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Got Your First Job? Here’s What You Must Understand About Your First Paycheck

Wed, Aug 13, 2025, 11:59 AM 5 min read

Whether you’re 16 and just starting out in a minimum wage job, or fresh out of college with your degree in hand, you’ve got to watch your money.

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There are so many parts of getting paid that you unfortunately didn’t learn in high school or college. And learning those things early can mean the difference between you becoming a millionaire and you living paycheck to paycheck for decades.

The key is to understand your paycheck and to use your income to grow your wealth. GOBankingRates breaks it all down.

That’s right. However much you were hired for, that’s not actually how much you’ll take home. In fact, you’ll probably take home closer to two-thirds of your actual salary. From every single paycheck, you’ll automatically pay:

Federal income tax
State tax (in all but eight states)
Social Security (6.2% of your salary)
Medicare (1.45% of your salary)

You’ll often hear people differentiate between your gross income and your net. Your gross income is how much money you get paid before taxes. Your net income is after those lovely deductions.

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But wait — it doesn’t stop there. Many employers in the United States also offer benefits packages that offer discounts on services like health insurance, dental insurance and retirement funds, like a 401(k) plan. If you sign up for any of these options, you’ll see those deductions come from your pay, as well.

These deductions will vary based on which options you choose and how much your employer contributes.

It’s important to know how often you get paid. Some employers will pay you twice a month, on the 1st and the 15th, for example. Others will pay you every other week on the same day of the week.

This information is helpful because it can help you decide how much to spend and how much to invest.

Biweekly pay gives you 26 paychecks per year, as opposed to the 24 you would get for semimonthly checks. That means you’d get an “extra check” two months out of the year, which you can plan to invest to grow your wealth.

Now that you’re making the big bucks, you want to use your money wisely. Far too many people start making money and then just spend it. Before the next paycheck comes in, all your money is gone, and you’ve begun the vicious cycle of living paycheck to paycheck.

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