A pay stub is a valuable source of information when building financial models and evaluating cash flow. It provides insight into income, tax, retirement savings, various insurance costs, etc.
A periodic paycheck review can be a productive exercise, demonstrating how their earnings translate into net pay. As you guide a client through their pay stub, you can help them to understand the automated tax withholdings, savings, and payments that they make each pay period, and appreciate any employer benefits that augment their compensation package.
This flowchart helps us lead our clients through a series of considerations when reviewing their paycheck. It covers:
Voluntary payroll deductions
Pre-tax vs. after-tax expenses