The two numbers that mean the most on your pay stub are called by accounting gurus your “gross pay” and your “net pay”.  Your gross pay isn’t called that because its repulsive.  Gross pay is how much you earned before anything is taken out of it.  So if you make $100 an hour and you work 40 hours, your gross pay is $4000 (nice pay check!).

Your net pay is what you get to keep.  If you subtract the net pay from the gross pay, that amount is money you earned but don’t get to put in your bank account.  And for the most part, the rest of those little boxes on your pay stub are there to explain to you where all your money went.  It doesn’t make it any less painful to give up that money but it is an explanation.  And the term accountants use for the different ways they take money out of our check is “withholding”.

Probably the biggest percentage of that amount you earned but don’t get are the taxes you pay to the federal government, the state government and to social security and Medicare.  You don’t get an option on whether those things will be taken out of your check.  Its the law that you are going to pay them before you get a dime to spend on yourself.

Keep an Eye on Those Deductions

Make it your goal to understand each and every one of those deductions that come out of your paycheck each pay period.  Don’t take it on faith that “they know what they are doing” when it comes to your hard earned money.  The deductions that are taken pay your federal taxes, your social security obligation and your local or state income tax as well.  There are also deductions for things like life and health insurance and any savings funds or retirement plans you participate in.  You should know where your money is going because you can change how much or how little of your paycheck you get each month.

Once you know what the different boxes on your pay stub represent, make it your goal to watch those funds to make sure they are correct.  Don’t assume the accountants or the computer programs that calculate your deductions always get it right.  It is also helpful to watch the running total boxes because they tell you have much you have paid into each kind of deduction category as the year goes by.

By knowing what each of those deductions is supposed to be each paycheck, you can jump all over it if something changes unexpectedly.  If there is an error on your paycheck, it is a lot easier to fix it when it first pops up than after it has been going on for a few months.  That is what the Human Resources Department of your company is for so make them work for a living and be accountable for what is being taken out of your paycheck.

Your Pay Stub as a Budgeting Tool

It is pretty eye opening as you watch the different values accumulate throughout the year.  But a great way to use your pay stubs to help you be a better money manager is to watch where your money goes and how much you are getting each month.  This is valuable information to you in building and staying on a budget and watching how you spend the money that does make it to your bank account.

Sometime around the end of January, you will get a statement from your employer that is a final annual computation of all of your deducted amounts.  This is your W-2 form which you have to have to do your taxes each year.  The amount of federal deductions on that W-2 should match exactly the accumulated values on your last paycheck for the year.  It’s a smart move to make they do mach  up.

Those pay stubs are important financial documents to you.  You should find a way to file them so you can get to that file and find all of the pay stubs for the year in one place.  For one thing, your social security number is on the pay stub.  So protect that document and tuck it away for future reference.  You will be glad you did.

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The one gift you get when you are laid off is time.  If you have a few months on severance pay or with unemployment money coming in, that is the perfect time to take some classes and build your skills up. You might add some new computer skills like how to use PowerPoint of Excel or even how to build a web page.  These skills may be helpful to your next employer.  There are also all kinds of adult education opportunities floating around where you might learn an entirely new skill.  The small business agency in your community will often help you learn what it would take to start your own business including how to write a business plan and how to get funding for that dream career that you may have had in your heart for decades.  So look at the time you have as a gift and start exploring new avenues to your next level of success.

•           Do some new kinds of networking.

If you are thinking about changing careers, don’t be afraid to call up someone who is in that line of work and buy him or her cup of coffee to “pick his brains”.  People love to talk about their work and if you might enter that career field, you might get more than just a free education in what it means to have that job.  You might get a mentor in how to land a job in that new career you want to try out.  This is the kind of networking that can point you toward success.

•           Don’t overlook headhunters.

People who make their living finding jobs for people need talent like yours to fill the jobs they have.  By making a few phone calls, you can touch base with the headhunters in your community who may specialize in your skill set.  Even if they don’t have a job that day for you, they will probably have you come in and fill out some paperwork so when a job does come in, they have your information on file to get you into that job.  They make their money off of the employer so you lose nothing buy letting these professionals know you are available.

