Short answerTaxes come out of your check before you see it. Federal withholding, Social Security at 6.2 percent, and Medicare at 1.45 percent all shrink the check. What is left is yours. Split it between spending now and saving for later.
Where your check goes
Your hourly rate times your hours is your gross pay. Your net pay is what lands in your account. The gap between them is taxes and deductions.
Federal income tax is withheld from each check based on your W-4 and your earnings. Teens with low earnings may owe little or nothing at filing time.
Social Security takes 6.2 percent of your wages. Medicare takes 1.45 percent. These payroll taxes apply to almost every worker, including teens.
Run the math on one check
$12 an hour for 20 hours is $240 in gross pay. Social Security takes $14.88. Medicare takes $3.48. That leaves about $221.64 before income tax withholding.
The W-4 in one paragraph
Your employer gives you a W-4 on day one. It tells payroll how much federal tax to withhold from your checks. Fill it out, turn it in, and keep a copy.
What to do with the money
Give every check three jobs: spending, saving, and a little fun money. Move the savings part first, before you spend anything.
An emergency fund is cash set aside for surprises like a car repair. Even a few hundred dollars beats scrambling when something breaks.
- Spend some. Your first paychecks should be fun too.
- Save some. Automatic transfers beat good intentions.
- Track it. One month of tracking shows where money really goes.
The Roth IRA, while you are young
A Roth IRA is a retirement account you fund with after-tax dollars. You need earned income to contribute, and a first job counts.
For 2026, the combined IRA limit is $7,500 for savers under 50. A parent or guardian opens a custodial Roth IRA for a minor.
Qualified withdrawals in retirement are tax-free. Starting early gives compound growth more years to work.