Income and Careers

How will my education and career choices impact my future income potential?

How can I tell if my choices were good financial investments?

Sources of Income

Wages/Salaries/Commissions

Investment/Interest

Self-Employment profits

Inheritance/Gifts

Scholarships/Awards

Benefits/Insurance

Lottery……… http://www.thedailybeast.com/articles/2012/03/30/15-things-more-likely-to-happen-than-winning-mega-millions.html

Income Terms

1. Wages: the amount of money paid to an employee each pay period

2. Insurance: A method for spreading individual risk among a large group of people to make losses more affordable for all

3. Income: Money received (paychecks, interest, etc.)

4. Cost of Living: price of food, transportation, housing, and other necessary expenses

5. Pension Plan: Retirement plan funded in part by an employer with a set benefit

6. Benefits: Non-Cash compensation companies offer in addition to paychecks

7. Leave: a period of time away from your job; sometimes paid for.

8. Retirement: the age at which you stop working full time

9. Investment: The use of money to earn a financial return

10. Commission: A fee received by a broker or agent for buying or selling securities or real estate

11. Inheritance: Property passing at the owner’s death to their heirs

12. Gift: Something given voluntarily to someone without payment in return

13. Workforce: The people engaged in or available for work, either in a country or an industry

14. Unemployment: When a person cannot find a job but is actively searching for one

15. Entrepreneur: A person who takes the initiative and risk to start and run a business

16. Withholding: Part of an employee’s earnings paid directly to the government by an employer

17. Taxes: An involuntary fee paid by workers to pay for government programs

Which income terms represent direct sources of income?

Wages

Benefits

Investment

Commission

Pension Plan

Inheritance

Gift

Wages

http://www.cc.com/video-clips/8fg72p/the-colbert-report-minimum-wage---mcdonald-s-spending-journal

Should the minimum wage be increased to from 7.25-15 dollars per hour?

Benefits

Leave: vacation, holidays, sick days

Insurance: health, disability, life, dental

Pension Plans

Personal Retirement Plans (401k IRAs)

Tuition Reimbursement

Travel Expenses

Access to Financial Advice

Payroll Savings Plan

Stock Option Purchase

Paychecks

When a person gets a paycheck there are a couple of items which will help you know what you are getting and why.

Gross pay- how much you made total before withholdings were taken out

Net pay- after withholdings are taken out it’s the money you actually get to keep

YTD- year to date; a total of your earnings so far that year

Deductions- all the different ways money is withheld from your paycheck

Taxes and Withholdings

https://www.youtube.com/watch?v=ujdN7uK5kDk

Unemployment

Unemployment occurs when someone loses their job

In the event of unemployment, the government may provide unemployment insurance to those who qualify

This allows qualified individuals to continue receiving a paycheck while they search for work

https://www.youtube.com/watch?v=8JZjdj39TF0

Entrepreneur

Entrepreneurship is the fastest growing career in the U.S.

An entrepreneur is someone who

Is willing to take risks

VERY disciplined

Happier being their own boss

Is competitive!

Entrepreneurship

Risks

• No Guarantees it will work

• No regular paycheck

• Long hours, nights, weekends, holidays

VS Rewards

• Be your own boss

• Keep your profits

• Control your destiny

Investments

Good Financial Planning should include some form of investment.

By investing you can make your money earn more money for you.

https://www.youtube.com/watch?v=23zghpS9034

The cost of waiting to invest Ben invested $2000 dollars a year for 8 years in his retirement account, then nothing afterward until he retired.

Arthur invested nothing for the first 8 years of his career then $2000 a year every year from then until retirement (38 yrs).

Who do you think had more money for retirement?

How much did it cost Arthur to start his investing later in life?

The Time Value of Money (TVM)

When saved or invested, the value of money can increase exponentially over time.

