What can I learn today about something that will probably have the biggest impact on the type of life I live.

MONEY!!!

MONEY

Big Question

Unit Overview Summary

General summary of unit:

• Financial literacy activities in middle school curriculums ensure that students begin developing their financial skills, such as money management, savings and investing, and credit and debit, early on. That way, they can carry those important and beneficial financial skills with them into their future.

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Skills students need or will develop:

• Decision-making: Students will make informed choices, prioritize expenses, and make trade-offs.
• Money management: Students will learn to track income and expenses, manage their money effectively, and avoid debt.
• Problem-solving: Students will analyze financial challenges, identify problems, and find solutions.
• Collaboration: Students will work individually or in teams to discuss financial strategies, negotiate, and make joint decisions

Goals For A Final Project:

• Financial literacy: The primary goal of the PersonalFinanceLab is to promote financial literacy among students. By engaging in the budget game and related activities, students will develop essential knowledge and skills in areas such as money management, budgeting, saving, investing, and understanding credit and debt. The goal is to empower students with the necessary financial skills to make informed decisions and navigate their personal finances effectively.
• Practical application: The PersonalFinanceLab aims to provide students with practical, real-world applications of financial concepts. Through hands-on activities and simulations, students will apply their knowledge in realistic financial scenarios, making choices and experiencing the consequences of their decisions. The goal is to bridge the gap between theory and practice, equipping students with practical skills they can use in their everyday lives.
• Critical thinking: The PersonalFinanceLab encourages the development of critical thinking skills. Students will analyze financial situations, evaluate options, and make informed judgments. They will be challenged to think critically about financial concepts, identify problems, and propose solutions. The goal is to foster a mindset of critical inquiry, enabling students to navigate complex financial decisions and solve financial challenges with confidence.
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Unlocking YOUR Secrete to Financial Success

Teachers Prep Work

Click to Open the Setting Up Your Class Slide Deck

Day 1: Intro To Money Magic

Which one makes sense to you?

1. Money isn't just about cash: While most people think of money as coins, paper bills, or electronic transactions, there's much more to it than that. Money represents value, which can be exchanged for goods, services, or investments. Understanding the various forms of money and their uses can open up a world of opportunities for you.
2. MONEY decisions can impact your life: Middle school is the perfect time to start thinking about how financial decisions made now can have a significant impact your future. Small financial decisions such as saving, avoiding debt, and getting scammed can, lead to financial stability and independence.
3. Budgeting is like a game: it is an essential skill for and it doesn't have to be dull or complicated. Budgeting can be fun when viewed as a game that challenges you to make wise financial decisions, balance needs and wants, and meet your goals.

Question of the Day

Financial Pitfalls #20

What is the fastest growing scam reported to the FTC?

a) Tax scams

b) Romance scams

c) Gift card scams?

www.ngpf.org Last updated: 2/18/19

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Romance Scams

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Click here for more info on this topic

Follow Up Questions

1. Why do you think romance scams are so successful and growing so quickly?
2. So In 2018 PEOPLE LOST $218,000,000, HOW AND WHY?
3. What are steps that you can take to prevent falling prey to a romance scam?

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“I never want money to dictate what I can and can’t do in life.”

– Jessica Moorhouse, financial counselor, award-winning blogger

“A person either disciplines his finances or his finances disciplines him.”

– Orrin Woodward, author

“No one’s ever achieved financial fitness with a January resolution that’s abandoned by February.”

– Suze Orman, author, financial advisor, motivational speaker, and television host

Financial Literacy provides the ability to live life on your own terms. That was the best advice I ever got. No matter where you go in life, or who you get married to, you have to be financially independent. You don’t know which curve balls life will throw at you. Hence, you need to have the ability to take care of yourself and people whom you love.”

– Priyanka Chopra, actress

Here are the facts and I am here to HELP!!

