You in the economy Notes for Chapter 17

Getting paid Salary – fixed payments at regular intervals Salary – fixed payments at regular intervals Wages – paid by the hour Wages – paid by the hour Commission – employee is paid a percentage of the price of a good or service for making the sale Commission – employee is paid a percentage of the price of a good or service for making the sale Bonus – extra money for excellent performance Bonus – extra money for excellent performance Piecework – paid for each unit of a product made Piecework – paid for each unit of a product made

Other types of income Interest on savings Interest on savings Dividends on stocks Dividends on stocks Fringe benefits Fringe benefits Medical care Medical care Dental care Dental care Sick leave Sick leave Vacation pay Vacation pay Company car Company car Club memberships Club memberships Other… Other…

Net income Net income or disposable income is what you have remaining after you have paid your taxes Net income or disposable income is what you have remaining after you have paid your taxes

Fixed expenses Payments which stay the same every month Payments which stay the same every month Rent or mortgage Rent or mortgage Car payment Car payment Car insurance* Car insurance* Cell phone* Cell phone* Cable* Cable* Other… Other…

Variable expenses Expenses which change from month to month Expenses which change from month to month Food Food Clothes Clothes Entertainment Entertainment Phone* Phone* Utilities Utilities Gasoline Gasoline Travel Travel Other… Other…

Things to consider when making a purchase Price Price Quality Quality Features Features Warranty and service Warranty and service Sales/discounts Sales/discounts

Warranty A manufacturers promise to repair a product if it breaks within a certain time period after purchase A manufacturers promise to repair a product if it breaks within a certain time period after purchase Protects buyer from faulty products Protects buyer from faulty products Especially useful for high cost items so that the buyer doesn’t spend a lot of money and end up with a product that does not work. Especially useful for high cost items so that the buyer doesn’t spend a lot of money and end up with a product that does not work.

$aving$ Liquidity – the ability to turn savings back into cash Liquidity – the ability to turn savings back into cash Income – how much money will your savings or investment earn Income – how much money will your savings or investment earn Safety – how likely is the investment to lose value Safety – how likely is the investment to lose value Income vs. Safety Income vs. Safety

Liquidity “How quickly do I need to be able to get at my money?” “How quickly do I need to be able to get at my money?”

Savings plans Passbook savings (bank savings account) Passbook savings (bank savings account) Interest checking Interest checking Time deposit (CDs, bonds, savings bonds) Time deposit (CDs, bonds, savings bonds) Savings bonds Savings bonds Stock Stock Mutual funds Mutual funds Real estate Real estate Insurance Insurance

Insurance Life insurance – protects surviving family members from loss of income Life insurance – protects surviving family members from loss of income Property insurance – protects from damage or loss to homes, cars, boats, etc. Property insurance – protects from damage or loss to homes, cars, boats, etc. Liability insurance – protects a person from the costs of damage or injury to others Liability insurance – protects a person from the costs of damage or injury to others Health insurance – pays all or part of the costs of health care Health insurance – pays all or part of the costs of health care