Managing Your Money The Money You Earn Chapter 14 Managing Your Money Lesson 14.1 The Money You Earn

Bell Ringer Make a list of reasons why people work.

What your Sources of Income are Discover What your Sources of Income are How to Read and Interpret Paycheck Stubs continued

Bell Ringer To make a contribution To help others To use skills and talents To meet other people So they won’t get bored To challenge their minds To feel good about themselves

Why It’s Important Having a spending and savings plan will help you make the most of your money now and in the future.

income gross pay net pay withhold income tax Social Security Key Terms continued

Medicare F.I.C.A. budget fixed expenses flexible expenses interest Key Terms Medicare F.I.C.A. budget fixed expenses flexible expenses interest continued

Key Terms scholarship loan work-study program grant

Your Income The first step in managing your money is to know your income. Your income is the amount of money you receive or earn regularly.

Making Sense of a Paycheck The two parts of a paycheck are the check itself and the stub. The paycheck stub shows how much you were paid and the different amounts taken out of your check.

Understanding Withholding Gross pay is your total pay. Net pay is the amount you actually take home.

Understanding Withholding Gross pay – Total deductions = Net pay

Understanding Withholding Your employer must withhold, or take out, money from your paycheck.

Understanding Withholding Income tax is a tax you pay to the government on your income. Income tax pays for government services.

Understanding Withholding Social Security is a federal government program that provides benefits for people of all ages. Workers pay Social Security taxes so they can receive benefits when they retire or are disabled.

Understanding Withholding Medicare is a health care program provided by the federal government primarily for retired persons.

Understanding Withholding The money withheld for Social Security and Medicare taxes is labeled F.I.C.A. on paycheck stubs. F.I.C.A. stands for Federal Insurance Contribution Act.

Understanding Withholding Money may also be deducted from your paycheck for benefits your employer offers, such as insurance. Usually, the employer pays part of the insurance, and the employee pays part.

Bell Ringer Why are taxes taken from your paycheck?

Bell Ringer Government Services such as: Police Fire protection Public education High-way/road construction

Managing Your Money The Money You Earn Chapter 14 Managing Your Money Lesson 14.1 The Money You Earn

Bell Ringer Imagine that you have $400.00 to spend over a period of two weeks. How would you budget this money? List in detail, what you would buy and how much you plan to spend on each item.

Bell Ringer What is the difference between ‘’Needs” and “Wants” ?

Making a Budget When you are working regularly and earning more money, you’ll need a budget. A budget is a plan for saving and spending money.

Making a Budget A budget is based on your income—the money you expect to have coming in—and your expenses—the money you will pay out for goods and services.

Why…Why…Why??? Why is it important to create a Budget?

Decide on Your Goals The first step to making a budget is to list the things you need or want.

Bell Ringer Why is it important to set financial goals? Why is important to work toward those goals now?

Decide on Your Goals Divide your goals into short-term and long-term goals. Short-term goals are what you need or want to spend money on now or within the next 12 months. Long-term goals are spending or savings goals that take a year or more to reach.

Decide on Your Goals Write down the amount of money each goal will cost.

Prioritize Your Goals You’ll probably have more items listed than money to pay for them. Prioritizing will help you clearly see which goals are wants and which goals are needs.

Bell Ringer What question(s) should you ask about product brands?

Figure Out Your Income and Expenses Write down how much money you expect to have coming in. Include all your sources of income.

Figure Out Your Income and Expenses You will have two kinds of expenses: fixed expenses and flexible expenses.

Figure Out Your Income and Expenses Fixed expenses are expenses you have already agreed to pay and that must be paid by a particular date.

Figure Out Your Income and Expenses Flexible expenses are expenses that come irregularly or that you can adjust more easily.

Set Up Your Budget Your income should be equal to or more than your total expenses. If your income isn’t equal to or more than your expenses, you may have to make changes.

Set Up Your Budget When making changes, look at your flexible expenses.

Set Savings Aside Remember, a budget is a spending and savings plan. A savings plan helps you put money aside for long-term goals and unexpected needs.

Set Savings Aside Many people choose to put 10 percent of their income aside for savings.

Set Savings Aside You can make more money by keeping your money in the bank. The bank will pay you money known as interest to use the money in your savings account.

Staying Within Your Budget Your budget should be adjusted to fit your needs and wants. Check your budget at the end of every month.

$ $ $ $ Graphic Organizer Staying Within Your Budget Keep track of your spending. Shop smart. Don't carry around a large amount of cash. $ Whenever possible, pay with cash. $

Q and A I want to put my savings in the bank. Do all banks pay the same amount of interest? continued

No, they don’t. You need to be a smart shopper when choosing a bank. Q and A No, they don’t. You need to be a smart shopper when choosing a bank.

Financing Your Education The sooner you start planning how you will finance your education, the more likely you will achieve your educational goals. Include savings for education in your budget.

Financing Your Education Most schools have financial aid departments that will help you find financing options that are best for you.

Financing Your Education When you apply for financial aid, you will have to fill out a Free Application for Financial Student Aid (FAFSA).

Financing Your Education The following are some of the ways you can finance your education: Scholarships Loans Work-study programs Grants

Financing Your Education A scholarship is money for education awarded to students because of their need or academic or athletic achievement. Scholarships do not have to be repaid.

Financing Your Education A loan is money borrowed from the government or a lender that must be repaid.

Financing Your Education A work-study program allows students to earn their education by working full- or part-time jobs in a related field throughout the student’s academic career.

Financing Your Education A grant is money for education provided by the government, schools, or private donors. Grants do not have to be repaid.

Critical Thinking Review Why is it important to be flexible about your budget? What problems might arise if you are too flexible about your budget? Critical Thinking Q continued

Critical Thinking Review It is important to be flexible about your budget because your wants and needs may change, or something unexpected may happen. If you are too flexible about your budget, however, you may lose sight of your priorities and not have enough money for them. Critical Thinking A continued

Critical Thinking Review Why is it important to be honest with yourself about your income and expenses when making a budget? Critical Thinking Q continued

Critical Thinking Review You need realistic figures for income and expenses when you are making a budget; if you aren’t honest with yourself about your income and expenses, your budget won’t be realistic and won’t work. Critical Thinking A

Managing Your Money The Money You Earn End of Chapter 14 Managing Your Money Lesson 14.1 The Money You Earn