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• 2 in 3 families lack any type of emergency savings.
• I want you to be the ⅓ that does
• 78% of adults live paycheck to paycheck.
• I want you to be in the 22% that doesn’t
• 3 in 5 adults do not maintain a monthly budget.
• I want you to be the 2 out of 5 that do.
• On average, U.S. adults correctly answered only 50% of the questions on the TIAA Institute-GFLEC Personal Finance Index in 2021
• I want you to have a financial vocabulary so you do not get taken advantage of.
• Researchers have found is that far too few students — particularly those from low-income backgrounds — receive any personal finance education during high school. Yet they are expected to make big financial decisions about student loans and budgeting for living expenses after graduation.
• I want to provide you the tools to make good financial decisions.

Plan To Help You “Earn More From What You Know”

• Finance Friday
• Discuss current events
• Interject my personal financial experiences - Good & Bad

PERSONAL

BUDGETING

GAME

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An experience that teaches how to Manage YOUR MONEY with real-life scenarios and consequences. You will plan a month each week and the completion will last as long as your teacher wants to keep in running.

Teachers Use: Key Terms in lessons 2-7

Budgeting

Spending & Savings

Plans

Overview

In this lesson we will be learning about both budgets and spending plans.

• We will be able to tell what the different parts of each are and when to use either.
• We will be looking at other peoples’ budgets and saving plans to evaluate how to create one.
• We will leave with the tools and the skills to create their own personal budget and spending plan.

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Lesson 2-7

Objectives

Define Budget and Spending Plan

Identify parts of a budget and spending plan

Create a personal and family budget

Allocate funds into different sub categories

Lesson 2: Intro to Budgeting

What is a Budget?

Key Terminology

A Budget is...

An estimate of income and expenditure for a set period of time.

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Key Terminology

What is a Spending Plan?

Key Terminology

A Spending Plan is...

A plan of what you will be spending each month.

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Key Terminology

Up Next!

What is Money?

What is Money?

As technology continues to evolve in our society, it is possible that the way we store our money and pay for transactions will change.

What do you think that process might look like 15 years from now?

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Challenge Questions

What is Money? (personalfinancelab.com)

What is Money?

What additional security measures do you see happening in the future in order to keep scammers from fraudulently stealing people’s money?

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Challenge Questions

What is Money? (personalfinancelab.com)

What is Money?

Describe your experience with using the different financial tools you learned about in this lesson.

Challenge Questions

What is Money? (personalfinancelab.com)

What is Wealth?

What assets do you currently own?

How could those assets help you accumulate wealth for your future?

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Challenge Questions

Wealth (personalfinancelab.com)

What is Wealth?

Thinking about your future, what is one financial goal you’d like to have for yourself in your 20’s?

What choices would help you reach that goal? Choose from a goal for your 20’s, 30’s, 40’s, etc.

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Challenge Questions

Wealth (personalfinancelab.com)

Watch Needs vs Wants Video

Up Next!

Class Activity

Play the Budget Game

Up Next!

Class Activity

Lesson 3 - Understanding Money & Wealth

What are Needs?

Key Terminology

Needs are...

Needs are the things you must purchase in order to survive. They include necessities such as rent, utility bills, groceries, and medical expenses. They also include legal responsibilities such as paying taxes.

Key Terminology

What are Wants?

Key Terminology

Wants are...

Wants are things that you chose to spend money on, but in theory they are items you don’t really need. Eating out, holiday gifts for friends and family, TV/streaming subscriptions, and new clothes might be in this category.

Key Terminology

What is a Fixed Expense?

Key Terminology

Fixed Expenses are...

Fixed expenses are items whose cost stays the same from one month to the next. This means you can reliably plan for these expenditures. They include expenses such as rent, your cell phone bill, or a subscription fee for a video streaming service.

Key Terminology

What is a Variable Expense?

Key Terminology

Variable Expense are...

Variable expenses change from month to month, so it is hard to plan accurately for these expenses. They might include how much you spend on fashion, how many times you go out to eat, or how much you spend on gas for your car.

