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Unit 3 Budget: Don’t Go Broke. Overview: What is a Budget?. Objectives. Some of the questions you will be able to answer by the end of this unit are: What is a budget, how does it work, and how can it help you? How do taxes and other payroll deductions affect your paycheck ?

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Unit 3 Budget: Don’t Go Broke


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unit 3 budget don t go broke

Unit 3Budget:Don’t Go Broke

Overview: What is a Budget?

objectives
Objectives

Some of the questions you will be able to answer by the end of this unit are:

What is a budget, how does it work, and how can it help you?

How do taxes and other payroll deductions affect your paycheck?

What does “P.Y.F.” mean and how can it benefit you?

How can you make the best use of your cash?

step 1 the budget
Step 1: The Budget
  • Budget: a plan for managing money during a given period of time
  • It becomes your roadmap for achieving your goals as you set aside specific amounts
  • Income: Money coming in
    • Job
    • Allowance
    • Services for friends and family
    • Birthday and Christmas money
    • Yard sale money
step 1 the budget1
Step 1: The Budget
  • Reading your pay stub
    • Gross income: the total amount of income from your wages or salary before deductions
      • The number of hours you work times your wage
      • Your check is usually not the full wage
    • Payroll deductions
      • Income taxes—federal and state
      • Health insurance
      • Social security (FICA) and Medicare
      • Retirement savings

Open the link.

How to Read Your Paycheck

Discuss the pay check as a class. Click on the links and talk about earnings, deductions, and so on.

step 1 the budget2
Step 1: The Budget
  • Taxes
    • Usually the largest deduction
    • Taxes are fees placed on income, property or goods to support government programs
    • All levels of government may tax—national, state, local
    • Federal Income Tax is paid to the federal government to support national programs, like the military
    • State Income Tax is paid to the state government for state programs, like roads
    • The employer matches Social Security and Medicare contributions that are sent to the federal government
  • Net Income
    • Take-home pay, after deductions
step 1 the budget3
Step 1: The Budget

Watch the video.

Discussion Question: What would you change if you were in charge?

How Did We Start Paying Income Tax

step 1 the budget4
Step 1: The Budget

Discussion

Click on the map below. When you get to the page, click on Oregon. Discuss with a friend the tax load an individual carries in Oregon. Choose a state other than Oregon in which you would like to live. How does its tax load compare to Oregon’s?

Take notes on Oregon and the state of your choice in your notebook. Email this site to yourself for possible placement in your online portfolio.

step 1 the budget5
Step 1: The Budget
  • The W-4
    • It tells your employer how much tax to withhold from your check
    • The fewer “allowances” (dependents and marital status) you choose, the more that is deducted
    • If you are not a good saver, choose “0”; more will be taken from your check and you will have less take-home pay, but will probably get a nice refund
    • The higher the number you choose, the less taken out, but you may have to pay taxes in April. As a student, you will choose 0 or 1
    • You complete a W-4 when you start a new job but can change it later

Read through a copy of the W-4 provided by your instructor and place it in your portfolio.

the budget
The Budget
  • The W-2
    • It is an summary of wages earned from January 1 to December 31 of the same year
    • The employer must provide the W-2 by January 31
    • You use this document to file your income tax by April 15
the budget1
The Budget

Activity

Answer the questions on the next page using this pay stub.

the budget2
The Budget

Pay Stub Activity Questions: Copy the questions into your notebook then answer from the previous slide.

Who is the employee?

Who is his employer?

What is the length of the pay period he just worked?

How many total hours did he work during this pay period?

What amount per hour does he get paid?

Did he have any pay other than work hours? If so, what were they for and how many hours?

What is his gross income?

List the type and amount of each payroll deduction. The state taxes are for New Jersey. Does Oregon have similar taxes?

What is his net income?

What amount has been available for his financial goals year-to-date?

portfolio
Portfolio

Make sure that the items from this unit are placed in your portfolio.

Watch the video. What does it tell you about success?

How Bad Do You Want It

(Success)

bibliography
Bibliography

TEXT AND ASSIGNMENTS

NEFE High School Financial Planning Program, Student Guide. National Endowment for Financial Education. Greenwood Village, CO. 2001.

Page 4: “How to Read Your Paycheck.” Payroll Services. University of Washington: Pullman, WA. 2014.

Page 6: “How Did We Start Paying Income Tax?” Brainstuff: How Stuff Works.

Page 7: “Taxes by State.” Retirement Living Information Center. 2014.

Page 12: Howell, Matthew. “How Bad Do You Want It.” Video.

Images

Page 4: “Five Ways to Demonstrate Your E-Learning Success.” The Rapid E Learning Blog. 2012.

Page 9: W-2 and 1099 Tax Statements. myfreetaxes.com

Page 10: “Sample Paycheck and Pay Stub.” New Jersey Payroll Services LLC.