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Personal Finance Unit Visuals 2

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by

Taylor Rankin

on 4 May 2015

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Transcript of Personal Finance Unit Visuals 2

Personal Finance 2
Income
Savings
Expenses
Housing
Food
Transportation
Entertainment
Payments
Personal Living
Personal Care
Other
Columns for:
Budgeted Amount
Actually Spent
Difference
Budget Must Include:
Row across Bottom for TOTALS
1800 - 3000
400-1000
Add in the categories/amounts you have been given on the budget sheet and then add to the budget until you get to the income amount.
(Grand Total is Zero)
250-600
Rent
Groceries
Gas
50-200
$100-500
600-1300
Use your Budget Sheet, the Budget Sheet Example and your Reality Check Notes.
1. Choose an institution
2. Go to the bank or website
3. Pick the account you want (check for fees and requirements)
4. Provide your info (bring IDs, Social security card, etc.)
5. Agree to the Terms (Sign your paperwork and get a copy and put it in a safe place.)
6. Navigate your account online. (Keep password safe!)
Steps to Open a Bank Account:
Which bank would you want to open an account with and why?
(at least four sentences!)
Credit Basics
Advantages of Credit:
convenience
practical (if you need to pay over time)
Disadvantages of Credit
not free
terms can be confusing
real cost can be deceptive
interest rate changes
Establishing Credit
borrow against your savings
establish an account with a gas or department store
you may need a co-signer
savings is better for emergencies and long-term
What impacts your score...
past credit history and payments
amount you owe
length of credit history
amount of new credit
number of credit cards
Warning Signs:
charging to limit and applying for new cards
using cards for essentials like groceries
using one card to make payments on another card
borrowing from friends and family
avoiding opening statements
no savings or using savings to pay for card
Credit Scores
Types of Credit Used
New Credit
Length of Credit History
Amounts Owed
Payment History
payment info
adverse public accounts (legal issues)
delinquency (past due) and severity
number of past due accounts
number of accounts paid
amounts
number of accounts with balances
proportion of loans and credit lines
time accounts have been open
activity on accounts
recently opened accounts
recent credit inquiries
re-establishment of positive credit
number of different types of credit
cards
retail accounts
installment loans
mortgage
Character - integrity
Capacity - ability to repay
Collateral - some loans require property to secure a loan
Capital - net worth
Conditions - purpose of the loan and local economy
(What Creditors Look for Before Granting Credit)
The 5 Cs:
Hurt
Hurt
Hurt
Help
Hurt
Help
Help
Help
Hurt
Help
Hurt
Hurt
Help
Help
Help
Hurt
Help
Hurt
Credit Score Range
300-850
Credit Cards
Risks
Benefits
Some cards offer incentives (airline miles, bonuses, discounts, etc.)
Safer than carrying cash
Good to have in case of emergency
Builds your credit history (if used wisely)
Returns are easier
Purchases are protected if it is lost, broken, or stolen
Some businesses require a credit card (hotels, car rentals, etc)
Ease of making purchases
May have to give up long-term goals to pay off debt
Must sacrifice things you need now because you must pay off credit card debt
Impulse buying
Fraud - people may steal your info and make fraudulent purchases
You are spending money you don't actually have --> OVERSPENDING
Interest - rates are usually very high
Going into debt by overspending
Insurance/Car Buying
Automobile
Buying Insurance
Continuing Costs of Owning a Car
Buying A Car
Liability
Collision
Two Types:
Insurance
Life
Medical
Home/Rent
Pays for damages to other cars
Required in Texas
pays for damages to your car if in an accident
Includes a deductible (amount you must pay before insurance will pick up the cost)
Can take weeks or months to process
Required for new cars for 3 years
Property – will pay for the replacement or repair of a dwelling
Liability – pays for the medical expenses of anyone who is injured on your property
1. Health maintenance organization (HMOs)
Pay for all or part of medical expenses
Cover yearly exams and baby care
OR
2. Preferred provider organizations (PPOs)
Extend benefits to cover treatment by people outside of the PPO

