Question | Answer |
The total amount of money earned before any deductions are made | Gross Pay |
The amount left after all deductions are taken out of the gross pay | Net Pay |
Federal Income Tax, State Income Tax, Local Income Tax, Social Security, Medicare | Deductions |
Deductions that employers may take directly out of employee paychecks to pay for | Benefits |
Whatever you give up when making a decision | Opportunity Cost |
You must give something up if you want to get something | Trade-off |
Unlimited wants and limited resources explains the concept of________ | Scarcity |
Save it, Invest, it, Spend it, Donate it | What can People Do with Money? |
Something a person intends to acquire, achieve, or accomplish | Goals |
Less Than 1 Year | Short Term Goal |
Greater Than 1 Year | Long Term Goal |
Specific objective involving finances | Financial Goal |
Set aside a portion of money for saving each time a person is paid before spending any of the money | Pay Yourself First |
1. Unexpected Events and Emergencies 2. Purchase Expensive Items | Why Save? |
Keeps money safe, Earns Interest, Withdrawn at anytime | Savings Account |
Pays a Higher Interest Rate, Can be withdrawn a limited number of times each month | Money Market Account |
Earns Interest, Money is required to stay for a specific period of time, All money can be withdrawn at the end of the time period | Certificate of Deposit |
Allocating money for a particular purpose | Budget |
Expenses that don't change month to month | Fixed Expenses |
Expenses that change or vary month to month (You can control how much is spent) | Variable Expenses |
Assets - Liabilities | Net Worth |
Anything of value that is owned | Asset |
An amount owed to a lender | Liability |
Money saved with Net Income, Income is earned in account, taxes are paid annually, income is claimed on tax return | Taxable Accounts |
Tax on income earned is paid at a later date | Tax Deferred |
Before the payroll taxes are withdrawn | Pre-Taxed Income |
An employer sponsored retirement account, the employer makes contributions, to become vested you may have to work for a specified number of years, at retirement the employee receives a set amount based on wages and years of service | Defined Benefit |
An employer sponsored retirement account, the employee and employer can make contributions, at retirement the employee gets to withdraw whatever money is needed, the money withdrawn at retirement is taxed | Defined Contribution |
Individuals can set aside a specific amount of money each year, taxes are paid when withdrawls are taken, the contributions can be deducted from income on tax returns | Individual Retirement Account |
Individual retirement account, where contributions cannot be deducted from income on tax return and the earnings are not taxed at retirement when withdrawals are taken | Roth IRA |