•           Work for free.

Many career areas also have slots for volunteers.  If you work in a medical field, there are always openings for people to do volunteer work helping out in clinics and hospitals.  You can usher at a theater if you are in the arts or help out at a dog park if you love animals and want a career working with pets.  This is a great way to network with people who know where the jobs in that field are.  It is also a way for you to learn what it would be like to do that job for a living.  And it gets you out of the house doing something productive and not feeling sorry for yourself which is a dead end for anyone who is unemployed.

Another risk free way to “try out” a new job is to sign on with a temp agency to work in the kind of business you are interested in part time.  You can work for minimum wage and get a little income while you “try out:” a new job you have always wondered about it.  Temps often learn the inside scoop of what really goes on behind the scenes in a career field.  Plus you make connections with decision makers who will be the ones who know about a job when it becomes available. If they know you well from your temp work, you will be the one they call when full time work becomes available.

•           Hire yourself.

Sometimes when a company has to cut back, they will “outsource” your job to a consultant.  They do that to trim the rolls of employees.  Consultants don’t cost the company any benefits funds and they are represented as an expense instead of as part of staff.  Who better to become the consultant they outsource your job to than you? Offer to come back as a contractor and work by the hour.  You can charge a lot more per hour as a consultant so you can afford to pay for your own benefits.

Even if you don’t become a consultant to your old boss, your skills have value in the work world.  By putting together your own small business of one person, you can use the internet and you’re networking contacts to line up “clients” to work for instead of employers.  The client/consultant relationship is often healthier than employer/employee.  It might be that once you work for yourself, you may never go back to working for someone else again.

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•           Do the easy stuff first and get it done fast.

The afternoon after you get laid off, update your resume and get copies made so you can be ready to pump them into the job market the next day.  Don’t lick your wounds or think about getting your old job back.  Imagine that next job just outside your door and get out there to find it quickly.  Start scanning the job ads in the newspaper and don’t speeds read them.  Make phone calls to anyone who might know of a job.  Call customers or vendors you had good relationships with at your old job and let them know you are available.  If they don’t have a job for you, they may know someone who does. But never give up and never get discouraged.  That job is out there and you just have to get through the false leads to find it.

•           The virtual world is your friend.

Any job counselor will tell you that the job markets have changed because of the internet.  In fact, you can’t count on the best jobs being listed in your local newspaper any more. You should learn to navigate the world of cyberspace job listings because many of the good jobs will be online and never show up in the old fashioned job advertising venues.

If you are not familiar with Craigslist or some of the big online employment agencies, now is the time to get familiar with them.  Also, most medium to large size cities will have a number of localized job boards where jobs are listed every day.  You can register on these sites, build an online profile and even have jobs that fit your skills sent to you every day by email.  In this way, the internet can do your job searching for you and make life a lot easier.

•           Use job aids that are already out there for you.

In times like these where lots of people are out of jobs, employers, colleges and even churches or fraternal organizations mobilize to help people get employed.  Don’t turn your nose up at any resource that can help you find a new job or further your job search.  If your former employer has some career counseling or placement help to offer, take it.  Your local unemployment agency may have a job web site and job fairs they offer to get people back into jobs.  Use everything that you can find to help with your search.  You might even check with the college you attended or trade schools in the area that teach the skill you have. Even if you didn’t graduate from those schools, they may have career placement resources that are open to everyone to use.  So take all the help you can get to get into your next job quickly.

•           Think about a new career.

Sometimes losing a job can be a godsend.  If you felt stuck in a career you didn’t like, maybe losing that job is the break you need to get out there and go for that dream job you always wanted.  If you got some severance, this may be your golden opportunity to get some training in the job of your dreams.  Then when you have a job you love, you might go back and thank your former employer for forcing you to change careers.

•           Think about getting some professional help.

There are people who are experts in how to find that next big job.  You might find them working at an online job agency, helping people who register with an employment company or even offering their services for hire.  Think about spending a little time with a skilled professional who knows the ropes of working the job markets.  That little investment may be well worth the time and money in the great new job you finally get.

Click here to see Part 2: Attacking the Job Market Part 2

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