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Earning money
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Getting paid for the first time in your new job feels great! You can start planning what you might spend it on and your dreams could actually turn into reality. However, some of you might be worried that you're not getting paid what you think you should be. Understanding your wages can be more complicated than you realised!
Your wages
First of all, be prepared for a reality check! Before you start a job you're told what your annual salary (what you'll get paid for a whole year) or your weekly wage (what you'll get paid every week) will be.
If you've been given an annual salary and you're getting paid once a month, you'll probably want to work out how much you'll get each month. That's easy maths! Say your starting salary (or gross salary) is £8,312... just divide it by 12. The answer is £692.66.
But before you get too excited - you won't be getting £692.66 put straight into your bank account from your employer thank you very much. Now you're in the world of work there's the small matter of tax and national insurance. Not to mention pensions and trade union subscriptions. These deductions will be taken out of your wages and you'll be left with your 'net pay'. Your net pay is what you need to use to do your budgeting.
Understanding your payslip
The amount taken off your gross salary for tax and national insurance will depend on the amount you're earning. When you receive your very first payslip you may find it baffling. You may still find it baffling 10 years down the line but to give you an idea of what it might be like, take a look at our example payslip.
The minimum wage
We have a minimum wage in the country which means that from the age of 16, depending on how old you are, you have to be paid a minimum amount. To work out if you're being paid the minimum wage from your annual (or gross) salary, divide your annual salary by 52 and then divide that amount by the number of hours you work in a week. For example, if you're being paid £7,120 a year and work 37 hours a week, divide by 52 - which leaves £136.92 then divide that figure by 37 which equals £3.70. Easy! If you're 16 or 17 then anything over £3.30 an hour is the minimum wage, if you're 18 or over then an hourly rate of £3.70 is not high enough (it's £4.45).
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