TVM can be used to see the opportunity costs of choosing not to save or invest your money

Example: Spending $1000 from a savings account that earns 4% a year would have an opportunity cost of $40 ($1000 x .04 interest/year = $40)

$1000 saved and compounded at 4% over 10 years would have been worth $1480

Is Education an Investment?

https://www.youtube.com/watch?v=w7Kqg0UUyfg

Value of Education

These figures show that for the average person, finishing

high school is worth about $10,000 more (compared with

dropping out). And finishing college nearly doubles the

worth of that number to $22,000 more!

Uneducated = Unemployed Education pays in higher earnings and lower unemployment rates

Source: www.bls.gov: Employment statistics of the civilian population 25 years and over by educational attainment.

What might a employer think about a High School Dropout?

How will I pay for my Education? There are many different routes one may

choose in order to pay for their Post-Secondary (after high school) education

Personal funds- Your own money or your parents

Student Loans- Most will not require you to start paying them back until you graduate or stop going to school

Scholarships- Money awarded to you because you applied and met their requirements

Grants- Free money from the government given to those who qualify

How can I get government Grants?

In order to qualify for government grants you will have to fill out the FAFSA (Free Application for Federal Student Aid)

Go to FAFSA.ed.gov

Use the FAFSA Forecaster to see if you might qualify for Federal Grants

Investment Basics

People invest their available resources (Money, Time, Energy) primarily looking for a Return on Investment or ROI

Total Gain from Investment – Cost of Investment

Example: If you invested $1000 dollars in a company only to sell your shares in the company a year later for $1200

your ROI would be $200

= ROI

Return On Investment

To determine if an investment was worth the resources applied, investors calculate the Rate of Return or ROR.

(Total Gain from Investment – Cost of Investment)

Cost of investment

Example: If you invested $1000 dollars in a company only to sell your shares in the company a year later for $1200

your ROR would be 20% ($1200-$1000/$1000)

= ROR

Career Choices Impact on Income

Imagine the world had to start over. That there is nothing left but the natural world and 100 people.

As a group, decide on the 7 most important occupations you would need in order to restart society and why you would need each one.

Income Factors

Education, Training, Skills and Talents

+ Demand for your skills, training, etc

– the number of competing workers

=Earning Potential

The amount you are likely to make in your career

Will the demand for your skills always remain the same?

https://www.youtube.com/watch?v=XrJjfDUzD7M&src_vid=vdvo5FlRqmM&feature=iv&annotation_id=annotation_2862183529

What does this means for you?

If you stop learning and growing you may be out paced and replaced before you are done working

Cost of Living

The decision of what career path to take should also take into account where you might live

Different areas of the country and world have different costs of living

A sufficient salary to live on in St. George may be completely unrealistic to live on in New York

http://money.cnn.com/calculator/pf/cost-of-living/

Should you take the job

Lets imagine you currently work at a business in St. George which pays $49,000 a year with basic benefits like health insurance and retirement (valued at $500 a month)

You then are offered a position in San Francisco California which offers you $79,000 a year with a similar benefits package.

Should you take the job?

Creating a Résumé

What is a Résumé- a document with information about you which is organized to help you get a job

Why should I create and use a résumé- It tells the employer who you are and what you can do

When should I use a résumé- Any time you apply for a job. It is often done in addition to the company’s application

Career Placement Test

Creating a Resume

Important information to include on a Résumé Objective Statement- state the position you are seeking and the

contributions you can bring to the company

Work Experience- Any paid experience you have in the field you hope to work in

Education- Information on training; could include GPA and Graduation dates from High School

Accomplishments- Anything you can point to which shows a record of success

References- People (generally over 21) who can speak well about you if contacted. Usually employers will ask for 3 different non-related references (can be included on separate pages)

Hobbies and Volunteer Experiences can also be included

Creating a Resume

Rules for making a Résumé more Professional

Try to limit it to 1 page

Do not use the word I

Use as little wording as you can while still being concise and descriptive

Use strong Verbs when describing your accomplishments like: achieved, controlled, coordinated, designed

Use Skill wording when describing yourself like: Capable, Flexible, Responsible, Resourceful

Make sure it is free of spelling errors!!