Assets vs. Liabilities
What is an asset?
Something you own that has value.
What is gross pay?
The total amount of money earned before taxes and other deductions are taken out.
What is a cash surplus?
When your income is greater than your expenses.
What are employee benefits?
Extra forms of compensation or support provided by an employer in addition to regular wages or salary.
What is a fixed expense?
An expense that generally stays the same amount each month, such as rent or a car payment.
What is a liability?
Money you owe to another person or organization.
What is net pay?
The amount of money you take home after taxes and other deductions are subtracted.
What is a cash deficit?
When your expenses are greater than your income.
What is a 401(k)?
An employer-sponsored retirement savings plan that allows eligible employees to save and invest money for retirement.
What is a variable expense?
An expense that can change in amount, such as groceries, electricity, or entertainment.
You own a car worth $15,000 and owe $6,000 on the car loan. Is the car an asset or a liability?
The car is an asset. The $6,000 car loan is a liability.
What is a paycheck deduction?
Money taken out of your gross pay, such as federal income tax, Social Security tax, health insurance premiums, or retirement contributions.
You earn $2,000 per month and spend $1,700. Do you have a surplus or deficit, and how much?
A $300 cash surplus. $2,000 − $1,700 = $300
What is health insurance, and how can it benefit an employee?
It helps cover eligible medical expenses, reducing the amount the employee may have to pay out of pocket for covered care.
Is a monthly $1,200 rent payment a fixed expense or a variable expense?
A fixed expense, assuming the rent amount stays the same.
Name TWO examples of assets a person might have.
Cash, savings account, home, car, pokemon cards (some), etc...
You earn $1,500 in gross pay. Your total deductions are $350. What is your net pay?
$1,150. $1,500 − $350 = $1,150.
You bring home $2,400 per month and your expenses total $2,650. What is your monthly cash surplus or deficit?
A $250 cash deficit. $2,400 − $2,650 = −$250.
An employer offers a retirement plan match. What does this mean?
The employer contributes money to the employee's retirement account based on the employee's own contributions, according to the plan's rules.
A person's grocery bill is $350 one month and $425 the next month. Is groceries a fixed or variable expense?
A variable expense because the amount changes.
A person has $8,000 in savings, a car worth $12,000, and $5,000 in credit card debt. What is their net worth?
$15,000. Assets of $20,000 minus liabilities of $5,000 equals $15,000.
Two employees earn the same gross pay. One takes home less money than the other. Give TWO possible reasons why.
They may have different tax withholding amounts, health insurance premiums, retirement contributions, or other deductions.
A person has a monthly cash deficit of $200. Give TWO ways they could improve their financial situation.
They could reduce expenses, increase income by working additional hours, find a higher-paying job, or reduce unnecessary spending.
Two jobs pay the same salary. Job A offers health insurance, paid time off, and a retirement match. Job B offers no benefits. Why might Job A be the better financial choice?
A person wants to save more money each month. Which expense might be easier to reduce quickly: a car loan payment or entertainment spending? Explain why.
Entertainment spending, because it is generally a variable expense that can be reduced or eliminated more easily than a contractual car loan payment.