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Earning

A paycheck is a powerful thing. You use it to pay for what you need today, and to save for what you’ll need tomorrow—a down payment for a home, a college education, your retirement. In other words, your paycheck is the foundation for your entire financial life. Yet many people are mystified by it. Getting your financial house in order starts with understanding exactly what’s going on with your paycheck.

Defining a salary

Your take-home pay is not the same as your salary.

Salary is what you earn before money is taken out for things like taxes and benefits. Your pay-check deductions are for things like federal and state taxes, Social Security, Medicare, health insurance, and retirement savings.

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