Seeking a job that also offers a benefits package can be very helpful and should be considered in your personal finance strategy.

Employment benefits are offerings made by the employer to support the employee such as health and dental insurance, legal assistance, discounted purchasing programs or memberships, and retirement funds. Benefits are very important as they offset to cost of living in many respects. If you have ever paid out of pocket for a visit to your primary care physician, you know the value of a smaller copay fee.

Health insurance benefits are often offered in tiers. These tiers vary among employers based on the company size and industry. It is important to consider the premium (the amount you contribute from each paycheck toward your insurance) you will pay as it is deducted from your gross income and thus reduces your net income. Always have this conversation upfront with your potential employer before accepting any job role.

Deductions

While we consider benefit premiums to be a part of your deductions, there are also local, state, and federal taxes, social security, long-term disability, workman’s compensation insurance, and other deductions that may be required by law in your state. These deductions are based on a percentage of your gross earnings. On average, you may expect between 20-35% of your gross income to be subtracted for deductions.

The SocietalGlitch Personal Finance Workbook has a sheet dedicated to understanding your gross and net income, including deductions.

The easiest way to understand your current rate of deductions is to do this calculation on your most recent full paycheck.

Gross Wage – Net Wage = Deduction Rate, (Deduction Rate/Gross Wage)*100 = deduction %

As you progress in your vocation, you can use this formula to understand how much of your salary is going to your deductions.