Money Management Life Skills Activity - How to Read a Basic Pay ... - Free Printable

The image is an educational resource titled "How to Read a Basic Pay Stub", designed as a life skills tool for understanding pay stubs, which are essential for independent living. Let's break down the components of the pay stub and explain how to interpret them.

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🔹 Key Sections of the Pay Stub

#### 1. Company & Employee Information
This section identifies who is paying and who is being paid.

- Company Name: Funville Game Designs
- Company Address: 456 Main Street, Suite #987, Funville FL, 33331
- Employee Name: Adam A. Anderson
- Employee Address: 321 South Street, Apt #54, Funville FL, 33331
- Employee Number: 111333555
- Job Title: Game Designer
- Hourly Rate: $21.50
- Bank Account Number: XXXXXX4321 (partial for privacy)
- Pay Period: March 1 – March 14, 2022
- Payment Date: March 19, 2022
- Tax Withholding Status: S01 (likely means Single, no dependents)

> ✔ This information helps verify that the paycheck belongs to the correct person and provides contact details.

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#### 2. Employee Earnings
This shows how much the employee earned during the pay period.

| Earnings Type | Hours | Pay Rate | Current Amount | Year-to-Date Amount |
|-------------------|-------|----------|----------------|----------------------|
| Regular Pay | 80.00 | $21.50 | $1,720.00 | $8,600.00 |
| Overtime | 10.00 | $32.25 | $322.50 | $1,612.50 |
| Shift Pay | 40.00 | $1.70 | $68.00 | $340.00 |
| Bonus | — | — | — | $750.00 |

Explanation:
- Regular Pay: 80 hours × $21.50 = $1,720.00
- Overtime: 10 hours × $32.25 = $322.50 *(Note: Overtime rate is 1.5x regular rate → $21.50 × 1.5 = $32.25)*
- Shift Pay: 40 hours × $1.70 = $68.00 *(Extra pay for working certain shifts)*
- Bonus: One-time payment, not hourly

✔ Total Earnings for this Pay Period:
$1,720.00 + $322.50 + $68.00 + $750.00 = $2,860.50

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#### 3. Employee Deductions
These are amounts withheld from the paycheck for taxes and benefits.

| Deduction Type | Current Amount | Year-to-Date Amount |
|--------------------|----------------|---------------------|
| Health Insurance | $85.00 | $425.00 |
| Retirement | $45.00 | $225.00 |
| Federal Tax | $212.53 | $1,062.65 |
| FICA (Social Security) | $128.03 | $640.15 |
| Medicare Tax | $29.94 | $149.70 |
| State Tax | $0.00 | $0.00 |

Explanation:
- Health Insurance: Employer-sponsored coverage; employee pays part.
- Retirement: Likely a 401(k) contribution.
- Federal Tax: Income tax based on federal tax brackets.
- FICA: Social Security (6.2%) and Medicare (1.45%). These are mandatory.
- FICA = $128.03 → ~6.2% of gross income
- Medicare = $29.94 → ~1.45%
- State Tax: None in this case (possibly Florida, which has no state income tax).

✔ Total Deductions for this Pay Period:
$85.00 + $45.00 + $212.53 + $128.03 + $29.94 = $500.50

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#### 4. Net Pay Calculation
- Gross Pay (before deductions): $2,860.50
- Total Deductions: $500.50
- Net Pay (take-home pay):
$2,860.50 − $500.50 = $2,360.00

> 💡 This is the amount deposited into Adam’s bank account.

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📌 Summary of Key Takeaways:

1. Understand your earnings: Know what you’re being paid for (regular, overtime, bonuses).
2. Know your deductions: Taxes and benefits reduce your take-home pay.
3. Track year-to-date totals: Useful for budgeting and tax preparation.
4. Verify accuracy: Ensure your hours, rates, and deductions match expectations.

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✔ Why This Matters (Independent Living Skills)

Learning to read a pay stub helps individuals:
- Manage personal finances
- Budget monthly expenses
- Understand tax obligations
- Prepare for tax season
- Spot errors before they become problems

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Final Answer:

Adam A. Anderson earned $2,860.50 in gross pay for the pay period (March 1–14, 2022), with $500.50 deducted for insurance, retirement, and taxes. His net pay was $2,360.00, which was deposited on March 19, 2022.

This pay stub teaches foundational financial literacy—essential for independent living.