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Earning your own money

Lesson 41 · Written for kid, teen, and little

Paycheck vs Paid Yourself

See why $200 from a job and $200 from your own work are not the same.

The idea

When you work for someone else as an employee, your employer usually takes taxes out of your pay before you ever see it, and what lands in your account is called take-home pay. When you work for yourself, customers normally hand you the full amount with nothing taken out, so setting money aside for tax becomes your own job. That is why $1,000 earned as an employee and $1,000 earned self-employed are not really the same thing. Rules vary a lot by country and situation, so the habit that always helps is to find out what comes out before you spend any of it. 🧾

A

Words to know

5

Employee

Someone who works for a company and gets a regular paycheck, with tax already taken out. The company handles the paperwork for you.

Self-employed

Someone who works for themselves and bills their own customers. Nobody takes the tax out for them, so they have to set it aside.

Gross pay

The full amount you earned, before anything is taken out. 20 hours at $15 is $300 gross.

Take-home pay

The money actually left for you after taxes and other deductions. That $300 might arrive as about $255.

Withholding

Money your employer holds back from your pay and sends to the tax office for you. It is why gross and take-home are different numbers.

Try it — no accountMatch the pairs

Match each term to what it means.

0 / 4 matched

In the full lesson

  1. 1Match the pairs
  2. 2Work out the number
  3. 3Make the call

Vine has 107 lessons like this one, each written three ways so a 7-year-old and a 17-year-old both get a version that fits.

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