Chapter 14 Managing Your Money

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

2. What your sources of income are How to make a plan for spending and saving money Discover continued

3. How to finance your education Discover

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

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

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

7. scholarship loan work-study program grant Key Terms

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

9. 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. Making Sense of a Paycheck

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

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

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

13. 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

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

15. 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

16. 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. Understanding Withholding

17. 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

18. 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. Making a Budget

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

20. Divide your goals into short-term and long-term goals. Decide on Your 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.

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

22. 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. Prioritize Your Goals

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

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

25. 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

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

27. 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

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

29. 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

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

31. 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. Set Savings Aside

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

33. 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. $

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

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

36. 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

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

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

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

40. 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

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

42. A work-studyprogram 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

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

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

45. 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 Review Critical Thinking A continued

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

47. 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 Review Critical Thinking A

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