In all their survey’s, ATS tells us that students with education debt in seminary have two main questions:

  • What will my future income be?
  • What will my future student loan payments be?

I have been meeting with students for the past month for one-on-one financial counseling and in each meeting we make a point of addressing these two questions before they leave. Recently as I was walking through a future student loan payment and discussing how much this student would be comfortable paying, the student asked: “What will my take home pay be?”

I realized many graduate students haven’t had a full time employment position yet, so it may be helpful to break down what a future paystub might look like.

I connected with payroll and I have a really good example: An earnings statement for a $52k income – $1,000 per week. Obviously your income might be higher or lower, but this is a great introduction to help you understand where all your money actually goes. Let’s walk through this. Here is a full Earnings Statement:

revised original

and another similar statement for comparison with a key attached:

Earnings Statement

In the example we’re using, the employee is making $52,000 a year, or $4,333.34 a month ($52k divided by 12). Each month they receive an actual cash deposit of $3,303.81:

Total Monthly Income for $52k

Total Take Home Income

The difference between their total pay and take home pay is $1,029.53. Where does that money go? Well, its divided on the earnings statement into two different categories: Taxes and Payroll Deductions:

Total deductions from paycheck

Key Abbreviations:


FICA – Federal Insurance Contributions Act

Med – 2.9% of income goes to Medicare – half of which is paid by employer.

SS – Social Security is 12.4% of total income – half of which is paid by employer.

Federal – Federal Income taxes withheld


The employee portion of ½ of the 15.3% of required FICA taxes is $292.86. This employee has no money withheld at all for Federal or State Income taxes. That doesn’t mean they won’t owe any taxes, just that they don’t anticipate having a federal tax liability so they aren’t withholding any taxes throughout the year. If this seems unusual, you may want to consider doing it yourself by changing your W9. Somewhere around 47% of Americans don’t pay any federal income taxes at all, so any ‘refund’ you receive after filing your taxes is really just the return of an interest free loan you gave to the government throughout the year.


1EF – Health Insurance Payment

GS – Retirement (401k or 403b)

HSA – Health Savings Account


This employee is saving 5.0% of their income toward retirement. Their employer is matching that 5% dollar for dollar so this is a wise investment (100% return!). Their monthly health insurance is $420 ($5,040 year) and they are setting aside another $100 a month ($1,200 year) in a Health Savings Account. If you are a single person, your health insurance premium will be quite a bit lower (About $100 a month). If you are married and your spouse is on your insurance, it will be a little less expensive (about $280 a month) – this example is for a family coverage. This health insurance premium is for a High Deductible plan, meaning that the employee will cover 100% of their medical expenses for the first $5,000 or so. Obviously health insurance premiums vary between providers and they are also going up at a pretty significant rate – these figures are from last year (2014).


This category isn’t pay at all, but rather these are benefits paid by the employer to the employees benefit. Here is what they mean:Benefits Paid by Employer

1EF – Employer portion of Heath Insurance paid

GS – Employer retirement match paid into retirement account

LIEE00 – Life Insurance premium paid by employer

LIE50 – Additional life insurance premium

LTD – Employer paid toward Long Term Disability

STD – Employer paid toward Short Term Disability


  1. Even with no federal OR state income tax withheld you’re only bringing home around 75% of your total income.
  2. Employers pay around 25-30% above and beyond your salary to have you on staff.
  3. Self Employed people are required to pay the additional taxes that your employer pays.
  4. Clergy are allowed to opt out of Social Security if they have moral objections to the system. If you opt out, you are not allowed to opt back in ever so research this option if you’re leaning in that direction.

Hopefully this has been a helpful primer in understanding and reading your current or future paycheck. Please hit me up with questions and I’ll add to this post. Thanks!

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