Paycheck Basics Personal Finance

Income Unearned Income “An individual's income derived from sources other than employment, such as:”incomesourcesemployment o interest interest o dividends from investments dividendsinvestments o income from rental property.property Earned Income Income from employment

Definitions Bonuses Business Profits Capital Gains Commissions Dividends Employee Profit Sharing Fees Fringe Benefits

Definitions Hourly Wage Interest Pensions Piece Rate Rent Royalties Salary Tips Transfer Payments

Bonus A sum of money or an equivalent given to an employee in addition to the employee's usual compensation

Business Profits Profit is your income minus expenses. A business owner makes money from the profit or what’s left of income after all expenses are paid. Must be an owner to receive business profits

Capital Gains The difference between the purchase price of an item and it’s selling price. If you sell for more than the purchase price, it’s a “gain”. Examples:

Commissions Pay bases upon the amount of sales you generate. Sales x Commission Rate (%) Examples

Dividends Portion of a company’s profits that stockholders are paid on a quarterly (every 3 month) basis. Must own the stock to receive Not all stocks pay dividends

Employee Profit Sharing When a company shares it’s profits with the company employees Advantage?

Fees a fixed charge for a privilege or for professional services

Fringe Benefits An employment benefit given in addition to one's wages or salary Examples?

Hourly Wage Pay based upon the number of hours you work and your hourly rate of pay.

Interest When you deposit money into a savings account, the bank will pay you a percentage of your deposit for the use of your money.

Pensions Payments made periodically of (generally) a definite amount for a specified period (usually life) from an employer-funded plan to workers who have met the stated requirements. Its primary purpose is to provide retirement income

Piece Rate Pay calculated by the number of items you complete Examples?

Rent Income generated from owning property that you allow others to use at a cost.

Royalties payment to the holder of a patent or copyright or resource for the right to use their property

Salary A fixed amount of money stated per year paid in equal amounts at equal time intervals such as biweekly and semimonthly

Tips Also called a gratuity; is a payment made to certain service sector workers beyond the advertised price

Transfer Payment Money paid by the employed population to the unemployed population: Social Security Unemployment Welfare