Key Terminology

What does Pay Yourself First mean?

Key Terminology

Pay Yourself First means...

You make your savings goals your #1 priority, before paying other bills and obligations.

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Key Terminology

What is an Emergency Fund?

Key Terminology

An Emergency Fund is...

Money you set aside to pay for true emergencies, like a major car repair.

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Key Terminology

Up Next!

All About Budgeting

Budgeting

Personal Finance Lab

Budgeting 101

What?

• A budget is a personal document where you list your planned expenses and planned income. The purpose of a budget varies on the type but the main purpose is to see where your money is being spent and to plan saving.

When?

• There are two main types of budgets, a project budget and a living budget. A project budget can be used to plan for various things like buying a car or comparing apartment costs. You can use a living budget to see where your money is being spent each month and to increase your savings.

Who?

• Everyone should have some type of budget. A budget will help you stay on track with both your short and long term spending and saving goals.

Project Budget

When?

• Here are some of the reasons that someone would create a project budget comparing apartments, planning a vacation, paying off short-term debt or planning for college. All of these tasks cost larger amounts of money and take more time to pay off. This is why it is important to create a separate budget to cover these projects.

Parts of a Project Budget:

• Itemized list of known expenses for this period in time
• Surplus – the total income minus the total expenses
• Total expected income or starting cash you have to allocate to this period in time

Example of Project Budget

Based off this budget which apartment would be better to rent?

Living Budget

What?

• A living budget tracks and records your expenses on a month to month time frame to see where you are spending your money and where you can save a few dollars.
• A living budget is a breathing and changing document that is meant to grow and change over time. It is important to sit down at the start of the month to adjust your budget to ensure the most saving.

Part of a Living Budget:

• Regular monthly income (things like your paycheck)
• Variable income (gifts, one-off payments, ect)
• Regular monthly expenses
• Regular contributions to savings or other financial goals
• Expected variable expenses

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Wants vs Needs

• A need is something that you cannot live without i.e. water, food for fuel, warmth.

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• A want is something that is a luxury. Without it, you will still manage to survive.I.e. tennis racket, new purse, wrist watch, etc.

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Breaking Down Living Budget

Fixed Needs

Costs that change much month to month

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• Rent
• Utilities
• Car Payments
• Groceries

Fixed Wants

Costs that occur everyday that make life a little sweeter

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• Morning Coffee
• Unlimited Data
• Gym Membership
• Magazine Subscription

Variable Needs

Are important but may not happen every month

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• Heating in the winter
• Oil Change for car
• Getting teeth fixed
• Birthday Gifts

Variable Wants

Spur of the moment expenses

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• Shopping for clothes
• Buying video games
• Drinks with friends
• Unplanned Events

Is it a want or a need?

Play the Budget Game & Use the Home Budget Calculator

Up Next!

Class Activity

Lesson 4 - Spending & Savings Plans

What is Discretionary Income?

Key Terminology

Discretionary Income means...

The money you can spend on whatever you like, after you’ve paid for your overhead expenses, like rent, food or electricity.

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Key Terminology

What are Non-Spending Alternatives?

Key Terminology

Non-Spending Alternatives are...

Considering the cost of your time as well the money to buy the things you need. For example, making something yourself, or borrowing from a friend something you only need once.

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Key Terminology

Up Next!

Spending and Savings Plans

Spending Plans

Personal Finance Lab

What is a Spending Plan?

Definition

• A spending plan is a plan on how you will be spending your money each month.

What is Included

• Your spending plan includes both your fixed and variable spending.
• Your fixed savings are usually the same each month, and include things like rent/mortgage, insurance and groceries.
• Your variable spending change from month to month, and include things like birthday gifts, doctor visits or buying new furniture.
• Any extra funds can be allocated toward any other wants or put into some type of savings account or investment
• Pay Yourself First
• Spending plans work best with a “Pay Yourself First” saving strategy - make sure you have specific line-item in your budget of the money that goes to saving and investing, which you allocate FIRST, before all your other expenses

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Spending Plan vs Budget

Similarities

• Both are a list of how you will be spending your income on different expenses.

