personal finance terms 2
Employee benefits
Forms of employee compensation, in addition, to pay. There are different types of benefits, some are required by law and others are common benefits
types of insurance
Health, life, Dental, vision, disability, workers' compensation
A tip -
Money, often displayed as a percentage, of the total bill for performing a service. ex. are waitstaff or caddies
Medicare tax-
Provides medical insurance, all, and to some disabled Americans.
state income tax-
Selected by employers on behalf of the employees and sent to the state revenue department.
A budget summary review
Step 1. to begin, make a clean copy of your monthly budget. Step 2. next, record your actual expenses in each category over a period of several months. step 3. highlight areas where you're spending consistently goes over budget. also highlight areas for which you have spent less than you budgeted. this will help you see where are you might have to make changes in your budget.
Net income/Net pay definition -
The amount left when all deductions are taken out of your gross pay. (AKA your take home pay.) Some required deductions are your federal, state, and local taxes, Social Security, and Medicare taxes. The exact amount withheld are determined with tax tables.
Net pay -
The amount of money left after all your deductions are taken out. The amount of your paycheck.
Gross pay -
The total amount any money before any deductions are subtracted.
Overtime -
Time worked beyond regular hours. The standard work day is a total 8 hours (plus brakes and unpaid lunch). The standard work week is 40 hours in a 5-day week. According to the Fair Labor Standards Act, employers must pay hourly workers for overtime at a rate of 1.5 times the regular rate of pay.
A budget summary
To review your financial progress, prepare a budget summary. It compares your actual spending with the amount that you have budgeted.
debt payment ratio
monthly credit pay/ take Home pay indicates how much of a person's earnings goes to pay debts (excluding mortgage). recommended to be less than 20%.
savings ratio amount saved each month/ row Gross monthly income
savings ratio amount saved each month/ row Gross monthly income
Some benefits are required by law-
unemployment compensation, workers' compensation, and matching social Security and Medicare payments.
Creating a spending plan
1. Make progress to achieve goals. 2. Avoid traps and buyer's remorse. 3. Deal with the unexpected costly events. 4. HAVE MONEY ON HAND WHEN YOU NEED IT. 5. Put you in control of how your money is used.
Without spending plans
1. May come up short on money before the next paycheck or allowance payment. 2. More likely to not reach your spending goals. 3. Added stress if struggling to keep up with payments. 4. Will need to give up something you planned for if money needs to be used for unexpected 5. Give up independence if you need to rely on others for financial help
Discretionary income -
Any extra money that can be spent, saved or invested after taxes and necessities.
Income -
Any money you have received this can be from jobs, birthdays, and allowances.
Tips -
Are when some workers receive tips and addition to wages. Money, often displayed as a percentage, of the total bill for performing a service. ex. are waitstaff or caddies
your safe deposit box (the bank)
Birth certificates mortgage loan papers title Deeds copy of will certificates of deposit checking and savings account numbers automobile title(s) insurance policy numbers valuable collectibles
Commission -
Commission- A set fee or percentage of sales paid to a salesperson instead of or in addition to salary or wages. It is only earned when a sale is made. ex. real estate agents and car salespeople
How to build a budget
Decide on a time frame for tracking expenses (a week, two weeks, a month?). List all money you have coming in (income). make categories for all expenses. Subtract total expenses from income. study your budget and your finacial plan to make sure it fits with your plans and goals.
Federal income tax-
Fees collected by the government to support its programs. Employers withhold it from your check and send it to the IRS.
Is your budget on track? To help you decide if your spending and savings are in line considered a general guidelines. Your total debt, not including your mortgage, should be less than 20% of your annual take-home pay. your rent / mortgage payment should be no more then 30% of your annual take-home pay. You should save at least 10% of your take-home pay each month.
Is your budget on track? To help you decide if your spending and savings are in line considered a general guidelines. Your total debt, not including your mortgage, should be less than 20% of your annual take-home pay. your rent / mortgage payment should be no more then 30% of your annual take-home pay. You should save at least 10% of your take-home pay each month.
Factors that determine how much is withheld:
Marital status, whether you have more than one job, and how many children you have.
