By Steve Watmore, Product Manager Payroll and HR, Sage
In uncertain times like these you need to take control of what you can and plan accordingly for your future. Don’t be left on the back foot where there are opportunities such as understanding a payslip, can change the way you plan for the future.
A payslip puts the power in your hands to organise your finances and budget accordingly. It’s important to ask yourself how carefully you’re looking into your payslip, the level of detail you are taking from it, and whether you are making the most of what it tells you.
They of course vary from company to company, but all act as an official proof of income, and your payslip opens up a whole new world of opportunities. From providing a simple access to benefits, to helping you budget. Now more than ever, it is crucial for you to fully understand your regular payslip.
A budget has never been more important
While budgeting can be dull, it’s rarely been more important. Getting on top of your income and expenses helps you prioritise your money on what’s most important to you. But first you need a good understanding of your earnings.
Your take-home pay may have changed in the last few weeks and months. The UK government’s Coronavirus Job Retention Scheme allows struggling companies to keep staff on the payroll, by giving them a grant to pay 80% of furloughed employee’s wage.
If you’ve been furloughed your pay might have reduced, but it could also have changed your tax bracket and what entitlements you’re due. This can get quite confusing. Luckily, your payslip serves as a short and useful summary of all these changes so you can keep on top of things.
It’s important as well to check your payslip for any errors. As companies adjust to various government schemes, payroll teams are only human and can make mistakes. However, if you’re not checking for them then you could receive less than what you’re entitled to. Always read your payslip carefully and flag any errors to your payroll team.
Your payslip is the quickest and most reliable way to understand what money you have coming in, any deductions made, and what employee benefits you’ve received – such as expenses or health insurance. The final figure is essentially your budget for the next month.
When you have a full overview of your income and how it changes month-to-month, you can make more informed decisions over your finances. A payslip empowers you to plan better for the future.
The power of the payslip
Understanding payslips also helps you apply for certain benefits and financial services. They can serve as proof for a rental provider and grant access to overseas visas and government benefits. If you’re applying for compensation following an accident or hardship, the information you need for your insurance provider can all be found on your payslip.
When planning for the future, payslips also help you get up to speed on pension deductions. They can show you every contribution you’ve made and ensure you receive your full pension pot once you retire.
Keeping and carefully filing away your payslips is also important. Many rent or mortgage applications may ask for several months of payment information before the provider considers your application. Having your payslip to hand will save you time and effort and make applying for these a lot easier.
So, whether it’s a handed to you in an envelope or hosted electronically, don’t ignore your payslip. Learn to love it. Check to make sure you understand all the information and keep it handy the next time you’re budgeting for the month. Now is the time to check your payslip with confidence and to form good habits for the future.
A recent study from the Department for Business, Energy & Industrial Strategy found that only 62% of people understood the full potential of the information that their payslip provides. Don’t be left in the dark and take control of your finances whilst the time is right.