Differences

• A budget as strict allowances or amounts that you cannot go over, since every dollar should be accounted for. For example, if you spend an extra $45 eating out, that extra money must come from another part of your budget.
• In a spending plan you plan for your expenses that are hard and essential first because those payments are most likely not going to change. Then any extra money that you have is considered discretionary income or money that you can use for whatever you want.

Example of a Spending Plan

Vocabulary

• Fixed Spending
• An expense that you cannot change easily month to month
• Variable Spending
• An expense that you might have one month but not every month
• Total Income
• How much money you deposit in the back every month.
• Charity
• You may not be able to donate every month but it is important to donate to charitable organizations
• Savings and Investment
• These numbers can change depending on your goals. The next slide will dive deeper into this.

Saving vs Investing

Saving

• Saving is considered any type of stored value such as saving account, government bonds or even cash in a piggy bank.

Investing

• Investing includes some type of risk with your money such as buying a stock or investing in a mutual fund.

Where They Fit in Your Spending Plan?

• Your savings and investing usually starts as what is “left over” from your other spending. However, after you have a couple months of experience, you can set realistic saving and investing goals - so you can allocate this BEFORE your other expenses (and make sure you always hit your saving targets)

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Influences on Spending Plan

Marketing

• Commercial, billboards and magazine advertisements all influence how you spend your money. This can be both a good or bad thing. You just have to make sure that you are aware of how marketing influences you.

Life Changes

• Things like dating someone or having a child may have major effects on your spending plan because they add different expenses to your life. That is why it is important to look at your spending plan each month and adjust it for the different thing or events occuring in your life.

Importance of sticking to your Spending Plan

• It is important to stick to your budget plan because that will allow you to have more extra spending money or money to put into savings or investing. Systems like an automatic payment will help you stay on track with paying your bills every month so that is is not something you have to worry about.

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Assessment

1. Implement and Control
2. Track Current Income and Expenses
3. Evaluate and Make Adjustments
4. Allocate Money to Each Category
5. Personalize Your Spending Plan

Spending Plan Cycle

Play the Budget Game

Up Next!

Class Activity

Lesson 5 - Maintaining a Budget

What are Spending Shocks?

Key Terminology

Spending Shocks are...

A large, irregular expenses, that can be either budgeted (seasonal gift giving) or unplanned (sudden illness).

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Key Terminology

What is a Receipt?

Key Terminology

Receipts are...

Proof of purchase, either paper or electronic, that is used to return unwanted items or to file your taxes.

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Key Terminology

What is a Warranty?

Key Terminology

Warranties are...

A promise from a licensed professional that a product or service will be defect-free over a period of time.

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Key Terminology

Up Next!

Receipts Keeping & Tossing

Receipts Keeping & Tossing

When was the last time you received a receipt?

Did you check it and did you keep it?

Challenge Questions

Receipts – Keeping and Tossing (personalfinancelab.com)

Receipts Keeping & Tossing

Have you ever received the wrong change?

Challenge Questions

Receipts – Keeping and Tossing (personalfinancelab.com)

Receipts Keeping & Tossing

Have you ever returned a product to a store?

Were you asked for a receipt?

Challenge Questions

Receipts – Keeping and Tossing (personalfinancelab.com)

Receipts

Keeping and Tossing

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Personal Finance Lab

Receipt 101

What is a Receipt?

• A receipt is a piece of paper that you recieve after you make a transaction with someone. For every transaction that you complete you should receive some type of receipt.

Why is this important?

• It is important to keep track and obtain receipts because this will allow you to keep track of your purchase which will help you stay on budget.

3 Types of Receipts

1. Will I want to return this purchase later?

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• If there is a possibility that you will return an item, it is important to keep the receipt. Make sure that you check the company's return policy (eg. how many days you have to return the product).
• Throw out these receipts between 30-60 days

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• Is this purchase accounting for 10% or more of what I expect to spend this month?

