Personal Finance Chapter 3. © EMC Publishing, LLC Establishing Financial Habits Share Save Spend® Sharing

Personal Personal FinanceFinance

Chapter 3Chapter 3

© EMC Publishing, LLC

Establishing Financial HabitsShare Save Spend®

• Sharing



• Sharing• Saving



• Sharing

• Saving

• Spending


Establishing Financial HabitsYour Values

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


• What do you value?

• What do you think most Americans your age value?

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


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.



• Determine your income.

• Determine your expenses.



• 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



• 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


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.


Your Financial PlanSharing Suggestions

• Birthdays

• Holidays

• Service-learning


• Why do people share?

• Who benefits from people sharing?

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


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.


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.


Your Financial PlanKeeping Records

• Organize your records.– Alphabetical

– Numerical

– Chronological

• Manage your money with acomputer-based system.


Your Financial PlanPaying Taxes

• Types of Taxes– Social Security / Medicare

– Sales

– Property

– Estate

– Income

– User fees

FICA


Your Financial PlanPaying Taxes: Forms

• Form W-4: Withholding

• Form W-2: Wage and tax statement


Your Financial PlanPaying Taxes: Forms

• Form 1040EZ

• Form 1040A

• Form 1040

• State and local


+$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


Your Financial PlanCalculating Your Taxes

• Adjusted gross income (AGI)

• Tax deductions– Itemized

• Schedule A




• 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




• Tax deductions

– Itemized

• Schedule A

– Standard

• Tax credits


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


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


• 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?


Documents

Personal Finance Chapter 3. © EMC Publishing, LLC Establishing Financial Habits Share Save Spend® Sharing