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Intro to Business

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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Intro to Business

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  1. Chapter 28 Intro to Business

  2. Planning For The Future • What does money mean to you?

  3. 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…

  4. 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

  5. What type of lifestyle do you dream about?

  6. 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.

  7. 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

  8. SMART GOALS • Specific • Measurable • Attainable • Realistic • Timely

  9. 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

  10. 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

  11. 3. Budget for Fixed Expenses • Fixed Expenses • Rent, Car, Loans 4. Budget for Variable Expenses • Variable Expenses • Cable, Phone, Groceries, Entertainment???

  12. 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 -

  13. 7. Review Spending and Saving Patterns • Saving… • Big Purchases • Big Ticket Items • Retirement • Budgeting is a continual process…

  14. Average Household Expenses

  15. Income & Taxes

  16. 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

  17. 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

  18. 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

  19. 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???

  20. 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

  21. 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%

  22. Other Deductions from your paycheck • Pension Retirement • 401 K • 403 B • Health Insurance • Union Dues • Savings • Donations; charity

  23. 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

  24. 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

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