Unit 2

How much of income should be saved?

20%

How much income should be spent on wants?

30%

For most employees what percent of there paycheck is deducted in taxes

31%

How much income should be spent on needs?

50%

regressive taxes

As income rises, the taxes remain the same or decrease

taxes

Compulsory charges imposed on citizens by local, state, and federal governments

outflows

Money going out

Take home pay; your paycheck after taxes have been taken out

Net Pay

progressive taxes

Take a larger percentage of income from high income taxpayers

Name of the form employers use to inform you about how much money they deducted from your paycheck in a given year

W2

Name of the form employers use to determine how much tax to deduct from your paycheck

W4

Maslow's Hierarchy of Needs

a psychological theory that categorizes the level of needs we have as humans. The basic idea is that the lower-level needs must be satisfied in order to reach the higher-level needs.

needs examples

air, food, and water. You also need shelter and basic clothing.

liabilities

amount you owe - this could be credit cards, car payments, or any other type of debt

impulse purchases

an unplanned decision to buy a product or service

assets

anything of value that you own

wants

anything that's not needed for survival, but makes our lives more fulfilling

Periodic Expenses

arise occasionally during the year

The a in smart

attainable

Medium Term Goals?

can be reached in 1 to 5 years

Short term goals?

can be reached in less than a year

IRS (Internal Revenue Service)

collects federal taxes, issues regulations, and enforces tax laws written by the US congress

To receive a paycheck a employee must

complete a form W-4(employee's withholding allowance certificate) and I-9(employee eligibility verification

wants example

concert tickets

What are athletic shoes?

could be both

What is a car?

could be both

What is a cell phone?

could be both

What is food?

could be both

fixed expenses

do not change month to month

The best way complete a budget is to use a spreadsheet like Microsoft Excel.

false

The following statement is a SMART Goal: "I want to be able to attend college"

false

The following statement is a SMART Goal: "I want to be able to purchase a house when I graduate high school."

false

The following statement is a SMART goal: "I want to make all As."

false

Physiological

food, water, sleep, air

privacy, business privacy policy, Details how recipient information is protected, trustworthiness

general safety and health, employment, family, resources

Total money earned before taxes and other deductions

gross pay

Portfolio income

income received from selling investments at a higher value than when you bought them and Interest earned on a savings account

balence

inflows equal to outflows

goal

is another word for a plan. Most successful people and organizations set goals

Emery wants to plan for his retirement is what type of goal

long term

Love and Belonging

love, family, friendship

The m in smart

measureable

1.45% of your gross pay

medicare

inflows

money coming in

Passive income

money earned regularly with little or no effort. Examples include rental income, and royalties earned from authoring a book, producing a song, or acting in a movie.

Long Term goals?

more than 5 years

What are eyeglasses?

need

What are fruit and vegetables?

need

What is water?

need

variable expenses

occur every month but change in cost

US tax system operates on a

ongoing payment system

Two methods of payment

paycheck and direct deposit

marketing

promoting and selling products and services

One of the keys to financial success is to

recognize your bad habits now and try to avoid them

The r in smart

relevant

Self-Esteem

respect for self/personal worth, respect for and from others, confidence, achievement

Self-Actualization

self-awareness, personal growth, focus on being one's best self

buyer's remorse

sense of regret after having made a purchase

Katie wants to save $100 for a trip this summer is what type of goal

short term

6.2% of your gross pay

social security tax

The S in smart

specific

Earned Income

the money you earn from your job

needs

the things you need to live

net pay

the value of your assets minus your liabilities

The t in smart

timely

The following statement is a SMART goal: "In one year, I want to save $6,000 to purchase a car."

true

What is a dog?

want

What is a gym membership?

want

What is a house?

want

What is a laptop?

want

What is ice cream?

want

budget deficit

when outflow is higher than inflow