Paycheck Basics
What is a paycheck?
Payment for work done during a specific period.
What is gross pay?
Total earnings before deductions
What do deductions do to your paycheck?
They reduce gross pay to net pay
What is a budget?
A plan for how income is spent
If you earn $1,000 and get $700, what caused the difference?
Deductions
Name one way paychecks can be delivered.
Direct deposit or physical check
What is net pay?
The take-home pay after deductions
Name two types of deductions
Taxes, Social Security, Medicare, insurance
What are the 3 main budget categories?
Needs, Wants, Savings
If rent and groceries are included, what category are they?
Needs
Why is understanding your paycheck important?
It helps with financial planning and understanding deductions
What is a want?
Things that are nice to have but that you could live without.
Why do we pay taxes as deductions?
To fund government services like roads, schools, and safety
What is the 50-30-20 rule?
50% needs, 30% wants, 20% savings
If you have $700 monthly income, how much should go to savings using 50-30-20?
$140
What is the name of the start and end date used to track hours and calculate pay?
Pay period.
What is a need?
Things you must have to survive and live safely.
What deductions are optional?
Benefits, retirement savings, FSA, HSA, etc.
Why must budgets be based on net pay instead of gross pay?
Because net pay is the actual money you receive.
You have $700. Spend $350 on needs. How much is left for wants + savings
$350
Gross pay or net pay: which is higher and why?
Gross Pay: The money you earned before deductions are taken out.
Money you earn or receive.
What is another name for net pay?
Take home pay
20%
If you cannot afford everything on your list, how do you decide what to cut first?
Cut an item that is in the want category. You do not need "wants" to survive.