Payment Stubs: What Exactly Are They and Why Are They Important?


You get one near the end of every week, and yet, most Americans don’t really understand how to read their payment stubs. Pay stubs are a piece of paperwork that often comes with or in lieu of a paycheck. It contains all the information having to do with an employee’s pay over a certain period of time.

While some might think these are unimportant to know about, their value can actually be quite immense. Need more information about pay stubs?

Read on and we’ll walk you through everything that you need to know.

What Are Payment Stubs?

Again, a pay stub is simply a portion of a paycheck that gives information on an employee’s pay. It breaks down an employee’s pay into multiple different categories.

It is easier for a person to understand where the money they work for has gone when they receive a pay stub. As you’re likely aware, some of the money we work for goes to taxes or is deducted for benefit programs that we are part of.

Seeing how much money has gone to each source can be helpful in understanding one’s own finances. Most of these pay stubs also contain information about a person’s pay for the year so far, so you’ll be able to see how much total income you’ve made.

Generally speaking, pay stubs to come physically printed alongside a pay stub. However, it is not unusual in the modern era for some businesses to provide them to their employees through a digital format.

If you need to create pay stubs for your own business, there are plenty of pay stub templates to choose from online. You simply need to customize and print.

Information on a Pay Stub

If you have a pay stub in front of you, what information will you be able to ascertain? One of the most helpful features of a paystub will be one’s ability to see how much of their income has gone to pay taxes at the federal, state, and local levels.

A pay stub should clearly state how much money was put towards each of these separate taxes. It should also state clearly how much money was put towards programs like social security.

Learning to read one’s paystub has many benefits. It allows a person to have a better understanding of what their labor adds up to. Understanding how a pay stub works will also allow workers to better scan the information for potential mistakes.

It gives a worker more agency over their work and pay. These stubs can also be helpful financial records to hold on to for use in the future. Often, they are used as proof of income.

Understanding an Employer Payment Stub

If you’re getting paid at your place of work, it is likely you’re also receiving payment stubs each week. Understanding the importance of these stubs can be beneficial to workers across many different industries.

Need more personal finance advice? Keep scrolling our blog for more.


Please enter your comment!
Please enter your name here