Chien always works 20 hours/week at $15/hour and gets paid every 2 weeks.

- What should he expect the gross pay on his next paycheck to be?

- Which one -- gross pay or net pay -- is synonymous with "take home pay"?

- Chien is always dismayed, however, to learn that his net pay is noticeably less. What items on his pay stub could be accounting for the difference?

- When creating his budget, which pay should Chien use and why?

The gross pay that shows up on your paycheck is the sum of wages, commissions, and any other earnings your employer may share with you (tips, insurance offsets, bonuses). From this gross pay, government regulations may require the deduction of taxes of various kinds. Your employer may deduct the cost of insurance, and you may voluntarily have amounts deducted for additional taxes, insurance, union dues, or retirement plan contributions. The pay that you take home is the net pay after these deductions.

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Chien gets paid at the rate of $15 per hour for 20 hours per week and 2 weeks per pay-period. We are not told of any other earnings or contributions to his gross pay. So, it will be ...

($15/h)(20 h/wk)(2 wk/period) = $600/period

Chien's gross pay will be $600 each pay period.

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As discussed above, "net pay" and "take-home pay" are synonymous.

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As discussed above, there may be a variety of deductions from his gross pay that will reduce his net pay. Often the largest of these is income tax together with Social Security tax. There may be additional deductions for insurance, union dues, health plan contributions, and retirement plan contributions.

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Chien's budget should be based on money he actually has available to spend. That would generally be his net pay.

If Chien is considering changing jobs or his family situation, changes to payroll deductions may figure into his budget. Ordinarily, those costs would be considered "fixed" and not subject to a budgeting process.