1. Making the Most of Your Money
Unit 2 Budgeting
Making the Most of Your Money

2. Examine spending habits
How does your spending measure up?
Spending Plan / Budget
A plan for managing your money during a given period of time.
Will change as your income grows.

3. SMART SPENDING Spending a $1 a day on a bottle of water
In one month—you would have spent $30
VERSUS
Spending $30 on something you really need or want

4. Part 1 - INCOME
Cash Flow- refers to the money you have coming in, as well as the money you have going out
Income-any money you receive
Allowance
Birthday $
Working a job

5. Paycheck Income
Paycheck will be for less than the money you actually earned.
WHY?
Payroll Deductions- items that you must pay for and that your employer must withhold from you
Taxes
Insurance

6. Taxes
Fees that support government programs and are required by law to be applied to income, property, or goods.

7. What do our taxes pay for?
Public Schools
Military
Road Maintenance
Retirement Income -Elderly

8. 4 Most Common Tax Deductions
Federal Income Tax
State Income Tax
Social Security Tax
Medicare Tax

9. Federal Income Tax- a fee collected by the federal government to support its programs- sent to the Internal Revenue Service (IRS)

10. State Income Tax
Most states collect an income tax that helps pay for state services. Also collected by every employer on behalf of its employees and then sent to the state.

11. Social Security Tax
Provides a small income and other services to the elderly, disabled Americans, and orphaned minors.

12. Medicare Tax
Provides medical insurance also to the elderly and to some disabled Americans.

13. What you actually get a check for?
What you earn?
versus
What you actually get a check for?

14. Gross Income The total Amount of income from your wages
Before any Payroll Deductions
# of hours you work time your hourly rate
Ex. If you work 15 hours a week and get paid $10 an hour-your gross income would be $150 for the week

15. Net Income / Take home pay
The amount you’ll be able to deposit or cash.
The amount the check is written to you for.

16. Expenses
What you spend money on
Needs and Wants

17. Expenses
1. Fixed
2. Variable
3. Periodic or Occasional

18. Fixed Expenses Cost the same amount every time Home Loan (Mortgage)
Car Loan
Example- $250 every month to pay off a car loan

19. Variable Expenses
Fluctuate in amount, so you usually have more control over how much they will be.
Food / Groceries
Entertainment

20. Most Important Expense
P.Y.F.
Pay
Yourself
First

21. Pay yourself first
Saving is an important part of reaching your financial goals.
Whenever you receive $, you should immediately put aside a certain amount into an account that you will use later to reach a long-term financial goal.

22. Creating a Budget
1. Decide the time frame for tracking your income and expenses. Weekly or Monthly?
2. List all the money you have coming in. Then total your income.
3. Make categories for each of your expenses. Don’t forget P.Y.F. Then total your expenses.

23. Creating A Budget
4. Subtract your total expenses from your total income. If the # is negative—you must adjust your expenses. If the # is positive, you might want to add more to P.Y.F.

24. Creating a Budget
5. Step back and look at your budget and your financial plan.
Does it need tweaking?

25. Stay on Track

26. Documents associated with earnings/income
Pay stubs
W-2

27. W-4 It is almost impossible to avoid paying any taxes.
You do have some control over the amount taken out of your paycheck.
The federal gov’t calculates your tax decutions from the information on the Form W-4.
W-4 form is filled out when you started your job.

28. Sample Form W-4

29. Form W-4 ..continued
Key part of W-4 is on line 5 where you fill in the total number of “allowances”.
These allowances determine how much tax will be withheld from each paycheck.
Examples
Martial Status
# of children

30. Documents– pay stubs
Pay stub- portion of paper that is attached to your actual paycheck.
Double check your stub when you receive it.

31. Sample Pay Stub

32. Documents –W-2 Form
When you receive your last pay stub for the year- double check it against your W-2 that you will receive from your employer in January.
The information should match! If it does not match, ask your employer for a corrected W-2 form.

33. Sample W-2 Form

34. Summary 3 types of documents associated with our earnings/income W-4
Pay Stubs
W-2
QUESTIONS????