Personal Finance

Unit 1: MONEY

What’s the BIG DEAL What’s the BIG DEAL about MONEY?about MONEY?

It allows us to move beyond the barter (good for good) system

Characteristics of Characteristics of Money:Money:– Durability– Portability– Divisibility– Uniformity– Limited Supply– Acceptability

What’s the BIG DEAL about MONEY?

WATCH VIDEO

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)

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.

How can How can you buy you buy

stuffstuff

without without CASH?CASH?

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

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)

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?)

US Income at a Glance…

Criteria OverallLess than 9th grade

High school

drop-out

High school

graduate

Some college

Associates degree

Bachelor's degree

Bachelor's degree or

more

Master's degree

Professional degree

Doctorate degree

Median ind.

income

Male, age 25+

$33,517 $15,461 $18,990 $28,763 $35,073 $39,015 $50,916 $55,751 $61,698 $88,530 $73,853

Female, age 25+

$19,679 $9,296 $10,786 $15,962 $21,007 $24,808 $31,309 $35,125 $41,334 $48,536 $53,003

Both sexes,

age 25+

$32,140 $17,422 $20,321 $26,505 $31,054 $35,009 $43,143 $49,303 $52,390 $82,473 $70,853

Median household income

$45,016 $18,787 $22,718 $36,835 $45,854 $51,970 $68,728 $73,446 $78,541 $100,000 $96,830

US Income at a Glance…

The median income in New York State for a person with 1-4 year’s experience is around:

Finding the Job for YOU

• Research

• Internships and Job Shadowing

• Part-time jobs early in life–Most successful people worked

part-time as teenagers

Finding a Career – complete Career

Exploration Profilewww.bls.gov/oco

www.payscale.comscroll to bottom and click on CAREER

RESEARCH – do NOT fill out nay surveys!

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).

Analysis of a Paycheck

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

So, what’s taken out?

• 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…

GROSS PAY NET PAY

SALARY

DEDUCTIONS

CAN YOU READ A PAYSTUB?LET’S FIND OUT!

Now YOU try it…

Taxes, Taxes, Taxes!

I want MY MONEY!

The goal of tax planning is to The goal of tax planning is to arrange your financial affairs arrange your financial affairs so as to minimize your taxes so as to minimize your taxes

and keep the most of your and keep the most of your money.money.

TAXES

Reducing your TAXES:

1. Increase your TAX DEDUCTIONS

2. Take advantage of TAX CREDITS

3. Increase your WITHHOLDINGS

1. Increase your TAX DEDUCTIONSDeductions 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

2. Take advantage of TAX CREDITS

Tax credits reduce your tax - straight up $ for $ reduction

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

3. Increase your WITHHOLDINGSIncrease the amount of money taken out

of each paycheck throughout the year – you’ll get a bigger refund at the end.

CLAIM 0CLAIM 0 – More money is taken out of each paycheck and you are more likely to get a refundCLAIM 1 CLAIM 1 – Less money will be taken out of each paycheck, but you may end up owing money at tax time

THANKS UNCLE SAM!

Tax Examples Worksheet

LET’S REVIEW!End of Unit Notes!

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