What no-one tells you about your first payslip
You’ll have certain expectations about earning your first salary; in fact, you probably already know how you’re going to spend it, but many new employees are surprised when the amount that hits their bank account differs from their salary. That’s thanks to all the deductions and new financial responsibilities and considerations you’re dealing with.
To make the most of your first payslip, you need to make sense of it first. Here’s what you can expect from it.
What you earn isn’t what you take home
Your salary is how much money your employer pays you, and it’s referred to as your gross pay. From this amount, things such as tax and employer-specific contributions, e.g. UIF, medical aid or provident fund, are automatically deducted, leaving you with your net pay, which is what’s paid into your bank account.
It’s important to understand the difference because your net pay is what you take home and what you should be basing your budget and expenses on.
The lowdown on the line items
There’s a lot of important information on your payslip, and it can seem confusing, but it’s vital that you know what your payslip contains, what the wording means and how everything is calculated.
You need to understand each line item and why it’s there so you can check that you’ve received the correct payment into the correct account, that you are paying the right amount of tax, as well as what you are and aren’t paying towards.
It shows more than your salary
Your payslip is an important document that shows your proof of employment and financial stability. You’ll need it when you apply for a credit card or a loan and want to rent a place or apply for certain travel documents (e.g. visas) because it provides evidence that you can afford to pay for things and that you have a source of income that is reliable and recurring.
What you do with it is up to you
The way you use your first payslip can be the start of smart money moves that set you up for financial success. Keeping track of your earnings, taxes and deductions will help you create a plan for your money so that you can find the right balance between enjoying yourself, covering your expenses and laying a strong foundation for your financial future.
Now that you’re earning money, here are some tips on the dos and don’ts of managing your money.