Most people accept a job offer based on the hourly rate or salary. Then the first paycheque hits… and the deposit is smaller than expected.
That’s normal. In Ontario, your take-home pay is your pay after taxes and payroll deductions. Once you understand the basics, it’s way easier to plan rent, groceries, transit, and savings without guessing.
This guide breaks it down in plain language and gives you a simple system to budget your pay (even if you’re a student or working part-time).
This is general information, not personal financial or legal advice.
1) Gross pay vs net pay (the only two numbers that matter)
Gross pay = what you earned before deductions.
Net pay (take-home) = what lands in your bank account.
A quick example:
- You earn $1,200 gross in a pay period
- After deductions, you receive $950 net
- Your budget should be based on $950, not $1,200
If you want a fast estimate before payday, use this tool:
Estimate your take-home pay in Ontario (taxes + deductions):
2) What usually gets deducted from an Ontario paycheque
Even if you’re new to Canada or new to working, these are common deductions you’ll see:
Income tax
Your employer withholds income tax so you don’t owe a huge amount later. The exact amount depends on your income, pay frequency, and tax forms.
CPP (Canada Pension Plan)
CPP is a retirement program. If you earn over a minimum annual threshold, a portion comes off your pay.
EI (Employment Insurance)
EI helps if you lose your job or need certain benefits. Most employees pay into EI.
Other deductions (depends on the job)
You might also see:
- union dues
- benefits (health/dental)
- pension contributions
- repayment programs (in some workplaces)
If your pay seems “too low,” it’s often because the deductions are higher than you expected—not because the payroll is wrong.
3) Pay frequency changes your “monthly” budget (more than you think)
People budget badly because they mix pay schedules with monthly bills.
Common pay schedules:
- Bi-weekly (every 2 weeks): 26 paycheques/year
- Semi-monthly (twice a month): 24 paycheques/year
- Weekly: 52 paycheques/year
Bi-weekly is the one that tricks people. Two months a year you’ll get 3 paycheques (not 2). That’s a great time to catch up on savings or pay down debt instead of spending it without noticing.
4) A simple “first paycheque” budget that actually works
Here’s a clean starter approach:
Step A: Start with your net pay
Use your real deposit amount (or estimate it with the Ontario paycheque calculator above).
Step B: Split it into three buckets
You can adjust the percentages, but this is a solid start:
- Needs (50–70%)
Rent, groceries, transit, phone, minimum payments - Future you (10–20%)
Savings, emergency fund, tuition, debt payoff - Life (10–30%)
Eating out, small shopping, fun money
If you’re a student or part-time worker, your “needs” might be higher. That’s okay—the point is to give every dollar a job.
Want a template that makes this easy? Use:
Build a monthly student budget (rent, groceries, transit, phone):
Even if you’re not a student, it works great for anyone starting out.
5) Quick paycheque checklist (2 minutes)
Before you budget or panic, check these:
- Does the pay period match the dates you worked?
- Are your hours correct (especially overtime/holiday pay)?
- Is your hourly rate correct?
- Do you see CPP and EI deductions?
- Did you recently change tax forms or start a second job?
- Are there one-time deductions (uniforms, benefits starting, etc.)?
If something looks off, ask payroll for a pay stub breakdown. Most issues are fixable quickly
6) If your job ends: don’t guess what you’re owed
If you leave a job (or get laid off), people often don’t know if the final pay is correct.
You may be owed things like:
- unpaid wages
- vacation pay
- termination pay / severance pay (depends on situation)
Instead of guessing, use a calculator to get a starting estimate:
Estimate your Ontario severance / termination pay (quick ballpark):
7) If you have student loans: check forgiveness and relief options early
If you’re paying student loans, don’t wait until it feels unmanageable. Some relief options are time-sensitive or have eligibility rules.
A good starting point is to understand what “forgiveness” can actually mean (and what it doesn’t):
Student loan forgiveness options in Ontario (what exists + where to start):
A mini case that shows why net pay budgeting matters
Let’s say you take a job at $20/hour, working 30 hours/week.
You might do quick math:
- $20 × 30 = $600/week
- $600 × 4 = $2,400/month
But your actual take-home might be more like:
- net deposit closer to $1,900–$2,200/month depending on deductions
If you sign a lease based on $2,400, you’ll feel broke fast. If you budget based on net pay, you’ll stay in control.