Like a lot of people out there, today (Friday) was pay day, who-ooo (Simpson’s reference – anyone? anyone?). But as I looked at my bank balance, I started to think…Why is my take home so low!? Like 85% of my generation, I utilize my employer’s direct deposit option, so I rarely even look at my stub. But today was different; considering the money wasn’t in my bank account, I decided today we were actually going to review my paycheck to determine where it all went!
I am somewhat satisfied with my gross salary, however one has to ponder whether any salaried employee is ever fully satisfied. Regardless of my satisfaction with my gross income, my net income (i.e. take home) seems WAY too low.
Paycheck Deductions
A little simple math proved that over 42% of my paycheck fails to make it to my bank account every other Friday. So I opened up Excel and started figuring things out. I have no idea if my situation is the “norm” but it bothers the hell out of me. For every $100 I make:
- $5.16 goes to FICA
- $1.21 goes to Medicare
- $11.98 to Federal Withholding
- $4.10 New York State Withholding
- $.04 to NYSDI
Simply put, over 22% goes to taxes. While this sounds like a lot, it seems awfully low in terms of taxes paid. The other 20% that “disappears” is made up of items that I have chosen to participate in:
- $16.11 taken out for medical
- $.72 taken out for dental
- $3.64 taken out for my 401(k) – matched fully by employer
Leading to grand total of $42.96 which is gone for every $100 I earn.
When viewed as absolute numbers it upsets me, but when broken down it seems actually reasonable.
- 22% in taxes doesn’t seem horrible. I am not sure how this is going to work out towards the end of the year. It seems like a low amount but I also have a full year of mortgage payments to deduct.
- Medical is 16%. This one upsets me, but I chose to have the best plan my employer offers, in case the new Wife gets pregnant. It should also be noted that she is fully covered under me, which obviously increases this amount.
- Less than 1% for dental! That is a-ok with me, especially since I would have spent the full amount 3 weeks ago when I had a root canal if I didn’t have this insurance.
- 3.64% seems a little low for my 401(k) but that is set up so I get the full match by my employer.
I would recommend everyone do this exercise. For me, it gave perspective as to where my money goes/went prior to hitting the bank account.
