Income and Expenses
True or False:
You get to keep all the moeny you earn from your job.
False
(because of taxes and deductions)
True or False:
If you become rich, you will not have to worry about money problems ever again.
False
(Everyone needs to budget and manage their money responsibly)
What is a budget?
Which type of payments use your own money?
Debit (debit card, cash, check, etc.)
What is the term used to measure the potential for a borrower to repay money owed?
Credit score
Which of the following is an example of an expense?
a) Getting paid for babysitting
b) Buying groceries
c) Receiving a paycheck
d) Earning tips
b) Buying groceries
Which of the following is a living expense?
a) Video games
b) Concert tickets
c) Clothing
d) Rent
b) Rent
Sort the following into two categories: "want" and "need"
(You can get 50 points for each one you sort correctly)
- New video game - Snacks at a movie
- Transportation to school/work - Phone apps
Needs = transportation to school/work
Which type of payments allows you to borrow from a bank with the intention of paying back later on?
Credit (credit card, loan, etc.)
Besides being able to spend money, why is it a good idea to open a credit card with the intention of paying it off in time?
To build up your credit score
What is income?
The money you earn from working or other sources.
Think about your morning routine. What are THREE examples of essential expenses from your morning, and why is it considered essential? (You can earn 100 points for each example you get correct.)
Sample Answers:
- Breakfast (food is necessary to live)
- Bus ride/gas (transportation to school or work)
- Clothing (basic need for daily life)
You saved $40 toward a new bike that costs $100. You earn $20 this week. Your friends invite you to the movies where the tickets costs $15 and snacks cost $10.
What is one smart way to manage your money so you can still work toward your goal?
Sample Answers:
- Go to the event but only pay for the $15 ticket (skip the $10 snacks)
- Say no to the event and save the full $20
- Spend less so you can keep saving for the bike
What type of payment would you use to buy a car or a house?
Loan
A charge for a loan, including an unpaid credit card balance, usually given as an annual percentage rate, is called what?
Interest
An individual earns $500 in gross income. Income tax is $75, health insurance costs $50, and retirement savings costs $25.
What is the individual's net income?
$350
Define "gross income" and "net income".
Gross income = the income BEFORE all items like taxes and benefits (health insurances and retirement savings) have been deducted
Net income = the income AFTER all items likes taxes and benefits (health insurances and retirement savings) have been deducted
Robert agrees to wash 4 cars for $12 each but must spend $6 on cleaning supplies. He has already saved $14 and wants to buy sneakers that cost $60.
How much money will he have after this job, and what should he do next to reach his goal?
Earnings: 4 x $12 = $48
After supplies: $48 - $6 = $42
Total savings: $42 + $14 = $56
- Save more instead of spending on games
- Earn more money with another gig
What is one advantage and one disadvantage of using debit cards?
Pros: Widely accepted, easily tacked, can be used to get ATM cash, encourages you to live within your means by only spending what you have
Cons: Can only use what you have in the account, can be charged overdraft fees if there isn’t enough money on the card, can be hacked or stolen
Your financial life starts getting tracked when you open a bank account and start using debit and/or credit cards. What are two things that your financial reputation is assessed on?
Possible answers:
- Income (how much you do you make?)
- Spending (how much? how often?)
- Bill-paying habits (on time? consistent?)
- Personal activities (borrowing money/loans?)
What would be the net income for each job and which of the two jobs would you pick? Explain why.
Job A - Hourly rate is $16, no overtime, weekly pay is $640, income tax is $120, health insurance costs $50 per week
Job B - Hourly rate is $13 per hour (plus overtime is $19.50), weekly pay is $520, income tax is $100, and health insurance costs $20 per week
Job A net income = $470
Job B net income = $400--> if work 4 extra hours a week would make $478
[Job choice may vary]
Your income stays the same, but your electricity bill increases.
What are TWO things you can do to still cover your expenses?
1. Spend less (ex. reduce flexible expenses like subscriptions, clothing purchases, Starbucks, etc.)
2. Earn more (ex. get a second job/gig work, get a new job that pays more, ask for raise, etc.)
A student has $1,000 in monthly net income and $700 in monthly expenses, leaving $300. They budget their leftover money as follows:
$100 to emergency savings
$100 toward a new bike (cost: $500)
$50 toward a vacation
$50 left for other spending
How many months will it take to save for the bike, how much will be saved for the vacation by then, and what is one change they could make to reach their goal faster?
Bike: $500 ÷ $100/month = 5 months
Vacation savings: $50 × 5 = $250
To reach the goal faster:
- Increase savings toward the bike (reduce “other spending” or vacation savings), or
- Reduce expenses or earn more income
What are two advantages and two disadvantages of using credit cards?
Pros: Widely accepted, easily tracked, strong identity theft protection, card rewards, no finance charges if paid back in full and on time, can be useful for bigger purchases
Cons: High interest rates if not paid back on time, may encourage overspending, debt can add up quickly
What might happen if you have bad credit? Give two specific examples of these consequences
Possible answers: you may not be able to borrow money to buy a car, you may not be able to rent an apartment, you may not be able to open a credit card, you may not be able to get certain jobs, you may get worse interest rates on your loans like a mortgage rate