2.13.1.G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of...
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Transcript of 2.13.1.G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of...
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 1
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
An employee starting a new job has the option to choose how he is paid for the first twenty days of work. He works five days a week, for four full weeks. Make the best choice for the new employee after comparing the two options.
Double the Salary
Payment Option 2:The pay will be $0.01 for the first day. Each day the pay will double. So, it will be $0.02 the second day, $0.04 the third day, $0.08 the fourth day, etc. By the end of twenty days, how much money will the employee have made?
Payment Option 1:For the first twenty days of work, the new employee will be paid $500 a day.
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 2
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Double the Salary
Payment Option 2:Day 1
$ 0.01 Day 11
10.24
Day 2
.02 Day 12
20.48
Day 3
.04 Day 13
40.96
Day 4
.08 Day 14
81.92
Day 5
.16 Day 15
163.84
Day 6
.32 Day 16
327.68
Day 7
.64 Day 17
655.36
Day 8
1.28 Day 18
1310.72
Day 9
2.56 Day 19
2621.44
Day 10
5.12 Day 20
5242.88
Total:
$10,485.75
Payment Option 1:$500.00 a day * 20 days = $10,000
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 3
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Solution
Payment Option 1:$500.00 a day * 20 days = $10,000.00
Payment Option 2:This is a better choice for the new employee as he will be making $10,485.75
This is $485.75 more than if he would have chosen Payment Option 1
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 4
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
An Earthlings Guide to Understanding Paychecks
Family Economics & Financial Education
Planet Paycheck
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 5
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Planet Paycheck Navigation
Welcome to Planet Paycheck!
While visiting Planet Paycheck the vast
world of paychecks will be explored!
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 6
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
First Job!• Miss Patty Paycheck has just received
her first paycheck from her new job!– But, the paycheck amount seems a little
lower than she had figured. How could that be?
• Taxes – Required charges of citizens by local, state, and federal governments– Taxes are deducted from all employees
paychecks– Used to provide public goods and services
• Roads, police, schools, governmental agencies, fire and emergency services
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 7
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Starting a New Job
To receive a paycheck, an employee must:Complete a Form W-4
• Employee’s Withholding Allowance Certificate
• Determines the amount of money withheld for taxes
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 8
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Starting a New Job
Complete a Form I-9• Used to prove the identity of
people and avoid hiring non United States citizens
• Must provide at least 2 of the following–passport–driver’s license–U.S. military card–Social Security card–birth certificate
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 9
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Starting A New Job
Form W-2 (Wage and Tax Statement)
• States the amount of money earned and taxes paid throughout the previous year
• Used to file income taxes by April 15th
• Individuals may be exempt from filing federal withholdings if they make less than a certain amount per year
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 10
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Methods for Paying Employees
1. Paycheck• Paper check with stub• Least secure payment method
because the employee is responsible for handling the paycheck
2. Direct Deposit• Employers directly deposit employee’s
paycheck into the authorized employee’s bank account
3. Payroll Card• A payroll card electronically carries the
balance of the employee’s net pay
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 11
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Payment Method Pros and Cons
•Paycheck–Pros:
•Employee controls when the check is deposited
–Cons: •Least secure, employee responsible for getting it to the bank
•Direct Deposit–Pros:
•No direct handling of check•Employee knows exactly when he/she will be paid
• Payroll card– Pros:
• Wages automatically loaded onto a card
– Cons• May charge fees
for use of the card
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 12
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Reading A Paycheck Stub
Items on a paycheck stub include: •Personal Information -The employee’s full name, address, and social security number or employee identification number
• Pay Period -The length of time for which an employee’s wages are calculated–Most businesses pay employees either
weekly, bi-weekly, or monthly
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 13
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Reading A Paycheck Stub
Gross Pay – The total amount of money earned before payroll withholdings
• If a person earns an hourly wage, gross pay is calculated by multiplying the number of hours worked by the wage
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 14
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
What is the Gross Pay?
If Miss Patty Paycheck worked at Terrific Tacos for $6.00/hour for 15 hours a week what will her gross pay be?
What is Miss Patty Paycheck’s gross pay for a two week pay period?
15 hours x $6.00/hr = $90.00/week
# hours worked x wage = gross pay
30 hours x $6.00/hr = $180.00 for 2 weeks
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 15
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Reading A Paycheck Stub
• Payroll Withholdings – The amount of money subtracted from the gross pay for taxes. Typically about 30% of your paycheck!
– Withholding Tax – The amount required by law for employers to withhold from earned wages to pay taxes
– FICA-Federal Insurance Contribution Act• Fed OASDI/EE (Federal Old Age Survivors
Disability Insurance Employee Employment Tax) or Social Security - helps provide retirement income for the elderly and pays disability benefits
• Fed MED/EE (Federal Medicare Employee Employment Tax) or Medicare - health care program for the elderly and disabled
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 16
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Reading A Paycheck Stub
• Net Pay – The amount left after all payroll deductions have been taken from the gross pay– Net pay is also referred to as “take home”
pay
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 17
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Miss Patty Paycheck’s Paycheck Stub
• Miss Patty Paycheck’s paycheck includes:– Gross Pay $180.00– Payroll Withholdings:
• Federal Withholding Tax $14.10• State Withholding Tax $5.45• FICA $13.77
• What is her Net Pay?
• Gross Pay – Payroll Withholdings = Net Pay
$180.00 – ($14.10 + $5.45 + $13.77) = $146.68
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 18
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Reading A Paycheck Stub
• Year-to-Date- Totals all of the deductions which have been withheld from an individual’s paycheck from January 1 to the last day of the pay period indicated on the paycheck stub
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 19
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Sample Paycheck StubTerrific Tacos
EmployeePaycheck, Patty
SSN/Employee Identification Number201-92-4856
Check #164
Check Amount (net pay)$146.68
Employee Address293 Michael GroveBillings, MT 59102
Pay Type-Gross Pay
Deductions Current Year-to-date
$180.00 Federal WithholdingState WithholdingFICA
$14.10$5.45$13.77
$296.10$130.80$330.48
Totals $33.32 $757.38
Pay Period 6/11/2007-6/25/2007
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 20
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Remember to Review
• It is important to review each paycheck stub to identify any possible mistakes!– If a mistake is found, contact the
employer for clarification
2.13.1.G1
© Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 21
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Thanks for Visiting
Thank you for visiting planet paycheck.
Good luck with all of your future paycheck journeys!