Personal financial statement the balance sheet a balance sheet also called a net worth statement, list all the items of value that you owe, the deaths that you owe, and the difference between them.
Personal financial statement the balance sheet a balance sheet also called a net worth statement, list all the items of value that you owe, the deaths that you owe, and the difference between them.
Social security tax-
Provides a small income and other services for the elderly, disabled, and orphaned minors.
Net income/Net pay equation -
Regular wages/salary + overtime = gross pay gross pay - deductions = net pay
the balance sheet instructions
Step 1. determine your assets. Assets are any items of value that you own, including cash, property, personal possessions, and Investments. Step 2 determine your liabilities. Liabilities are debts that you owe. step 3 calculate your net worth. To do this, subtract your liabilities from your assets. Step 4 evaluate your financial situation. Do you own more than you owe? Surplus = good do you more than you own? Deflect = very very very bad
cash flow -
The amount of money you have coming in as well as the amount of money you have going out.
Deductions -
The amount subtracted from your gross pay. ex. social, Security Federal, state income tax, company-sponsored saving plans. With each paycheck you earn, you'll get a detailed list of all the deductions taken from your gross pay.
Form w- 4
The federal government calculates your tax deductions based on the form W - 4 you filled out when you started your job. The key part of the form is line 5 for you fill in the "total number of allowances." The lower the number on line-5, the higher the amount of taxes withheld, and vice versa. Students are usually in the 0 to 1 range. They can be changed at any time.
Salary -
The fixed amount of money paid to an employee annually (yearly). This is stated as an annual amount (ex. $42,000 for 12 months). Work is usually 40(+) hours long, but you do not receive extra money for overtime, you do not have to keep a time card and do not count hours worked.
minimum wage -
The lowest pay rate allowed by law for each hour worked. This will vary by state.
your home computer
current and past budgets summaries of checks written and other baking transactions tax records Resume
fixed expenses -
fixed expenses - same cost every time or month. examples mortgages and car loans
variable expenses-
fluctuates in amount Examples food, entertainment, groceries, and the electric bill
Common employee benefits:
insurance, retirement savings plans, pension plans, paid sick leave, paid holidays, personal leave, vacation, and profit sharing.
Debt ratio
liabilities/net worth Compares what you oh to your network a low debt ratio is best!
liquidity ratio
liquidity ratio liquid assets/monthly expenses liquid assets- something you can turn into money quickly. indicates the number of months you would be able to pay your living expenses and case of Financial emergency. The higher the number the better!
periodic/ occasional expenses-
not paid monthly can be fixed or variable, examples car insurance home repairs
types of income
pay, allowance, interest, gift money, sales
personal financial statements the cash flow statement
personal financial statements the cash flow statement the money that actually goes in and out of your wallet and make accounts is called Cash Flow. Cash inflow is the money he received, or your income. cash outflow includes all of the money you spend.
the cash flow statement instructions
step 1 record your income. List all of your sources of income during a given month. Step 2 record your expenses expenses fall into two basic types: fixed and variable 1 fixed expenses are those that are more or less the same each month. 2 Variable expenses are those that may change from month to month. step 3 determine your net cash flow. To do this, subtract your expenses from your income.
tips to predict
use what is known pay regular allowance average interest earned
be conservative
when estimating, aim lower rather than higher don't count on windfalls
where to keep your financial documents take-home files safe deposit boxes home computer
where to keep your financial documents take-home files safe deposit boxes home computer
your home files personal and employment records money management records Financial Services records tax records Consumer records (receipts and booklets) housing records, Insurance records, Investment records should all be within a file system Estate Planning in retirement records
your home files personal and employment records money management records Financial Services records tax records Consumer records (receipts and booklets) housing records, Insurance records, Investment records should all be within a file system Estate Planning in retirement records
benefits of organizing your finacial documents Organizing your documents help you: Find any document you may need, even in a hurry plan and measure your financial progress handle routine Money Matters determine how much money you have available to spend now and in the future make effective decisions about how to save money
benefits of organizing your finacial documents Organizing your documents help you: Find any document you may need, even in a hurry plan and measure your financial progress handle routine Money Matters determine how much money you have available to spend now and in the future make effective decisions about how to save money
