Financial Management

Intro

100

Need

Something you must have

200

Want

Something you would like to have

300

Goal

Needed in order to be financially successful. Use your needs and wants to create goals for yourself

400

SMRT

Specific- Enough detail to be understood

Measurable- Can be quantified

Realistic- Can be accomplished

Time-bound- Has a reasonable time frame

500

SMRT Goal Example

For the next 22 weeks, save an extra $30 per week from my part-time job to buy a $1,000 256GB iPhone 12Plus

Gross Pay vs Net Pay

100

Gross Income

The amount of earnings before payroll deductions

200

Net Income

Take home pay is your gross income minus payroll deductions

300

Wages

Employees who work for wages are paid for each hour worked

400

Overtime Pay

Overtime pay is at least 1.5 times the regular pay

500

Standard Work Week

The standard work week is 40 hours

Retirement Plans

100

401k

Employees contribute pre-tax dollars into a retirement fund to be invested in financial markets. Taxes aren’t paid until the money is withdrawn from the account at 59½ years old.

200

Pension

The employee receives regular payments in retirement, this plan is funded by the employer

300

Roth IRA

Set up by an individual, earnings on the account and withdrawals after age 51½ are tax free

400

What to do with your 401k if you switch jobs

If you switch jobs, you should rollover your 401k into a Roth IRA or the new company's retirement plan.

500

When are taxes paid for a 401k

Taxes aren’t paid until the money is withdrawn from the account at 59½ years old.

Taxes and Deductions

100

IRS

Internal Revenue Service

200

Deductions

• Federal income taxes

• State income taxes

• Social security taxes

• Medicare taxes

• Local income taxes

300

Taxable Income

• All income (salary, wages, tips, commission)

• Interest on savings accounts, bonds

• Dividends and capital gains

• Gambling winnings

400

Not Taxable Income

• Money put into retirement plan 

• Gifts up to 14k per year

500

Federal Income Tax

It is a progressive tax, Rates range for 10% to 35%

Employee Forms

100

W4

Determines the percentage of gross pay which will be withheld for taxes.

200

W2

Shows your taxable income, this form is filled out by the employer

300

1040

Form that individual taxpayers use to file their income tax returns

400

Tax Avoidance 

Reducing your taxes by claiming legitimate adjustments, tax deductions, and credits

500

Tax Evasion

Failing to declare all income or falsifying deductions, adjustments, or credits