All of this information can also be found in your JA workbooks. Junior Achievement All of this information can also be found in your JA workbooks.

Key Terms Debit Card – uses money from your checking account. Money in your checking account is yours. Credit Card – uses money from a bank for purchases. You’re required to pay them back with added interest.

Leasing vs Buying When you LEASE a car you don’t actually own it. It’s similar to renting. EX: You can lease a car for 3 years at a certain rate (monthly payment). Buying a car means you do monthly payments until you’ve paid for all of it and it’s entirely yours

INCOME Terms Annual  yearly Deductions  certain things that comes out of your gross income. It’s the items which subtract from your total income. Social Security  A social insurance system that provides benefits to most Americans who are retired, sick, or too disabled to work, and to families of workers who have died.

NET GROSS Income All income from any source Your gross income is all the money you’ve earned before some is taken out Amount of income after deductions have been taken out “take-home pay” Possible deductions: TAXES Social Security Health Insurance Retirement Savings

Budget (page 67) Needs  goods or services that you cannot survive without (food, water, clothing, shelter) Wants  Make you happy but not necessary for survival Expenditures  money that’s spent on goods, services, or bills Impulse buying  buying based on immediate want Short-term goals  financial objectives within a year’s time Long-term goals  much longer than a year for larger outcomes (ex: college, trip to Europe, buying a car)

Carl agreed to work as an engineer at Yoda Manufacturing for $50,000 a year. After his first year working he realized that he only brought home $34,000. Federal and State taxes took out $11,000 and Social Security took $3,000. Carl also put $2,000 into his savings account. What’s Carl’s gross annual income? What’s Carl’s net annual income? How much were his deductions for the year? What is an example of opportunity cost in this?

Credit (page 56) Credit Report  details your financial information, estimated income, credit card accounts with $ owed and payment history. Credit Score  A number which measure your potential to repay a debt. The higher the score the better!

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Minimizing Risk (page 37) Insurance Policies  a contract that outlines coverages plans and protects a person against financial loss or damage Premium  the amount you pay for an insurance policy Deductible/co-pay  Money paid out of pocket before insurance covers the remaining costs

Expenses (page 71) Fixed Expenses  expenses that don’t change from month to month. Ex: Phone bill, car payment, rent Variable Expenses  expenses that aren’t the same each month. Ex: doctor bills, entertainment (going to the movies, buying games), or car repairs Discretionary income  Money available to spend on goods and services that are NOT essential. “fun money”

Pay Yourself First (PYF) – page 31 This is where you create a savings account where money is AUTOMATICALLY deducted from your paycheck. Your money is guaranteed to be saved. Why do this? Homes need repairs, cars get totaled, unexpected medical bills, et cetera….

Opportunity Cost Whenever we make a decision we ultimately turn down another. EX: By saving money you now have less spending money and vice versa. Opportunity cost is important when working out your budget and deciding how much money to spend in relation to how much money you want to save.

Co-Pay vs Deductible Co-Pay  We pay a portion of the medical bill along with the insurance company Ex: paying $30 at the doctor’s office Deductible  We have to pay a set amount before the insurance company starts paying Ex: Paying $3,000 before the insurance covers the rest

3 Major Forms of Taxes Income  Money taken out of your paycheck This would be a deduction as your income goes from Gross to Net Sales  Money you pay in addition to the good or service you’re paying for You buy a $20 shirt with 7% sales tax which means you pay $21.40 instead of $20. Property  Taxes on houses or cars among others

Deductions from a Paycheck Deductions are the money taken out of your gross income and there are many forms of them Federal and State Income Tax Health Insurance Social Security Medicare Retirement (optional) Savings (optional)