1. Analyzing Your Paycheck Personal Finance

2. Types of Pay  Your pay can be calculated in a number of ways – make sure you know which way it is being calculated.  Types of Pay:  Salary: Set amount of money earned per year – or another set time.  Wages: Set amount of paid per hour or day or item of work.  Piecework: Usually involves manufacturing/ assembly items

3. Types of Pay  Commission: Fixed percentage or amount of profit given for making a sale  Sales, Marketing, Real Estate, Retail jobs  Bonus: Sum of money paid in addition to regular pay for job performance/meeting goals.  Tips: Money given to employee by customer in exchange for a service  Waitresses, Bartenders, Hair stylists, Caddies

4. Regulations Affecting Pay  Fair Labor Standards Act – standards governing employee payment and compensation. http://www.dol.gov/elaws/flsa.htm  Equal Pay FSLA forbid employers from paying one person less than another person for the same work.  Work in same establishment  Work under same/similar conditions  Perform work requiring skill, effort, and responsibility  Often used to prevent discrimination against women, minorities, and older workers.

5. Regulations  Minimum Wage: Lowest hourly rate employer may legally pay most workers.  Raised periodically for inflation. (Just raised) http://www.dwd.state.wi.us/dwd/publications/erd/pdf/erd_9247_p.pdf  Subminimum Wage: A wage paid under certain conditions to certain categories of workers, such as trainees, that is less than the established minimum wage.

6. Over Time Work in excess of 40 hours per week.  Usually 1.5 times normal wage  For example $8.00 * 1.5 = $12.00/hr  Not paid to salaried employees – weigh the loss of overtime pay before changing to salaried position.

7. Types of Benefits Be sure to consider benefits when choosing a job!!  Insurance Benefits: Group health care plans offered by employers  Other insurance plans: Vision, dental, disability, long-term care, flex plans  Savings and Retirement Benefits: Employers deduct money from the employee’s paychecks to deposit in a savings or investment account.  Some or all deducted on a pre-taxed basis  Tax sheltered annuities, 401K plans

8. Types of Benefits  Other benefits:  Paid Holidays  Vacation Days  Sick Leave  Pay for addition education/training  Paid maternity leave or money towards childcare  Gym memberships  Addition perks

9. Budgeting Personal Finance

10. Why Budget?  A budget is helpful no matter how large or small your income is.  It is ALL about saving.  If created efficiently, a budget can help you:  Avoid running out of money between paychecks  Evaluate your spending habits and making better choices  Set aside savings for unexpected costs (They WILL happen!)  Work toward a financial goal

11. Budgeting Although a budget can be created for any time period, most create on for a year  Divided it up into months (by 12) Creating a budget involves three main tasks:  Estimating Income (Gross vs Net -- irregular)  Estimating Expenses (Fixed vs Variable)  Bringing the two into balance – saving

12. Estimating Expenses Group expenses into general categories  Groceries, dining out, gas, cable bill, miscellaneous, etc.  Fixed Expenses: Regular payments that do not vary from month to month. (Rent, car payment)  Variable Expenses: Normally increase and decrease from month to month. (Groceries, Dining Out) The MORE accurate you are – the more effective your budget.

13. Estimating Expenses You can estimate your expenses using several ways –  Your past spending.  Information from bank statements, receipts, tax forms.  Expert recommendations  Percentages of income to allow for various expenses.  National Averages  Consumer Expenditure Survey – shows how consumers spend their money.  Published periodically by the Bureau of Labor Statistics  Pie Chart

14. Saving Money  PAY YOURSELF FIRST!!  10% of household income – more if you can.  Treat savings as another FIXED expense.  Necessary to reach long-term savings goals and have emergency fund.

15. Balance Your Budget Income – Expenses = Zero If result is a positive number, add money to savings. If result is a negative number, adjust your budget.  Decrease expenses, do not cut out savings.

16. Adjusting Your Budget Look at discretionary expenses – categories that aren’t necessary.  Shopping  “Fun” money  Add-ons to other expenses (Cell minutes, HD or Tivo, Internet Speed) Think of ways to trim expenses  Coupons  Eating in more  Buy sale items Reduce Fixed Expenses – Less expensive car, lower rent, better deal on auto insurance.

17. Using Your Budget Establish a budget – use discipline!!  Monitor it each week  Compare actual expenses vs. budgeted amount  Analyze if overspending – Make adjustments.  Revise budgeted amounts, if needed.