Personal Personal FinanceFinance

Chapter 3Chapter 3

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Establishing Financial HabitsShare Save Spend®

• Sharing

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Establishing Financial HabitsShare Save Spend®

• Sharing• Saving

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Establishing Financial HabitsShare Save Spend®

• Sharing

• Saving

• Spending

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Establishing Financial HabitsYour Values

• Your values vary from those of others and influence your financial decisions

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• What do you value?

• What do you think most Americans your age value?

• How do your values affect how you spend your money?

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Establishing Financial HabitsYour Financial Plan

• Determine your current situation.

• Identify and prioritize your goals.

• Develop a long-term plan.

• Organize your records.

• Set up a budget.

• Keep it simple.

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Establishing Financial HabitsYour Financial Plan

• Determine your income.

• Determine your expenses.

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Establishing Financial HabitsYour Financial Plan

• Identify and prioritize your goals.

Financial Goals 

1. Buy new car2. Pay off student loan3. Move to bigger apartment4. Buy new shoes5. Vacation at Yellowstone6. Eat at fine restaurant

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Establishing Financial HabitsYour Financial Plan

• Distinguish between short-term, medium-term, and long-term goals.

• Adjust your plan and goals over time.Short-Term Goals 

1. Eat at fine restaurant2. Buy new shoes3. Move to bigger apt.

Long-Term Goals 

1. Buy travel trailer2. Pay off student loan3. Save for retirement

Medium-Term Goals 

1. Buy a new car2. Finish college3. Vacation at Yellowstone

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Your Financial PlanSharing

• Sharing is also called charitable giving, philanthropy, and altruism.

• Sharing connects people and gives them a sense of pride.

• Research an organizationthat meets your interests.

• Volunteer now.

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Your Financial PlanSharing Suggestions

• Birthdays

• Holidays

• Service-learning

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• Why do people share?

• Who benefits from people sharing?

• What kinds of opportunities do you have to share in your community?

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Which of the following is not one of the suggested ways to plan your finances?

A. Set up a budget.

B. Set goals.

C. Determine your income.

D. Freely spend your money.

E. Prioritize your goals.

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Which of the following is not one of the suggested ways to plan your finances?

A. Set up a budget.

B. Set goals.

C. Determine your income.

D. Freely spend your money.

E. Prioritize your goals.

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Your Financial PlanKeeping Records

• Organize your records.– Alphabetical

– Numerical

– Chronological

• Manage your money with acomputer-based system.

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Your Financial PlanPaying Taxes

• Types of Taxes– Social Security / Medicare

– Sales

– Property

– Estate

– Income

– User fees

FICA

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Your Financial PlanPaying Taxes: Forms

• Form W-4: Withholding

• Form W-2: Wage and tax statement

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Your Financial PlanPaying Taxes: Forms

• Form 1040EZ

• Form 1040A

• Form 1040

• State and local

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+$20,179 (Wages)+$15 (Interest)+$650 (Unemployment)−$2,000 (Student Loan)----------------

$18,844 (AGI)

Your Financial PlanCalculating Your Taxes• Adjusted gross income (AGI)

= sum of all sources of income − adjustments–Wages / business income– Interest income–Unemployment–Social Security / pensions– IRA contributions–Student loan payments

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Your Financial PlanCalculating Your Taxes

• Adjusted gross income (AGI)

• Tax deductions– Itemized

• Schedule A

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Your Financial PlanCalculating Your Taxes

• Adjusted gross income (AGI)

• Tax deductions– Itemized

• Schedule A

– Standard

2007 Standard Deduction (Fed)$5,350 = Single$7,850 = Head of household$10,700 = Married filing jointly$5,350 = Married filing separately

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Your Financial PlanCalculating Your Taxes

• Adjusted gross income (AGI)

• Tax deductions

– Itemized

• Schedule A

– Standard

• Tax credits

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Which of the following forms lists your wages and income from the previous year?

A. Form 1040

B. Form 1040EZ

C. Form 1040A

D. Form W-4

E. Form W-2

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Which of the following forms lists your wages and income from the previous year?

A. Form 1040

B. Form 1040EZ

C. Form 1040A

D. Form W-4

E. Form W-2

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• Why do we pay taxes?

• What type of taxes do you pay?

• What type of taxes are the most fair?

• What are some examples of tax deductions and tax credits?

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