Personal Finance Unit 1: MONEY. What’s the BIG DEAL about MONEY? It allows us to move beyond the...
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Transcript of Personal Finance Unit 1: MONEY. What’s the BIG DEAL about MONEY? It allows us to move beyond the...
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Personal Finance
Unit 1: MONEY
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What’s the BIG DEAL What’s the BIG DEAL about MONEY?about MONEY?
It allows us to move beyond the barter (good for good) system
Characteristics of Characteristics of Money:Money:– Durability– Portability– Divisibility– Uniformity– Limited Supply– Acceptability
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What’s the BIG DEAL about MONEY?
US first created lawful money (backed by silver and gold). We currently use a fiat money system – LEGAL TENDER (backed by the confidence in its value)
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Role of the Treasury Dept:
• Managing Federal finances; • Collecting taxes, duties and monies paid to and due to the U.S. and
paying all bills of the U.S.;
• Currency and coinage; • Managing Government accounts and the public debt; • Supervising national banks and thrift institutions; • Advising on domestic and international financial, monetary,
economic, trade and tax policy; • Enforcing Federal finance and tax laws; • Investigating and prosecuting tax evaders,
counterfeiters, and forgers.
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How can How can you buy you buy
stuffstuff
without without CASH?CASH?
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The Emergence of a Cashless Society:
All the ways we DON’T use CASH:
• Gift Cards• Debit Cards• Checks• Cashier’s Check• Money orders• Credit Cards• Electronic Transfers
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How do YOU Make Money?
• You will spend approximately 86,000 hours of your life working (about 10,000 days)
• Your CAREER Choice should be based on values and beliefs, not necessarily money (A LABOR OF LOVE)
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How do YOU Make Money?
• Take the following into account as well:
–Education Requirements–Job Trends (will the career exist in
20 years?)
–Job Outlooks (are there any openings?)
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US Income at a Glance…
Criteria OverallLess than 9th grade
High school
drop-out
High school
graduate
Some college
Associates degree
Bachelor's degree
Bachelor's degree or
more
Master's degree
Professional degree
Doctorate degree
Median ind.
income
Male, age 25+
$33,517 $15,461 $18,990 $28,763 $35,073 $39,015 $50,916 $55,751 $61,698 $88,530 $73,853
Female, age 25+
$19,679 $9,296 $10,786 $15,962 $21,007 $24,808 $31,309 $35,125 $41,334 $48,536 $53,003
Both sexes,
age 25+
$32,140 $17,422 $20,321 $26,505 $31,054 $35,009 $43,143 $49,303 $52,390 $82,473 $70,853
Median household income
$45,016 $18,787 $22,718 $36,835 $45,854 $51,970 $68,728 $73,446 $78,541 $100,000 $96,830
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US Income at a Glance…
The median income in New York State for a person with 1-4 year’s experience is around:
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Finding the Job for YOU
• Research
• Internships and Job Shadowing
• Part-time jobs early in life–Most successful people worked
part-time as teenagers
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Finding a Career – complete Career
Exploration Profilewww.bls.gov/oco
www.payscale.comscroll to bottom and click on CAREER
RESEARCH – do NOT fill out nay surveys!
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Analysis of a Paycheck
As soon as you start working, either part-time or full-time, the money will start rolling in….
Unfortunately, you only get what’s left (after everybody else has taken
their cut).
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Analysis of a Paycheck
GROSS INCOME
The amount of pay you get before any deductions are taken out
NET INCOME
Amount of pay you actually get to take home and do something with
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So, what’s taken out?
• Federal, State (maybe local) TAXES
• Social Security (FICA) – 6.2%
• Medicare (FICM) – 1.45%
• Automatic savings (Contributions to retirement plans that are taken out of gross pay)
• Health Insurance Premiums
• Life Insurance Premiums• Union dues• Charitable Contributions,• and more…
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GROSS PAY NET PAY
SALARY
DEDUCTIONS
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CAN YOU READ A PAYSTUB?LET’S FIND OUT!
Now YOU try it…
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Taxes, Taxes, Taxes!
I want MY MONEY!
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The goal of tax planning is to The goal of tax planning is to arrange your financial affairs arrange your financial affairs so as to minimize your taxes so as to minimize your taxes
and keep the most of your and keep the most of your money.money.
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TAXES
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Reducing your TAXES:
1. Increase your TAX DEDUCTIONS
2. Take advantage of TAX CREDITS
3. Increase your WITHHOLDINGS
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1. Increase your TAX DEDUCTIONSDeductions are
things you use to decrease your taxable income.
• There are standard deductions for singles ($6,100) and married couples ($12,200)
• Itemized deductions include:• Expenses for healthcare• Mortgage interest• Gifts to charity• Job-related expenses• State/local/property
taxes
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2. Take advantage of TAX CREDITS
Tax credits reduce your tax - straight up $ for $ reduction
There are tax credits for:• Earned Income Tax
(for low income families)
• Child Tax• Education• Retirement Savings
Contribution• 1st Time Homebuyer• Dependent Care• Energy Efficient Home
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3. Increase your WITHHOLDINGSIncrease the amount of money taken out
of each paycheck throughout the year – you’ll get a bigger refund at the end.
CLAIM 0CLAIM 0 – More money is taken out of each paycheck and you are more likely to get a refundCLAIM 1 CLAIM 1 – Less money will be taken out of each paycheck, but you may end up owing money at tax time
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THANKS UNCLE SAM!
Tax Examples Worksheet
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LET’S REVIEW!End of Unit Notes!
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Terms to KNOW
• Barter
• Lawful Money
• Fiat Money
• Legal Tender
• Treasury Dept
• Career
• Gross Income
• Deductions
• Adjusted Gross Income
• Taxable Income
• Net Pay
• Tax Credit
• Withholdings