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• If you think that a purchase will be 10% or more of your monthly it is important to save the receipt to make sure that the amount is correct and that you think about the purchase when planning you next budget.
• Throw out these after your account reconciliation

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• Do I want to claim this purchase on my taxes?
• If you think you can file the purchase on your taxes (Tution or Job Training, Work Uniform, Donation) then you should save the receipt because you might be able to get a tax break.
• You should save these receipts for at least 7 years just in case the IRS audits you

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Research Budgeting Apps

Up Next!

Class Activity

Lesson 6- Researching Purchases

What is Comparison Shopping?

Key Terminology

Comparison Shopping is...

The practice of comparing the price of products or services from different vendors before buying.

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Key Terminology

Up Next!

Researching Purchases

Researching Purchases

Personal Finance Lab

Why Do We Buy What We Buy?

It is not possible to carefully consider every single purchase you make – this would lead to Decision Fatigue. Decision Fatigue happens because every choice you make takes some brain power.

Advertising

When you are deciding to but something there is most likely an advertisement or brand that come to your mind. You might even be comparing facts about companies without thinking about it. This is called Source Amnesia, and it is exactly why advertising works for everyone. Source amnesia is when you know a fact, but cannot necessarily remember where you learned it from.

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Previous Experience

This is when you have bought something before and you know how well or not well it works. Based off of that you can decide to buy it again or not.

Peer Pressure

This is not always a bad thing because your friends can tell you about products that are both good and bad. The one negative that come with this is sometimes peer pressure leads to overspending

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How to Spend Time Researching

Use your Spending Plan or Budget

• You must determine how much money you actually have to spend
• See if you can reduce that amount by finding cheaper alternatives for products

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Compare Online as you Shop

• If you are purchasing something more than $20 quickly look online to see if it is priced fairly
• This will help you price check but also, see other peoples reviews of the item

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Delay Purchases

• If you are shopping online simply… Do Not But the Item Right Away.
• By not purchasing it right away you will receive advertisements and coupons for the item
• Also it stop you from spending money on impulse buys

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Electronic Bundles

• Some electronic stores may offer a bundle at checkout that includes a subscription to something at a lower price by bundling it in with your purchase. These bundles are almost always not worth it.

Researching Purchases

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Why is it important to consider comparison shopping?

Challenge Questions

Researching Purchases (personalfinancelab.com)

Researching Purchases

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Other than price, what other factors should you consider before purchasing something?

Challenge Questions

Researching Purchases (personalfinancelab.com)

Researching Purchases

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With the use of examples, what do you understand about peer pressure?

Challenge Questions

Researching Purchases (personalfinancelab.com)

Play Budget Game

Up Next!

Class Activity

Lesson 7 - Long-Term Saving

What is Social Security?

Key Terminology

Social Security is...

Social welfare system in the United States, paid for by payroll taxes, often referred to as FICA (Federal Insurance contributions Act).

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Key Terminology

Why Do people have an IRA Account?

Key Terminology

An IRA Account is...

Individual Retirement Accounts, commonly known as IRAs. The government lets you contribute an amount of your income, that you pay taxes on when you withdraw.

Key Terminology

Has anyone heard their parents talking about their 401 K Account?

Key Terminology

401(k) Accounts are...

A tax-advantaged retirement account offered by many employers to their employees.

Key Terminology

Up Next!

Planning for Retirement & Family Planning

Family Planning

Personal Finance Lab

Family Planning 101

It costs over $230,000 to raise a child from birth to age 17. That may seem a little bit scary but, with planning and budgeting, you can make the situation a little less stressful.

Modifying your Budget

The $230,000 cost will average down to about $13,000 per year, every year, per child. If you then break that down for a monthly budget, you get $1,1,00. That number is at the low end, if you want to save for college you can add $100-$200 monthly. Most people don’t have an extra $1,100 laying around so you must plan and save.

