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Chapter 28. Intro to Business. Planning For The Future. What does money mean to you?. What are values?. Values are a belief of what is desirable, worthwhile, and important to us What do you value?

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planning for the future
Planning For The Future
  • What does money mean to you?
what are values
What are values?
  • Values are a belief of what is desirable, worthwhile, and important to us

What do you value?

  • List what you would save if you could put only three items that are meaningful to you in a treasure chest.

Who influences values?

  • Values can be influenced by family, friends, teachers, religious affiliations, work/career, media, and law…
what do you value
What do you value?
  • People have different values which guide their decisions.
  • These decisions may have an affect on their lifestyle and financial situation.
    • For example, if a person values financial security, he/she may focus on saving, investing, and/or finding a good job
setting goals
Setting Goals
  • To reach your desired lifestyle you will need to do some planning and goal setting
    • setting goals allows you to focus on items that you identify as important.
  • Goals can be…
    • Short-termgoals can be achieved in less than one year.
    • Long-term goals can be reached in more than one year.
why are goals important
Why are goals important:
  • Having goals allows us to become better than we are today.
  • Successful people have goals
  • Goals motivate and inspire people
  • Goals guide people as they live their lives
  • Without goals we have nothing to work towards
smart goals
SMART GOALS
  • Specific
  • Measurable
  • Attainable
  • Realistic
  • Timely
to achieve financial goals
To Achieve Financial Goals
  • We need to manage our money
    • MONEY MANAGEMENT
      • To process of getting the most from your $$$
    • BUDGETING
      • A Plan of how I hope to spend my money
      • Steps in Planning a Budget
        • Set Financial Goals
        • Estimate Income
        • Budget for Fixed Expenses
        • Budget for Variable Expenses
        • Record what you Spend
        • Review Spending and Savings Patterns
2 estimate income
2. Estimate Income:
  • Any money your receive (on a regular basis)
    • Investments, Salary, ???
  • GROSS INCOME (salary)
    • Earned In come
  • Net Income
    • Income less (-) deductions
      • Examples: Taxes, Insurance, 401-K, Social Security
3 budget for fixed expenses
3. Budget for Fixed Expenses
  • Fixed Expenses
    • Rent, Car, Loans

4. Budget for Variable Expenses

  • Variable Expenses
    • Cable, Phone, Groceries, Entertainment???
6 record what you spend
6. Record what you Spend
  • Write down what you spend during the month
  • Check what you spend against your budget
    • A difference between budgeted amount and actual is called a budget variance
    • Surplus –
    • Deficit -
7 review spending and saving patterns
7. Review Spending and Saving Patterns
  • Saving…
    • Big Purchases
    • Big Ticket Items
    • Retirement
  • Budgeting is a continual process…
income
Income
  • Income = the actual amount of money you earn or receive during a given period
  • An employee may be paid:
    • Weekly
    • Biweekly=every two weeks
    • Twice a month; 15 and 30th
    • Once a month
    • Commission
income1
Income
  • Wage/Rate=paid hourly
    • US minimum wage is $7.25
    • IL minimum wage is $8.25 per hour
  • Salary - receiving the same gross pay each pay period
    • Example: $50,000 per year
gross pay
Gross Pay
  • Gross Pay is the total amount you earned for a specific time
  • Number of hours worked * wage (rate per hour) = gross pay
  • Example:
    • 30 hours worked * $8 per hour=$240 gross pay
net pay
Net Pay

Estimate about: $43,400

  • Net Pay (take home pay)
  • Gross pay-deductions=net pay
  • In US net pay = about 30 % less than gross pay
  • So you make $62,000 a year how much are you really making???
slide22
W - 4
  • An employer gets the federal income tax information when an employee gets hired and must fill out a
    • W-4 Form= lists number of withholding allowances you want
  • You will claim “0”or “1”on your forms
  • The more you claim the less the government takes out
    • Example you have 5 children you need more money to take care of them
deductions
Deductions
  • Gross pay is reduced by
  • Deductions = amounts that are taken out of your pay before you receive your pay check
  • MANDATORY DEDUCTIONS
    • Federal Income Tax
    • State Tax % of gross income
      • IL is 5 %
      • Some dates do not have state tax (Washington, Florida, Nevada, Alaska etc…)
    • FICA (Federal Insurance Contribution Act)
      • Social Security 4.2%
      • Medicare 1.45%
other deductions from your paycheck
Other Deductions from your paycheck
  • Pension Retirement
    • 401 K
    • 403 B
  • Health Insurance
  • Union Dues
  • Savings
  • Donations; charity
w 2 form
W-2 Form
  • By January 31stan employee must receive (from each employer)
  • W-2 Form= summary of your total earnings and withholdings from your job
  • NEED THIS TO DO YOUR TAXES!!!
  • Lists:
    • Total earnings from all sources
    • Federal income tax withheld
    • Social security tax withheld
    • Medicare tax withheld
1040 ez
1040 EZ
  • By April 15 each person who has worked must file an income tax return:
  • 1040 EZ (FORM TO DO YOUR TAXES)
    • Single or married
    • No dependents
    • Taxable income of less than $100,000
    • Earned no more than $1500 in interest