INTRO TO BUSINESS

Chapter 28

Planning For The Future What does money mean to

you?

What are values? Values are a belief of what is desirable, worthwhile,

and important to us

What do you value? List what you would save if you could put only three

items that are meaningful to you in a treasure chest.

Who influences values? Values can be influenced by family, friends,

teachers, religious affiliations, work/career, media, and law…

What do you value?

People have different values which guide their decisions.

These decisions may have an affect on their lifestyle and financial situation.For example, if a person values financial

security, he/she may focus on saving, investing, and/or finding a good job

What type of lifestyle do you dream about?

Setting Goals

To reach your desired lifestyle you will need to do some planning and goal settingsetting goals allows you to focus on items

that you identify as important. Goals can be…

Short-term goals can be achieved in less than one year.

Long-term goals can be reached in more than one year.

Why are goals important:

Having goals allows us to become better than we are today.

Successful people have goals Goals motivate and inspire people Goals guide people as they live their

lives Without goals we have nothing to work

towards

SMART GOALS

Specific Measurable Attainable Realistic Timely

To Achieve Financial Goals We need to manage our money

MONEY MANAGEMENT○ To process of getting the most from your $$$

BUDGETING○ A Plan of how I hope to spend my money○ Steps in Planning a Budget

1. Set Financial Goals

2. Estimate Income

3. Budget for Fixed Expenses

4. Budget for Variable Expenses

5. Record what you Spend

6. Review Spending and Savings Patterns

2. Estimate Income:

Any money your receive (on a regular basis) Investments, Salary, ???

GROSS INCOME (salary)Earned In come

Net IncomeIncome less (-) deductions

○ Examples: Taxes, Insurance, 401-K, Social Security

3. Budget for Fixed Expenses

Fixed ExpensesRent, Car, Loans

4. Budget for Variable Expenses Variable Expenses

Cable, Phone, Groceries, Entertainment???

6. Record what you Spend Write down what you spend during the

month Check what you spend against your

budgetA difference between budgeted amount and

actual is called a budget varianceSurplus –Deficit -

7. Review Spending and Saving Patterns Saving…

Big PurchasesBig Ticket ItemsRetirement

Budgeting is a continual process…

Average Household Expenses

33%

19%15%

13%

10%

6%4%

Average Household ExpensesHousing

Transportation

Other

Food

Personal Insurance and Pensions

Health Care

Apparel & Services

INCOME & TAXES

Income Income = the actual amount of money you

earn or receive during a given period An employee may be paid:

WeeklyBiweekly=every two weeksTwice a month; 15 and 30th

Once a monthCommission

Income

Wage/Rate=paid hourlyUS minimum wage is $7.25IL minimum wage is $8.25 per hour

Salary - receiving the same gross pay each pay periodExample: $50,000 per year

Gross Pay Gross Pay is the total amount you earned for a

specific time Number of hours worked * wage (rate per

hour) = gross pay Example:

30 hours worked * $8 per hour=$240 gross pay

Net Pay

Net Pay (take home pay) Gross pay-deductions=net pay In US net pay = about 30 % less than

gross pay So you make $62,000 a year how much

are you really making???

Estimate about: $43,400

W - 4 An employer gets the federal income tax

information when an employee gets hired and must fill out a W-4 Form= lists number of withholding allowances

you want You will claim “0”or “1”on your forms The more you claim the less the government

takes outExample you have 5 children you need more

money to take care of them

Deductions Gross pay is reduced by Deductions = amounts that are taken out of

your pay before you receive your pay check MANDATORY DEDUCTIONS

Federal Income TaxState Tax % of gross income

○ IL is 5 %○ Some dates do not have state tax (Washington,

Florida, Nevada, Alaska etc…)FICA (Federal Insurance Contribution Act)

○ Social Security 4.2%○ Medicare 1.45%

Other Deductions from your paycheck Pension Retirement

401 K403 B

Health Insurance Union Dues Savings Donations; charity

W-2 Form By January 31st an employee must receive

(from each employer) W-2 Form= summary of your total earnings

and withholdings from your job NEED THIS TO DO YOUR TAXES!!! Lists:

Total earnings from all sourcesFederal income tax withheldSocial security tax withheldMedicare tax withheld

1040 EZ By April 15 each person who has worked

must file an income tax return: 1040 EZ (FORM TO DO YOUR TAXES)

Single or marriedNo dependentsTaxable income of less than $100,000Earned no more than $1500 in interest

Average Salaries for Graduates Category 2012 Average

Salary 2011 Average

Salary Percent Change

Engineering $61,913 $59,591 3.9%Computer Science $59,221 $57,046 3.8%

Business $53,850 $51,708 4.2%Health Sciences $49,196 $47,336 3.9%Communications $43,717 $41,988 4.1%Math & Sciences $42,471 $41,370 2.7%Education $40,668 $38,581 5.4%Humanities & Social Sciences $36,988 $36,252 2.0%

Overall $44,455 $42,987 3.4% Source: National Association of Colleges and Employers (NACE). The data represent accepted starting salaries (not salary offers), derived from the U.S. Bureau of Labor Statistics, the U.S. Census Bureau and a master set of data developed by Job Search Intelligence. Data for the January 2013 report were retrieved in November 2012, and reflect the final results for the class of 2012.