Saving Cushion

If you already have a budget in place and some type of saving cushion, it will be alot easier to allocate that money toward saving for a child. Even saving an extra $100 a month, will help with the costs of raising a child.

Expenses with Age

Infants ( Newborn- 6 Months)

The biggest costs with children this age are things like diapers, formula and childcare. Childcare is the most expensive because many childcare providers will not accept children under 6 months, which means you will need to take time off work for the first 6 months.

Maternity and Paternity leave is not always given in the United States, meaning the biggest cost of infants is usually lost wages from the parents taking time off work.

Toddlers (6 months- 3 years)

This is when children enter your grocery budget but, they should not be that expensive. Child are growing a lot during this stage so buying them new clothes will be an additional cost.

The main cost will still be child care. Since children don’t start school till older, you still will need to find someone to watch them while you are at work.

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Expenses with Age

Children (3 years- 12 years)

At this age students are starting school so, childcare takes a back seat in the budget. The child's grocery and clothing budget increase during this stage but, the biggest cost is housing.

Housing is the biggest cost at this stage because children no longer can fit in a crib in their parents room so, the cost of getting their own room/ space is an added cost at this stage.

There are other costs at this stage too like transportation to social events or school. Also, the cost of toys should be budgeted for as well, especially around holidays and birthdays.

Teenagers (13 years- 17 Years)

During this stage, childcare costs are lower because children are in school and usually can be trusted unsupervised at home.

Transportation and food costs increase in this stage. You may help pay for a car which is a high cost item.

Multiple Children

If you have more than one child, some costs get offset.

Clothing

Clothing can be handed down older siblings. This is not that much of a money save because childrens clothes are relatively cheap and older children have their own style and might reject handed downs.

Rent

If you have multiple children you can have them share a bedroom and this will cut the rent cost in half. This may be a challenge and might not work when the children get older.

Childcare

This cost may ride or lower if you have multiple children because you might get a price deduction for having more than one child.

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Cost Relief

Earned Income Tax Credit

This is designed to increase the income tax return for low-income adults and families. If you have children, the income threshold goes up, and the actual return amount gets multiplied.

Supplemental Nutrition Assistance Program (SNAP)

The SNAP program is a grocery subsidy for low-income working families. Over 75% of SNAP participants are under 17, as the program is designed specifically to help families with children afford healthy food.

Children’s Health Insurance Program (CHIP)

The CHIP program is part of Medicaid, specifically to make sure every child has health insurance. If you do not have family health insurance coming from your work, you may qualify to have your children insured through the CHIP program.

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Budget Game Transaction Report

Up Next!

Class Activity

UNIT 2 Employment and Income

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Overview

In this lesson we will be learning about income, compensation and employment.

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• We will learn about the difference between direct and indirect compensation.
• We will have a basic understanding of income tax and the different ways of filing taxes.
• We will learn some best practices for starting our careers.
• We will learn about the importance of saving for retirement.

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Unit

Objectives

Define different types of income

Understand debit cards and bank accounts

Have a basic understanding of income tax

Prepare a career plan that supports long-term financial goals

Lesson 8 - Career & Income

What is the difference between direct and indirect compensation?

Key Terminology

Direct Compensation is...

The compensation that an employee receives directly from his or her place of work. This includes the base salary and any incentive pay.

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Key Terminology

Indirect Compensation is...

Includes non-monetary benefits provided to workers, such as pension funds, mobile phones, company cars, health and life insurance, overtime pay, and annual leave. From legally obligated health insurance to social security, child care, and more.

Key Terminology

What is Equity Compensation?

Key Terminology

Equity Compensation is...

Non-cash pay that is offered to employees, and may include options, restricted stock, and performance shares; all of these investment vehicles represent ownership in the firm.

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Key Terminology

What is the difference between an Employee and a Contractor?

Key Terminology

An Employee is...

A worker who gets paid an hourly wage or annual salary for a set job. Not all hourly workers are employees. They have certain protections and obligations that differ from other types of workers.

