Personal Finance Chapter 3

Establishing Financial Habits Share Save Spend® Sharing © EMC Publishing, LLC

Establishing Financial Habits Share Save Spend® Sharing Saving © EMC Publishing, LLC

Establishing Financial Habits Share Save Spend® Sharing Saving Spending © EMC Publishing, LLC

Family Love Peace Success Charity Sports Environment Establishing Financial Habits Your Values Your values vary from those of others and influence your financial decisions Family Love Peace Success Charity Sports Environment © EMC Publishing, LLC

What do you think? Discussion What do you value? What do you think most Americans your age value? How do your values affect how you spend your money? © EMC Publishing, LLC © EMC Publishing, LLC

Establishing Financial Habits Your Financial Plan Determine your current situation. Identify and prioritize your goals. Develop a long-term plan. Organize your records. Set up a budget. Keep it simple. © EMC Publishing, LLC

Establishing Financial Habits Your Financial Plan Determine your income. Determine your expenses. © EMC Publishing, LLC

Establishing Financial Habits Your Financial Plan Identify and prioritize your goals. Financial Goals   1. Buy new car 2. Pay off student loan 3. Move to bigger apartment 4. Buy new shoes 5. Vacation at Yellowstone 6. Eat at fine restaurant © EMC Publishing, LLC

Establishing Financial Habits Your Financial Plan Distinguish between short-term, medium-term, and long-term goals. Adjust your plan and goals over time. Short-Term Goals   1. Eat at fine restaurant 2. Buy new shoes 3. Move to bigger apt. Medium-Term Goals   1. Buy a new car 2. Finish college 3. Vacation at Yellowstone Long-Term Goals   1. Buy travel trailer 2. Pay off student loan 3. Save for retirement © EMC Publishing, LLC

Your Financial Plan Sharing Sharing is also called charitable giving, philanthropy, and altruism. Sharing connects people and gives them a sense of pride. Research an organization that meets your interests. Volunteer now. © EMC Publishing, LLC

Your Financial Plan Sharing Suggestions Birthdays Holidays Service-learning © EMC Publishing, LLC

What do you think? Discussion Why do people share? Who benefits from people sharing? What kinds of opportunities do you have to share in your community? © EMC Publishing, LLC © EMC Publishing, LLC

Freely spend your money. Prioritize your goals. Which of the following is not one of the suggested ways to plan your finances? Set up a budget. Set goals. Determine your income. Freely spend your money. Prioritize your goals. © EMC Publishing, LLC

Freely spend your money. Prioritize your goals. Which of the following is not one of the suggested ways to plan your finances? Set up a budget. Set goals. Determine your income. Freely spend your money. Prioritize your goals. © EMC Publishing, LLC

Your Financial Plan Keeping Records Organize your records. Alphabetical Numerical Chronological Manage your money with a computer-based system. © EMC Publishing, LLC

Your Financial Plan Paying Taxes Types of Taxes Social Security / Medicare Sales Property Estate Income User fees FICA © EMC Publishing, LLC

Your Financial Plan Paying Taxes: Forms Form W-4: Withholding Form W-2: Wage and tax statement © EMC Publishing, LLC

Your Financial Plan Paying Taxes: Forms Form 1040EZ Form 1040A Form 1040 State and local © EMC Publishing, LLC

Your Financial Plan Calculating Your Taxes Adjusted gross income (AGI) = sum of all sources of income − adjustments Wages / business income Interest income Unemployment Social Security / pensions IRA contributions Student loan payments +$20,179 (Wages) +$15 (Interest) +$650 (Unemployment) −$2,000 (Student Loan) ---------------- $18,844 (AGI) © EMC Publishing, LLC

Your Financial Plan Calculating Your Taxes Adjusted gross income (AGI) Tax deductions Itemized Schedule A © EMC Publishing, LLC

Your Financial Plan Calculating Your Taxes Adjusted gross income (AGI) Tax deductions Itemized Schedule A Standard 2007 Standard Deduction (Fed) $5,350 = Single $7,850 = Head of household $10,700 = Married filing jointly $5,350 = Married filing separately © EMC Publishing, LLC

Your Financial Plan Calculating Your Taxes Adjusted gross income (AGI) Tax deductions Itemized Schedule A Standard Tax credits © EMC Publishing, LLC

Which of the following forms lists your wages and income from the previous year? Form 1040EZ Form 1040A Form W-4 Form W-2 © EMC Publishing, LLC

Which of the following forms lists your wages and income from the previous year? Form 1040EZ Form 1040A Form W-4 Form W-2 © EMC Publishing, LLC

What do you think? Discussion Why do we pay taxes? What type of taxes do you pay? What type of taxes are the most fair? What are some examples of tax deductions and tax credits? © EMC Publishing, LLC © EMC Publishing, LLC

The End © EMC Publishing, LLC