Building Your Financial House WELCOME !

Program Objectives Become more comfortable talking about money issues Identify the Framework for Building Your Financial House Walk away with facts and skills needed to build your financial house Gain confidence to make good money choices for your situation Be in a better position for long-term financial stability and success. Module 2: Maximize Earnings

Modules 1. Invest in Yourself 2. Maximize Earnings 3. Spend Sensibly 4. Check Taxes 5. Make Money Work 6. Protect Your Potential 7. Borrow to Grow Module 2: Maximize Earnings

Recap: Invest In Yourself Last time, we talked about: The Framework for Building Your Financial House Identifying your personal assets and opportunities The education-to-income relationship Setting goals according to your priorities Module 2: Maximize Earnings

Did You Set a Goal? Module 1: Invest In Yourself (PAGE IIY-3)

Did You Practice? Module 1: Invest In Yourself (PAGE IIY-3)

Did You Learn More? Module 1: Invest In Yourself (PAGES IIY-18 & 19)

Did You Make Progress? Module 1: Invest In Yourself (PAGE IIY-3)

Module 2 Maximize Earnings

The walls represent earnings, built up from the foundation, and maximized by utilizing all available resources, directing payroll deductions, and choosing the right employee benefits. Adrian Review where this module fits within the Framework for Building Your Financial House. -Next- 2 Maximize Earnings

Self-Assessment Module 2: Maximize Earnings (PAGE ME-3) BYFH – Maximize Earnings (2016)

Objectives Knowledge Actions Identify your cash and non-cash sources of income Recognize the difference between gross and net pay Become familiar with employer provided benefits Recognize the actual dollar value of pre-tax benefits Identify factors which affect the net economic benefit of a job Review your pay statement Calculate gross and net monthly income Ask questions, compare options, and select the employee benefits that are right for you Review your W-4 withholding allowances and adjust if necessary Evaluate net economic benefit before accepting a new job offer Module 2: Maximize Earnings

Income Four Square 1. CASH In 2. NON-CASH In 4. Options for More 3. “Off the Top” Module 2: Maximize Earnings (PAGE ME-5)

Non-contributing household members Short-Term Resources COMPASS Community organizations Non-contributing household members Module 2: Maximize Earnings (PAGE ME-6)

Understanding Pay Statements Module 2: Maximize Earnings (PAGE ME-7)

Sample Pay Statement 3 4 5 1 2 Module 2: Maximize Earnings (PAGE ME- 8)

Job Benefits Game Module 2: Maximize Earnings (PAGE ME-10)

More Than Just a Paycheck Employee Benefits: Make people want to work for the company! Help workers learn more job skills! Keep workers healthy and secure their futures! Module 2: Maximize Earnings (PAGE ME-12)

More Than Just a Paycheck Financial gain using of benefits: Free stuff Discounted stuff Lower taxes Module 2: Maximize Earnings

More Than Just a Paycheck Examples of benefits: Paid time off Insurance Flexible spending accounts Retirement plans Module 2: Maximize Earnings

Paid Time Off Saves on travel expenses, gas, tolls Saves child care expenses Allows for learning opportunities Module 2: Maximize Earnings

Insurance Options Module 2: Maximize Earnings (PAGE ME-13)

Flexible Spending Accounts Also called FSA’s Used to pay for out-of-pocket medical and dependent care expenses Money put in not subject to federal, state or social security income taxes Use it or lose it Module 2: Maximize Earnings

Calculating FSA Contributions Module 2: Maximize Earnings (PAGE ME-14)

Retirement Benefits Pension (defined benefit plan) Types: Pension (defined benefit plan) Defined contribution (savings) plans: 401(k)/403(b)/457 Profit sharing Other lifetime benefits, such as health insurance, discounts, memberships Module 2: Maximize Earnings (PAGE ME-15)

Why Should I Save? Top Five Reasons: Choose your future Employer match Automatic Compound interest Lower taxes Module 2: Maximize Earnings (PAGE ME-17)

“Pre-tax Contributions” Side Bar: Lower Taxes Tax-Free (FICA and Federal) Health Insurance Flexible Spending Accounts Tax-Deferred (Federal) Retirement Savings “Pre-tax Contributions” Module 2: Maximize Earnings

Case Study (Pages 7-11) Module 2: Maximize Earnings

What Does Pre-Tax Really Mean? 1 2 3 4 5 6 Module 2: Maximize Earnings

Net Economic Comparison Anna’s Choice ABC Inc. Comparison DEF Company Annual Pay Transportation Allowance Gross Compensation State/Local Income Taxes FICA Taxes Health Insurance (5%) FSA Contribution 401(k) Contribution Net Take Home Transportation Cost Professional Dress 401(k) Match Tuition Net Economic Comparison $31,200 $ 0 $29,120 $ 1,440 $31,200 $30,560 ($ 1,405) ($ 2,270) ($ 1,560) $ 0 ($ 1,250) ($ 1,310) ($ 2,070) ($ 1,455) ($ 600) ($ 1,165) $24,482 $23,960 Net economic comparison includes 401(k) savings added back. ($ 3,900) $ 0 $ 1,250 ($ 1,560) ($ 600) $ 0 $ 3,000 $22,720 $25,965 Module 2: Maximize Earnings

Anna’s Withholding Worksheet Module 2: Maximize Earnings

Anna’s IRS Form W-4 Module 2: Maximize Earnings

NEW EMPLOYEE FEUD

What form must new employees complete that proves they are eligible to work in the United States? 1099 Module 2: Maximize Earnings

The IRS Form I-9 proves that a worker is eligible to work in the United States. Module 2: Maximize Earnings

What are you exempt from if you are an “exempt” employee? Federal Income Tax Bonuses Overtime Working Module 2: Maximize Earnings

This is often confused with being “exempt” from tax withholding. An “exempt” employee receives a flat salary regardless of how many hours worked. This is often confused with being “exempt” from tax withholding. Module 2: Maximize Earnings

Which is not a tax withheld from pay? Sales Tax Federal Income Tax State Income Tax FICA Module 2: Maximize Earnings

Sales tax is not a tax withheld from pay but charged when making a purchase of certain items. Module 2: Maximize Earnings

What form tells employers how much federal tax to withhold from pay? 1099 Module 2: Maximize Earnings

Employees must fill out an IRS Form W-4 to provide payroll deduction instruction for federal tax withholding. Module 2: Maximize Earnings

Which is not an employee benefit deduction? 401(k)/403(b) Flexible Spending Account (FSA) Health Insurance FICA Module 2: Maximize Earnings

FICA is a tax withheld, not an employee benefit deduction. Module 2: Maximize Earnings

What is the safest way to receive your wages? Cash Payroll card Paycheck Direct deposit Module 2: Maximize Earnings

Direct Deposit it the safest way to receive your wages. Cash is the least safest way, as it can be easily stolen and not accounted for properly. Module 2: Maximize Earnings

BONUS ROUND

What is FICA? Federal Income Credit Account Federal Insurance Contribution Act Federal Income Credit Act Federal Income Calculation Account Module 2: Maximize Earnings

FICA stands for the Federal Insurance Contribution Act, which is a payroll tax paid by both employee and employer for old age, survivor, and disability insurance. Module 2: Maximize Earnings

THANKS FOR PLAYING!

What Comes In: Add It Up Module 2: Maximize Earnings (PAGE ME-22)

Next Time: Spend Sensibly Maximize Earnings We’ve covered: Earnings and other resources Pay statements and deductions Employee benefits The actual dollar value of pre-tax benefits Completing the Form W-4 Net economic benefits of a job Next Time: Spend Sensibly Module 2: Maximize Earnings

Take Action - Set a Goal Module 2: Maximize Earnings (PAGE ME-3)

Take Action - Worksheets Module 2: Maximize Earnings (PAGE ME-3)

Take Action – Learn More Module 2: Maximize Earnings (PAGE ME-23)

Measure - Track Your Progress Module 2: Maximize Earnings (PAGE ME-3)

Please complete the session evaluation form. (Page ME-25) Module 2: Maximize Earnings (PAGE ME-25)

Building Your Financial House Thank You!