Key Terminology

A Contractor is...

A person or company that undertakes a contract to provide materials or labor to perform a service or do a job.

Key Terminology

Up Next!

Income and Compensation

Income and Compensation

What is the difference between a wage and a salary?

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Challenge Questions

Income and Compensation (personalfinancelab.com)

Unemployment and Assistance Programs (personalfinancelab.com)

Career Development (personalfinancelab.com)

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Income and Compensation

What are the advantages and disadvantages of being on a salary and a wage?

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Challenge Questions

Income and Compensation (personalfinancelab.com)

Unemployment and Assistance Programs (personalfinancelab.com)

Career Development (personalfinancelab.com)

​

Income and Compensation

Other than pay, are there any other benefits that employees could potentially get from working at a company?

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Challenge Questions

Income and Compensation (personalfinancelab.com)

Unemployment and Assistance Programs (personalfinancelab.com)

Career Development (personalfinancelab.com)

​

Budget Game Transaction Report

Up Next!

Class Activity

Rights and Responsibilities

Homework

Employer and Employee

Lesson 9 - Intro to Bank Accounts

What is the difference between a Bank and a Credit Union?

Key Terminology

A Bank is...

A for-profit corporation with a charter issued at the local, state, or national level. Generally, they specialize in commercial loans – making loans to businesses to help them get started or expand.

Key Terminology

A Credit Union is...

A non-profit organization, almost exclusively local, and are owned by the people who make deposits. Every member who makes a deposit at a credit union is a part-owner, and can vote on issues relating to the institution.

Key Terminology

Describe what Account Fees, Usage Limits and Overdraft fees are for Debit Cards.

Key Terminology

Account Fees are...

An annual fee charged for having a checking account at your banking institution. This fee will usually go up or down depending on your checking account type – account types that give you more flexibility with your debit card are usually more expensive.

Key Terminology

Usage Limits are...

The number of times you can use your debit card per month (which can be as low as 10 transactions). If you go over this limit, you will typically be charged a fee per transaction.

Key Terminology

Overdraft Fees are...

When you spend more on your debit card than you had in your checking account. Your checking account may or may not allow overdraft.

Key Terminology

Up Next!

Banks, Credit Unions, and Savings and Loans

Play 1 Month

Homework

Budget Game

Unit 10 - Into to Taxes

What is the difference between Progressive Tax and Regressive Tax?

Key Terminology

Progressive Tax is...

A “Progressive” tax is designed so that the more money you earn, the bigger percentage tax you pay. The clearest example of a “Progressive” tax is federal income tax in the United States.

Key Terminology

Regressive Tax is...

Key Terminology

What is Income Tax?

Key Terminology

Income tax is...

A state or federal government's levy on individuals as personal income tax and on the earnings of corporations as corporate income tax.

Key Terminology

What is an Audit?

Key Terminology

An Audit is...

A formal examination of an organization's or individual's accounts or financial situation.

Key Terminology

Up Next!

Intro to Taxation

Intro to Taxation

What are income taxes? Where does it go?

Challenge Questions

Taxation Overview (personalfinancelab.com)

Filing Taxes and 1040 EZ (personalfinancelab.com)

Income Tax Filing and the 1040

Personal Finance Lab

Income Tax 101

What?

Income tax is the tax you pay on your income, usually directly taken out of your paycheck. Everyone who works in the United States should be paying income tax on their earnings. This also includes other sources of income such as investments, interest on saving accounts, rents from rental properties ect.

How?

For most people, income taxes are straightforward – employers are required to withhold the appropriate income tax amount from your paycheck, which is then paid to the government without any extra steps.

If you are self employed or work for an independent contractor, like Uber, you must file your taxes on your own.

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Who Files Income Taxes?

All US citizens and everyone working and living in the United States needs to file an income tax return each year. By extension, all citizens and workers in the US need to report their income, even if that income is earned in another country. Us citizens use their social security number to file income taxes.

