Getting Started:
1. Check Stub- the part of the paycheck that lists deductions from salary
2. Deduction- an amount of money taken from an employee’s gross pay for taxes,
insurance, social security, or other benefits
3. Income Tax- the part of earnings that people must legally give to the government
to pay for government services
4. Gross Pay- the total amount of an employee’s earning before deductions are
taken out
5. Net Pay- the amount of a paycheck after deductions are taken out (sometimes
referred to as take-home pay)
Percents and Decimals:
When you work with money you need to understand percents and decimals. During this
module we will learn to convert percents to decimals and decimals to percents. We will
look at the parts of a paycheck and calculate net monthly income from gross monthly
income.
Change each percent to a decimal: To change a percent to a decimal you need to move
the decimal point two places to the left. A percent is based on a fraction of one hundred.
For example 15% is the same as 15/100. So if you actually divided 15 by 100 you would
get .15 as the answer.
1.
Percent
12.5%
2.
Decimal
6.
Percent
10%
4.9%
7.
15%
3.
7.65%
8.
125%
4.
6.0%
9.
20%
5.
25%
10.
5%
Decimal
Rounding Money
Money is expressed in hundredths. This is based on 100 pennies in one dollar. Rounding
to the nearest cent is like rounding to the nearest hundredth. For example: Jason is paid
$7.50 per hour. If he worked 9.25 hours, how much money did he make?
Ex: $7.50 x 9.25 = $69.3750 = $69.38
The rounding off rule to the nearest cent (hundredth)
is to look at the third number after the decimal point.
If it is 0-4 the second number stays the same; if it is 59, the second number goes up one.
1. $3.399
____________________
2. $2.433
____________________
3. $1.9091
____________________
4. $7.92334
____________________
5. $10.56788
____________________
6. $9.43560001 ____________________
7. $12.489
____________________
8. $421.5432
____________________
9. $98,467.21000 ____________________
10. $89.011119
____________________
Paycheck Stubs
A paycheck usually comes in two parts. One part is the check itself and the other part is
the check stub. The check stub is the part of a paycheck that shows what you were paid
and all of the deductions such as taxes, Social Security, and insurance that was taken out.
The remainder of the money is known as net pay. The amount of net pay is shown on the
check itself.
Sample: this paycheck stub shows the total amount of money earned (gross pay),
deductions (taxes and Social Security) and the net pay (amount to take home). Examine it
to see how a pay check stub is calculated.
Total
Earnings
$1800.00
Federal
Tax
12.5%
$225.00
Find the missing part:
Total
Federal
Earnings
Tax
12.5%
$60,000.00
$7500.00
State
Tax
5%
$90.00
Social
Security
7.5%
$135.00
Total
Deductions
Net
Pay
$450.00
$1350.00
State
Tax
5%
$3,000.00
Social
Security
7.5%
$4,500.00
Total
Deductions
Net
Pay
???
???
1. What are the Total Deductions: _________________________
2. How much is Net Pay: ________________________________
Total
Earnings
???
Federal
Tax
12.5%
$6,625.00
State
Tax
5%
$2,250.00
Social
Security
7.5%
$3,375.00
Total
Deductions
Net
Pay
$11,250.00
$33,750.00
3. How much are the Total Earnings: ________________________________
Total
Earnings
$50,000.00
Federal
Tax
12.5%
$6,250.00
State
Tax
5%
$2,500.00
Social
Security
7.5%
$3,750.00
Total
Deductions
Net
Pay
???
???
4. What are the Total Deductions: _________________________
5. How much is Net Pay: ________________________________
Total
Earnings
$24,000.00
Federal
Tax
12.5%
$3,000.00
State
Tax
5%
$1,200.00
Social
Security
7.5%
???
Total
Deductions
Net
Pay
$6,000.00
$18,000.00
6. How much is Social Security: ________________________________
Total
Earnings
$12,000.00
Federal
Tax
12.5%
???
State
Tax
5%
$600.00
Social
Security
7.5%
$900.00
Total
Deductions
Net
Pay
$3,000.00
$9,000.00
7. How much is Federal Tax: ________________________________
Total
Earnings
$38,685.00
Federal
Tax
12.5%
$4,835.63
State
Tax
5%
$1,934.25
Social
Security
7.5%
$2,901.38
Total
Deductions
Net
Pay
???
???
8. What are Total Deductions: ________________________________
9. How much is Net Pay: ____________________________________
The Cost of Working
Calculate the deductions and net pay a person would have if their yearly salary is
$24,000.00
1. What is their gross monthly salary? ________________________________
2. Taxes and Deductions
a. How much will be taken out if federal taxes are 12.5% of your gross
monthly salary? [Hint: First convert 12.5% to a decimal; then multiply by
gross monthly salary.]
Answer: ________________________________
b. How much will be taken out if State Taxes are 4.9%?
Answer: ________________________________
c. How much will be taken out if Social Security is 7.65%?
Answer: ________________________________
d. How much will be taken out if Retirement is 6%?
Answer: ________________________________
3. Monthly Take Home Pay
a. Add up all of the deductions (taxes, social security, retirement)
Answer: ________________________________
b. Subtract these deductions from your gross monthly salary to get net salary.
Answer: ________________________________
Fill in the following statement:
The gross monthly salary is $____________________. The amount of total deductions is
$____________________, leaving a net salary of $____________________.
The Cost of Living
Using the net monthly salary you have previously calculated, create a monthly budget. A
budget is a plan for how you will manage your money. You have fixed expenses like
housing, car payments, etc. These are payments that are the same each month and do not
change in amounts. You also have flexible (variable) expenses like clothing and
entertainment. The amount you spend each month can be changed up or down as you
need.
Directions: Calculate your expenses for each category (remember to use the net monthly
salary from above) and then add all the expenses together to get your total.
Food
20%
x net monthly income = _________________________
Housing
25%
x net monthly income = _________________________
Clothing
10%
x net monthly income = _________________________
Transportation 15%
x net monthly income = _________________________
Savings
5%
x net monthly income = _________________________
Misc
20%
x net monthly income = _________________________
TOTAL: _________________________
Working with Paychecks
George’s gross monthly income is $3,000.00. Figure out his net pay for the month.
1. Federal income tax is 12.5% of his gross monthly income.
Answer: _________________________
2. State income tax is4.9% of his gross monthly income
Answer: _________________________
3. Social Security 7.65% of his gross monthly income.
Answer: _________________________
4. Retirement Plan is 6.0% of his gross monthly income
Answer: _________________________
5. Add all of his deductions
Answer: _________________________
Subtract the total of all of his deductions from his gross monthly income to get his net
monthly income:
Answer: _________________________
Calculating Living Expenses
Use George’s net monthly income and multiple each percent by the net monthly income.
George’s net monthly income: ____________________
Food
25%
___________________________
Housing
25%
___________________________
Clothing
10%
___________________________
Transportation 15%
___________________________
Savings
5%
___________________________
Other
20%
___________________________
TOTAL EXPENSES: __________________________
Does George make enough money each month to cover this budget? Explain.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________