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Personal Finance

Personal Finance. Unit 1: MONEY. What’s the BIG DEAL about MONEY?. It allows us to move beyond the barter (good for good) system. Characteristics of Money: Durability Portability Divisibility Uniformity Limited Supply Acceptability. What’s the BIG DEAL about MONEY?. WATCH VIDEO.

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Personal Finance

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  1. Personal Finance Unit 1: MONEY

  2. What’s the BIG DEAL about MONEY? It allows us to move beyond the barter (good for good) system Characteristics of Money: • Durability • Portability • Divisibility • Uniformity • Limited Supply • Acceptability

  3. What’s the BIG DEAL about MONEY? WATCH VIDEO

  4. What’s the BIG DEAL about MONEY? US first created lawful money (backed by silver and gold). We currently use a fiat money system – LEGAL TENDER (backed by the confidence in its value)

  5. Role of the Treasury Dept: • Managing Federal finances; • Collecting taxes, duties and monies paid to and due to the U.S. and paying all bills of the U.S.; • Currency and coinage; • Managing Government accounts and the public debt; • Supervising national banks and thrift institutions; • Advising on domestic and international financial, monetary, economic, trade and tax policy; • Enforcing Federal finance and tax laws; • Investigating and prosecuting tax evaders, counterfeiters, and forgers.

  6. without CASH? How can you buy stuff

  7. The Emergence of a Cashless Society: All the ways we DON’T use CASH: • Gift Cards • Debit Cards • Checks • Cashier’s Check • Money orders • Credit Cards • Electronic Transfers

  8. How do YOU Make Money? • You will spend approximately 86,000 hours of your life working (about 10,000 days) • Your CAREER Choice should be based on values and beliefs, not necessarily money (A LABOR OF LOVE)

  9. How do YOU Make Money? • Take the following into account as well: • Education Requirements • Job Trends (will the career exist in 20 years?) • Job Outlooks (are there any openings?)

  10. US Income at a Glance…

  11. US Income at a Glance… The median income in New York State for a person with 1-4 year’s experience is around: $47,000 *www.payscale.com

  12. 30,500 305,000 3.05 million 30.5 million 274.5 million

  13. Finding the Job for YOU • Research • Internships and Job Shadowing • Part-time jobs early in life • Most successful people worked part-time as teenagers

  14. Finding a Career – complete Career Exploration Profile www.bls.gov/oco www.payscale.com scroll to bottom and click on CAREER RESEARCH – do NOT fill out nay surveys!

  15. Analysis of a Paycheck As soon as you start working, either part-time or full-time, the money will start rolling in…. Unfortunately, you only get what’s left (after everybody else has taken their cut).

  16. GROSS INCOME The amount of pay you get before any deductions are taken out NET INCOME Amount of pay you actually get to take home and do something with Analysis of a Paycheck

  17. So, what’s taken out? MANDATORY Deductions: NON-MANDATORY: • Federal, State (maybe local) TAXES • Social Security (FICA) – 6.2% • Medicare (FICM) – 1.45% • Automatic savings (Contributions to retirement plans that are taken out of gross pay) • Health Insurance Premiums • Life Insurance Premiums • Union dues • Charitable Contributions, • and more…

  18. SALARY DEDUCTIONS GROSS PAY NET PAY

  19. Now YOU try it… Can you read a paystub?Let’s Find out!

  20. Taxes, Taxes, Taxes!I want MY MONEY!

  21. The goal of tax planning is to arrange your financial affairs so as to minimize your taxes and keep the most of your money.

  22. TAXES

  23. Reducing your TAXES: • Increase your TAX DEDUCTIONS • Take advantage of TAX CREDITS • Increase your WITHHOLDINGS

  24. 1. Increase your TAX DEDUCTIONS Deductions are things you use to decrease your taxable income. • There are standard deductions for singles ($6,100) and married couples ($12,200) • Itemized deductions include: • Expenses for healthcare • Mortgage interest • Gifts to charity • Job-related expenses • State/local/property taxes

  25. 2. Take advantage of TAX CREDITS • There are tax credits for: • Earned Income Tax (for low income families) • Child Tax • Education • Retirement Savings Contribution • 1st Time Homebuyer • Dependent Care • Energy Efficient Home Tax credits reduce your tax - straight up $ for $ reduction

  26. 3. Increase your WITHHOLDINGS Increase the amount of money taken out of each paycheck throughout the year – you’ll get a bigger refund at the end. CLAIM 0 – More money is taken out of each paycheck and you are more likely to get a refund CLAIM 1 – Less money will be taken out of each paycheck, but you may end up owing money at tax time

  27. THANKS UNCLE SAM!Tax Examples Worksheet

  28. End of Unit Notes! Let’s review!

  29. Terms to KNOW • Barter • Lawful Money • Fiat Money • Legal Tender • Treasury Dept • Career • Gross Income • Deductions • Adjusted Gross Income • Taxable Income • Net Pay • Tax Credit • Withholdings

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