Establishing Healthy Financial Habits Personal Finance

The Share, Save, and Spend System ●Share, Spend and Save- Involves dividing your funds into three categories. ○ It is a balanced approach that helps you look at money in terms of your own personal values systems.

Sharing and Saving ●Sharing can mean buying Christmas presents, donating to a charity, etc. ●Saving involves putting away for short-term, medium-term, and long-term goals ○ Short-term: buying an ipod ○ Medium-term: going to college ○ Long-term: starting a family or buying a house ●Buying everyday items such as food, gas, clothing, etc.

Sharing, Saving and Spending ● When you put spend last in the Share, Save, Spend System you are putting less emphasis on your everyday wants. ○ You will soon staying learning to use phrases such as. “I cannot afford that right now” or “No I do not need that”

Values ●Before you can begin setting up your financial planning system you need to think about your own values ○ What parts of your life deserve the most attention?

Cause and Effect ●What happens if you blow your whole paycheck? ●What happens if you pick up an extra shift? ●What happens if you get a speeding ticket?

Your Financial Plan ●Step 1- Determine your current situation ○ Analyze how you use money now. ○ Coming to terms with how you have spent (or overspend) money in the past can be a powerful lesson. ●Step 2- Set and prioritize your goals ○ Decide what goals you have for the short, medium, and long term ○ Your goals should be specific, measurable, and realistic. ○ Determine which goals are most important to you

Your Financial Plan ●Step 3- Develop a long-term plan ○ Think about how you can work towards your goals. ○ Make sure your plan is something you can do without a lot of trouble. ●Step 4- Organize your records ○ Come up with a way to organize your bills, bank records, and other paperwork. ○ Use Excel, a notebook, and make sure you keep important documents

Your Financial Plan ●Step 5- Set up a budget ○ Your budget should reflect the three R’s ■ Reality ■ Responsibility ■ Restraint ○ It should be doable and should reflect your values ●Step 6- Keep it simple ○ People who achieve their financial goals keep their plan simple ○ Make sure your plan is easily trackable

Income vs. Expenses Money coming in is income Money going out represents your expenses Determine your income o Jobs o Allowance o Gifts When projecting your budget, be realistic about your income.

Income vs. Expense A good way to evaluate your spending is to keep track of your expenses for a month DateItem or ServicePurchased atCostCategory May 11LatteMug Shots$4.42Food May 12HaircutBarber Shop$20.00Grooming May 12MovieCinema 16$9.00Entertainment May 15Bus PassCity Bus$35.00Transportation

Income vs. Expense After you had made a detailed list or log of your spending for a month, you can put each item into a category CategoryWeek 1Week 2Week 3Week 4Total Sports$24.00$32.00$21.00$27.00$ Food$13.00$20.45$16.10$18.00$67.55 Clothing$0 $40.00$8.00$48.00 Grooming$0$20.00$0 $20.00 Entertainment$9.00$21.75$9.00$18.00$57.75 Transportation$0$35.00$0 $35.00 Grand Total $332.30

Income vs. Expenses After creating this detailed list or log, you will have a much better picture of how and where you spend your money. o Ask yourself  Did my spending reflect what is important to me?  Two years from now, which of these purchases will still mean something to me?  What percentage of my spending is for necessities?

Keeping Records and Paying Taxes Financial Records include a variety of documents such as bank statements, receipts, vehicle ownership papers, contracts, insurance papers, employment records, tax records, and bills. o These should be kept on file for 7 years.

Filing Systems Paper documents are best kept in file folders and can be organized a few different ways o Alphabetical o Numberical o Chronological Computer Based o Many banks and other financial institutions provide online access to your accounts

Online Safety Most online financial service providers are safe to use. However you should always be safe and follow the basic rules o Keep a hard copy of your records o Do not give out personal information o Never click on links sent in an o Regularly update your operating system, firewalls and antivirus software o Read the privacy policies of companies before you click accept.

Taxes Taxes- represents all the money that people pay to their local, state, and federal government to fund government programs o Federal Taxes- Medicare, Medicade, Education, the Military, roads and other public projects. o State Taxes- Fund the same sorts of programs and projects as the federal government o Local Taxes- Go towards Fire and Police departs, schools, parks, and community services

Types of Taxes Sales Tax- You pay when you make a purchase Property Tax (real estate tax)- You pay on the land and homes that you own. o Personal Property Tax- You pay on items such as cars, boats, certain services like hotel rooms and car rentals.

Types of Taxes Estate Tax- You pay when you for inheritance money Income Tax- You pay out of your paycheck, this is figured as a percentage of a person’s earnings. o Everyone pays income tax on the money they earn o Gift Tax- Tax paid on gifted money, o More than $14,000. You will pay taxes.

Income Tax When you start any job you will have filled out a form which is called a W4 form. o This form helps you and your employer figure out how much money to withhold from each paycheck Withholding- the money that is taken out of your paycheck to pay taxes, Social Security, and any additional fees.

Forms W EZ

Social Security Tax Social Security Tax- Covers the federal program that people pay into while they are working o This money pays for disability, retirement, and life insurance benefits o New law affect the amount of money you end up paying into the system and the amount you will collect when you retire decades from now.