Welcome to the real world. Today, you are going to learn the hard truth about the money you earn versus the money you actually get to keep. Work through the 4 phases below.
Phase 1: Research Your Dream Job
Don't guess! Take 2 minutes to search online for the average starting salary for your dream career in the state you want to live in. Enter it below.
Your "Theoretical" Monthly Pay is: $0.00
Hold your horses: This is your Gross Pay. You will never, ever see a check for this amount. Before you get paid, the government gets paid. Move to Phase 2 to see how.
Phase 2: The W-4 & FICA Trap
On your first day of work, you will fill out a form called a W-4. This tells your employer how much money to withhold for taxes.
The Thermostat: If you withhold too little, you will owe a massive penalty to the IRS in April. If you withhold too much, you are giving the government an interest-free loan with your money.
FICA (7.65%): This stands for the Federal Insurance Contributions Act. It pays for Social Security and Medicare. You cannot legally opt out of this, no matter how young you are.
Phase 3: The Reality Check Simulator
Let's simulate a job. Enter your hourly wage and how many hours you work a week to see what a Bi-Weekly (2-week) paycheck looks like after the tax man visits.
Bi-Weekly Paystub (2 Weeks of Work)
Gross Pay:$0.00
- FICA (Social Security & Medicare - 7.65%): $0.00
- Estimated Federal Tax (~12%): $0.00
- Estimated State Tax (~4%): $0.00
Actual Net Pay (Take-Home): $0.00
Notice the drop? That green number is your Net Pay. This is the only money you can actually spend. Let's see if it's enough to survive. Move to Phase 4.
Phase 4: The Survival Test (Budget Bridge)
Your bi-weekly Take-Home pay has been loaded below. We multiplied it by 2 to give you your Monthly Take-Home Cash. Now, pay your basic bills.