Adulting 101: Understanding Your First Professional Paycheck
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Access to affordable credit helps me pay my employees, but I don't really need it. Inflation is killing me. But who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill. See? Banks and credit unions help small businesses make payroll. This bill would cut the vital resources they need. While increasing megastore profits. They deserve it, don't they? Tell Congress, stop the Durbin Marshall money grab for corporate megastores. Paid for by the Electronic Payments Coalition.
This is a special bonus episode of Your Money Briefing for Wednesday, June 26th. I'm J.R. Whelan for The Wall Street Journal.
And I'm Arianna Espuru. We're back with the second installment of our series, Adulting 101, Navigating the Real World.
Arianna, you're the producer of Your Money Briefing, but you're also a great co-pilot for this series because you went through adulting and this minefield of entering the real world not that long ago.
Very true. I graduated college a few years ago, and I would say that I feel very much still in the thick of it. It's such a long process with so many ups and downs. In our first episode, we talked about ways you can use AI tools in your job search. Now, let's say you've done that first big part of adulting. You got the job, and you're really excited.
So you're in the door, you got your work laptop, your coffee mug, and then you get your first check.
And you think something's wrong. I mean, I'm going to be completely honest here again. When I got my first paycheck, I saw money taken out for taxes. And I was like, why is there so much money coming out? In fact, I'm embarrassed to this day, but I even asked my parents to take a look.
Who is this Uncle Sam taking my money?
I don't know him. Why is he getting it? And I was younger then. It's funny.
What should I expect when I open my first professional paycheck?
But some things are the same. I open it and there's money taken out for taxes and there's money taken out for benefits.
And with that comes a wave of questions about how to make the right choices. So your money is going to the right places and you've still got enough left over to live on. In this episode, we're going through that paycheck line by line.
And we're talking about how taking advantage of the benefits at your job can help save you more of that money now.
Access to affordable credit helps me pay my employees, but I don't really need it. Infliction is killing me. But who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill. See? Banks and credit unions help small businesses make payroll. This bill would cut the vital resources they need. While increasing megastore profits. They deserve it, don't they? Tell Congress, stop the Durbin Marshall money grab for corporate megastores. Paid for by the Electronic Payments Coalition.
J.R., you did a fun exercise with our tax reporter, Laura Saunders, to help kick off this conversation about paychecks.
This was so great. We each opened up a sealed envelope with a fake paycheck to break down what gets taken out. All right, Laura, we have our fake checks. Let's take a look inside and see.
All right, here we go.
I'm so excited.
Well, the first thing people say is, I can't believe how much they take out.
Okay, so what are the first things that you see on the page when you get a paycheck like this?
Well, you see your name, your address. You see hours, earnings, things like that. And then you see all the subtractions from your earnings. You see things for taxes, things for benefits, all kinds of stuff.
The first big thing that we see, like you said, was state and federal taxes. Let's start with the federal. How much is taken out for your paycheck? How is that determined?
Depends on how much money you make. Someone who earns a lot will have more taken out than someone who earns less.
So you're in a tax bracket. We hear a lot about that when you're in the workforce. What does that mean?
We have a progressive income tax system, and it has brackets of like 10%, 12%, 22, 24, all the way up to 37. Now, if you're in the 37% tax bracket, it means you make hundreds of thousands of dollars, but you don't pay 37% on all of that money.
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