How to Adult: Wait, What Happened to My Pay Check?

Here's an interesting video featuring college seniors and what they know about 'real life,' particularly where their money is going to go, now that they're about to launch their careers....Even a Business major didn't know most of them.


https://www.bing.com/videos/search?q=how+to+adult+&&view=detail&mid=7D8AF44E83099AF75C327D8AF44E83099AF75C32&&FORM=VRDGAR


Did you know what any of those were??
W-4 - This is the form you sign when you accept a job offer (any job, anywhere). It will indicate your tax filing status (single, married, with or without dependents) and that determines how much tax your employer will take out of your check. You may be surprised at how much you actually see on your paycheck. Your employer will withhold Federal and State taxes, Social Security (FICA,, Federal Insurance Contributions Act): https://www.paycheckcity.com/pages/article.php?page=what-is-FICA , amounts for medical and/or dental insurance, and possibly costs of life insurance you have opted for, possibly union dues, and your retirement plan, as well as savings you may have opted for. These costs can easily run over $200 or more per check. You can also indicate you wish a certain dollar amount to be deposited in a savings account at a bank or credit union, or a retirement account.

A Flex Account is money withheld from your check and put into an account to pay medical costs not covered by insurance. If you had a co-pay, or if you visited a dentist or bought new glasses, you could use your Flex Account to pay for it (it is your money).


As to savings, if you saved $100 a month for 10 years in a bank account at 2% interest, you would earn $13,394.09 with interest (as long as you never withdrew any money). Here is a calculator: https://www.edwardjones.com/preparing-for-your-future/calculators-checklists/calculators/retirement-savings-calculator.html

Every year, anybody who earns over a certain dollar amount ($10,000 for a single person and $20,000 for a married couple filing jointly) has to file their taxes, essentially telling the IRS (Internal Revenue Service) how much taxes they paid. The form you receive from your employer is the W-2 and it is supposed to be in your hands by January 31 of the new year. All the information about your pay from that employer is on that form. You will also get tax forms from any other source of income for that year. If you file your taxes and you have overpaid, you'll get a refund from the IRS.

401K-A form of retirement savings, with your employer also chipping in money. Here's an example, if you start young and save 10% of your pay and your employer also contributes (that's what a 401K is), see how much you might be able to accumulate: https://www.bankrate.com/calculators/retirement/401-k-retirement-calculator.aspx

                                 This assumes a return and employer contribution you may or may not receive---it's one example
Of course, it's not likely you'll stay with the same employer over that many years, but you will probably continue to earn the same or more salary wherever you work. 401K accounts can be 'rolled over' from one employer to another.


IRA-Individual Retirement Account (there are several kinds of these)
How it impacts you: If you start at a young age stashing away money in a retirement account, when you reach retirement age, you can have a nice pile of money for whatever you need: Bill paying, vacations, whatever... and you earned it yourself.

Credit Score: Three companies, TransUnion, Experian, and Equifax, track your use of credit and give you a score that reflects how well you handle credit. A score of 850 is the highest you can get, and 300 is the lowest, although 300-549 is considered low. The scores are based on how much money you owe, whether it's a new credit application, how long you have made reliable payments-they are predicting if you are a good credit risk. Sometimes, if you aren't a solid credit risk (if you haven't been great at handling credit or haven't had a credit card before), you can get a loan or credit card, but it will have higher interest rates, such as for a car or a house, or may have a limit how much you can charge.

                                                                                 Aaron.... what were you thinking??


Here is a calculator to figure exactly how much money you'll give the credit card company: If you owe $2,000.00 on a credit card that charges 18% interest, and you pay $35 a month, it will take you almost 11 years to pay it off (IF you never charge anything else). In the end you will pay them $754.43 in interest. https://www.calculator.net/credit-card-calculator.html?balance=2000&rate=18&minimum=35&payoffoption=0&fixedpaymentamount=35&ctype=1&x=52&y=22 

You can check your credit scores free, once a year. Be aware that your credit report and your credit score are two separate things. If you apply for a loan, you can ask to see your credit score and/or report from the lender.

HMO-This is a Health Maintenance Organization, which is a type of health insurance. You'll pay a monthly fee, and will also have a deductible and "copays" which means, when you visit the doctor you pay a smaller amount, like $30, and the insurance picks up the rest or a certain percentage of the rest.


PPO-Preferred Provider Organization, Another similar type of health insurance, but it will only cover specific doctors/clinics/hospitals. You will also have a deductible and co-pays with this type of health insurance.  With any kind of health insurance, you need to check and make sure your 'provider,' or doctor, is in their covered network.

Congratulations on your first 'adult' job, and welcome to all things confusing when it comes to your pay.