*Disability – covers your temporary or long-term inability to work
Covers you throughout your life
Pays a dividend after a period of time
More expensive
What is it??
expires after a period of time
Relatively inexpensive
Term Life
Whole Life
Pays benefits to the families of policy holders who die
Usually offered as a part of your employer’s benefit package (if you work at least 40 hours)
Buy from an established company
Shop around for best rates (they change all the time)
Rates typically go down as you get older
Insurance
Repairs and maintenance
Driver’s license renewal
License and registration renewals
Gas
Size
Define how you will use the car
Large car can accommodate more people
Smaller car gets better gas mileage
Options
List price is without any options
Add features you want BUT the price will increase
Rank options by priority to decide
Style
Available in different colors (avoid red!)
Will get lower price if car is in stock (be flexible)
Initial Fees
Sales tax
Title
License plates
Employee Rights
Job Search
Career Center at your College
College Database
Social Media
Local Database (Example: Amarillo.jobs/)
Websites
Monster.com
Careerbuilder.com
Indeed.com
Simplyhired.com
Talk to friends and family
"Network" with people you know and meet
Things to Discuss Before Signing Anything:
Job description
Responsibilities
Expectations
Salary
Benefits (insurance, sick leave, vacation)
Hours
Learn day-to-day schedule and responsibilities
Enroll in insurance and programs (only eligible if you work a certain number of hours - usually 40)
Read policy manuals
Clarify benefits with Human Resources
Understand the deductions from paychecks (talk to the accountant or manager)
After You Start Your Job
Deductions
Gross Pay = earnings before deductions
Net Pay = earnings after deductions
Federal Income Tax
State Income Tax (depends on the state)
Social Security Tax
Insurance Plan
Retirement Plan
Social Security Act (1935)
Provides workers with:
disability and accident insurance
unemployment compensation
old-age retirement benefits
*FICA is deducted from each paycheck
Labor Laws
National Labor Relations Act – right to belong to a union
Fair Labor Standards Act – right to minimum wage , standard work week, overtime pay
Civil Rights Act – right to seek equal employment (protects women, the disabled, and minorities)
Contracts
What is a contract?
Agreement between two or more parties that is enforceable by law

Verbal and written contracts are considered contracts
Verbal contracts are binding only for a small amount of money and for a short time
Job
Buying and selling real estate
Personal loan
Use of a credit card
Purchase/lease of a car
Rental agreement
Maintenance agreements
Insurance policies
Read the contract!
Contact a lawyer if needed
Be sure you agree with the terms
Make certain you know the options to terminate or change the contract
Know what will happen if you break your promise
An offer and a promise to accept the offer
All parties must be competent
Terms must be legal
“Bargain for exchange” – agree to fulfill promises
Four Criteria
Examples of Contracts
Before you sign...
Total Credit Limit
Total Credit Available
Statement Date
Minimum Payment
Payment Due Date
Current Payment Due
Previous Balance
Payment/Credit
Purchases/Debits
Finance Charge
New Balance
Transaction Summary
Annual Percentage Rate
Credit Card Statement Poster
Directions:
Glue the credit card statement onto poster paper. Around the statement, draw an arrow to each of the parts and write the label.
Then, glue the rubric onto the poster and fill it in.
Parts to Label:
COMMON FORMS

W-4 - used by employers to determine the correct amount of tax withholding to deduct from employees' wages (claim yourself for more money to be taken out of your paycheck)

W-2 – reports wages paid to employees and the taxes withheld from them


1040A - limited to taxpayers with taxable income below $100,000 who take the standard deduction instead of itemizing deductions
Kinds of Taxes
Sales tax
Property tax
Excise tax
Income taxes

**Pay for public goods/services and federal programs.**
Key Terms to Know:
Dependent – a person who relies on someone else for support.
Earned income – includes wages, salaries, tips, and net earnings from self-employment
Standard deduction – an amount fixed by law and based on filing status and age which taxpayers deduct from their gross income before tax is determined
Where does the power to tax come from?

1788 – Constitution specified that taxes collected by the government had to be divided fully among the states according to population.
1913 – 16th Amendment gave Congress the power to collect income taxes
Taxes
Go to creditcards.com

Use the info sheets to analyze the man's credit
SMART Goals
S - Specific (What, Who, Where, Why?)
M - Measurable (What will it take?)
A - Attainable (Resources, Reasonable?)
R - Relevant (Worthwhile, Meaningful, Commitment?)
T - Time-bound (Deadline, Steps?)
Time Span
Short = up to Three Months
Medium = Three Months to a Year
Long = more than a Year
Opportunity Cost
Remember...
You must always give up something with every decision you make.
Income should equal Expenses
*Expenses can be fixed, variable, or periodic.
Pay yourself first (SAVINGS)
Savings should be your first expense each month.

PAYING THE BILLS
SPENDING
decide the time frame
list your income
use a budget to log
subtract your total expenses from your total income (extra goes to savings!)
implement your budget
review and adjust as needed
Avoiding Spending Leaks
plan and make a list
limit temptations (pay with cash)
research bigger purchases
buy used over new when you can
look for student discounts
don't shop when you are stressed
Education Dividends and Payoffs
2/3 of all jobs will require at least some college by 2018
four choices: four year, two year, apprenticeship, military
extra income multiplies throughout your career with a degree
employees with a degree are more likely to enjoy their jobs and receive insurance
Cost of College
state public college = $22,826
private college = $44,750
includes:

tuition
fees
housing and meals
books and supplies
(2014 info)
for one year
Ways to Ease Education Costs
get a job
starting at a two-year school
research scholarships and grants
every year
employer training
take summer classes (usually cheaper)
savings account
loan deferment
Preemptive Strikes for Down Times
keep doing a good job (need positive job referral)
tune up your finances
update your resume
use online resume services too (example: LinkedIn)
enlist support
network!!
Mind the Gap
(gaps between jobs on your resume)
gaps show that you are unreliable
list EVERY job
never lie on your resume
never blame someone else
keep learning and growing (add to your resume!)
Balancing Expenses & Income
Pay Yourself First
Full transcript