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Reading A Paycheck Stub

• Payroll Withholdings – The amount of money
subtracted from the gross pay for taxes. Typically about
30% of your paycheck!
– Withholding Tax – The amount required by law for
employers to withhold from earned wages to pay
taxes
– FICA-Federal Insurance Contribution Act
• Fed OASDI/EE (Federal Old Age Survivors Disability
Insurance Employee Employment Tax) or Social Security -
helps provide retirement income for the elderly and pays
disability benefits
• Fed MED/EE (Federal Medicare Employee Employment
Tax) or Medicare - health care program for the elderly and
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 15
disabled
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Reading A Paycheck Stub

• Net Pay – The amount left after all payroll
deductions have been taken from the gross
pay
– Net pay is also referred to as “take home” pay

© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 16
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Miss Patty Paycheck’s

Paycheck Stub
• Miss Patty Paycheck’s paycheck includes:
– Gross Pay $180.00
– Payroll Withholdings:
• Federal Withholding Tax $14.10
• State Withholding Tax $5.45
• FICA $13.77

• What is her Net Pay?

• Gross Pay – Payroll Withholdings = Net Pay
$180.00 – ($14.10 + $5.45 + $13.77) = $146.68
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 17
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Reading A Paycheck Stub

• Year-to-Date- Totals all of the deductions
which have been withheld from an
individual’s paycheck from January 1 to the
last day of the pay period indicated on the
paycheck stub

© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 18
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Sample Paycheck Stub

Terrific Tacos
Employee SSN/Employee Check # Check Amount (net
Paycheck, Patty Identification Number 164 pay)
201-92-4856 $146.68
Employee Address  
293 Michael Grove
Billings, MT 59102
  Pay Type- Deductions Current Year-to-date
Gross Pay
 $180.00 Federal Withholding $14.10 $296.10
State Withholding $5.45 $130.80
FICA $13.77 $330.48

  Totals $33.32 $757.38

Pay Period 6/11/2007-6/25/2007

© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 19
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Remember to Review
• It is important to review each paycheck stub
to identify any possible mistakes!
– If a mistake is found, contact the employer for
clarification

© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 20
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
 2.13.1.G1

Thanks for Visiting

Thank you for visiting planet paycheck.

Good luck with all of your future paycheck
journeys!
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 21
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona