Receiving your wages for the first time can be a really exciting experience and your first instinct may be to go and spend all of your hard earned cash. However, the majority of first time workers are unaware of any money management skills and have never seen a pay slip before. We have created a guide that will help you to check your wages correctly, understand your pay slip and most importantly how to sensibly manage your money.
Calculating your pay
Firstly, it is important to understand how your pay has been calculated. There are currently four types of pay that you could be receiving. These include:
- Salary - Based on how many hours you are working a week, your employer will calculate an annual salary.
- Hourly Rate - Your employer will offer a set pay per hour. The more hours you work, the more money you earn.
- Piece Work - Your pay may be dependent of how many items or units you produce.
- Commission - In some roles, you will be paid a percentage of a profit that you make. This is often in a sales role and is added on to your basic salary or hourly rate.
You should be aware of how much money you will be getting paid before you start your employment. A reminder of the National Minimum Wage and National Living Wage are below. These wages apply to anybody in paid employment who is older than the compulsory school leaving age.
- National Minimum Wage - The minimum wage that any worker (not including apprentices) should receive per hour. You can use the Minimum Wage calculator to find out the minimum pay you should be receiving.
- National Living Wage - If you are 25 and over and not completing your first apprenticeship, you are entitled to a wage that is suitable for living. An updated list of the National Living Wage, click here.
- National Apprenticeship Wage - Apprentices are entitled to receive a wage whilst in training. To view an updated list of the National Apprenticeship Wage, click here.
Receiving your wages
The most common way for an employer to pay you is through a bank account. However, some employers may pay you by cash. Receiving your wages through a bank account is the safest way to ensure your money is secure. Another advantage of this is that your employer will be able to enrol you for PAYE (Pay As You Earn) which automatically withdraws your Income Tax and National Insurance.
Before you receive your wages, you should be sent a pay slip. This is often sent by a protected E-Mail or online and will contain important information regarding your most recent pay.
Your pay slip should include:
- Gross Pay - Your total earnings before any deductions
- Net Pay - The amount leftover after all deductions. This will be what you are taking home.
- Payroll Number - A unique code that identifies each employee at your company
- Tax Code - Indicating the rate you are taxed at
- National Insurance Number - Confirming your eligibility to work in the UK
- Earnings - What you have earned: Wages, Bonuses, Commission
- Deductions - Things that have automatically been dedicated from your wages. This includes: Tax, National Insurance, Expenses, Pension and Student Loans
- Workplace Benefits - Your employer may offer added extras such as healthcare or a company car. These extras will be added here.
To understand your pay slip in more detail, click here.
When you get paid
Your employer should inform you about when you should expect to receive your wages as soon as you have been employed. It is most common that wages are paid monthly, however some employers pay weekly, daily or every 2 weeks. This should also be stated on your contact of employment.
Receiving your first wages can be a very proud moment and you may feel a bit overwhelmed. Remember that it is really important to be sensible with your money. Good money management skills will stay with you throughout your whole life. Keep in mind that you need to be practical and make your wages last to cover all costs before your next payment. It is a good plan to make a budget for yourself and stick to it.
For more information about money management, click here.