Immigrant Workers

Workers who work in the United States without a Social Security Number (both legal immigrants and undocumented workers) are still required to pay income taxes. Those who do not have a Social Security Number, can request an Individual Tax Identification Number (ITIN) from the IRS to use to file their taxes.

US Citizens Living Abroad

US Citizens who live and work in other countries are also required to file their US income taxes each year or risk heavy fines. While citizens do need to file their taxes, most citizens living and working outside the US are exempt from actually owing any tax, unless they have exceptionally high incomes.

Form W2 & 1099

W2

The W-2 form is a document all hourly and salaried employees will receive from their employer at the end of the year (usually in January, covering the previous year). The W-2 form is a fairly basic form outlining the total wages earned in the previous year, along with how much Social Security and Income Tax was already withheld by the employer and paid. Employees receive their W-2 form already filled out from their employer.

1099

This is the form that you would use if you need to self-report your income.

This dorme is a little more complicated because you have to fill out the form

yourself so it required more detail and attention.

The 1040 Income Tax Return Form

1040

This is the most common income tax return for in the US. The basic use of the form is to add up all your income from the year from all sources, calculate how much tax you have already paid, subtract any deductions you qualify for, and see how much of a tax return you should receive or how much tax you currently owe.

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Income Tax Corrections

Taxpayers have 7 years in the United States to file any corrections. Usually this would be to claim deductions you may have missed, or report income later to avoid tax evasion penalties.

IRS Corrections

The IRS may also apply corrections directly based on their own calculations of your taxes owed. If this is the case, they will generally mail you a letter explaining how their calculation differs from theirs, along with a method to dispute their calculation.

Audit

There is a small chance that your income tax could be audited by the IRS, in which case they will ask you to bring in supporting documents. Audits are designed both to ensure the tax returns are using all the correct values, and to prevent fraudulent claims.

State Income Tax

Most states also levy an income tax, but the actual tax amount and thresholds will vary quite a lot from state to state. The way you file state tax is very similar to filing federal tax.

There are currently seven states with no income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. States that do not charge income tax make up for the lost revenue through other channels, usually sales taxes and use taxes (in fact, states with no income tax typically charge their citizens higher total taxes than those who do have income taxes).

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Lesson 11 - Starting Your Career

What is an Internship?

Key Terminology

Internships are...

The position of a student or trainee who works in an organization, sometimes without pay, in order to gain work experience or satisfy requirements for a qualification.

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Key Terminology

What is a Resume?

Key Terminology

Resumes are...

A short account of one's career and qualifications prepared typically by an applicant for a position, also known as a curriculum vitae or CV.

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Key Terminology

What is an Objective Statement?

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Objective Statements are...

A brief, targeted statement that clearly outlines your career direction while simultaneously positioning you as someone who fits what the employer is looking for exactly.

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Key Terminology

What are Qualifications?

Key Terminology

Qualifications are...

An official record of achievement awarded on the successful completion of a course of training or passing of an exam. Especially, one that provides the individual with the credentials to perform a particular job or task.

Key Terminology

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Career Best Practices

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What strengths do you have that could be valuable to an employer?

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Lesson 12 - Building & Sharing Wealth

9 Week Course Outline

What is Wealth?

Key Terminology

Wealth is...

An accumulation of valuable economic resources that can be measured in terms of either real goods or money value. Contrary to income, wealth measures the value at a point in time.

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Key Terminology

What is a Career Plan?

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A Career Plan is...

The process of enhancing an individual’s future value in the workforce through on-the-job experience, qualifications and personal development that matches their goals and skills to opportunities in the marketplace.

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Building Wealth

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In order to build wealth, you have to learn to manage your money and save some of the money that you earn. Is this true, and if so why?

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How might your career over time help you build your wealth? What surprises you below?

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Does earning more money guarantee to build wealth? If so, why? If not, why not?

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Why should you have a savings account and a checking account, rather than having one single account?

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Key Terms