What Do You Take From Your Earnings?
- Earnings are also known as the net pay, or the amount of money you get paid after taxes and deductions.
- This is how you calculate your net pay, Net Pay = Gross pay (total amount of money earned during a pay period) - Deductions (Taxes).
There Are Many Responsibilities When Filing Taxes
- Before learning how taxes work, I believed that the government just takes them when we buy things, and we get them all back when income tax season comes.
- After learning this topic I learned that we have responsibilities to file for our own income tax, the government does not do it for you.
- Another responsibility with taxes is that if you have a job you have to allow your employer to withhold taxes from your pay.
- You also have from the first of January until the 15th of April to file for your income taxes.
How Credit Differs From Debit
- With a credit card this allows the cardholder to use funds from a credit card company to make purchases you not be able to afford.
- A debit card is a card issued by a bank and allows the holder to get money directly from their account.
How Open Credit Differs From Closed Credit
- With open end credit, you are not restricted to a specific amount, and you do not have a set date to pay back your debt.
- Closed credit however, you are borrowing a specific amount of money. You have to make payments regularly and you are borrowing for a set time period.
What Is A Stock Vs. A Bond
- Stocks mean that you own a piece of a company, in the long run it can benefit you but it is not guaranteed.
- A bond is a loan, the company is in debt to you. Bonds may offer a steady stream of income, but yields are often lower than stocks.
The Importance Of Saving
- Savings is money put away in a safe, accessible place.
- Many people start to save money when they get their first full time job for things like retirement and building their lives. Ex: Buying a home, buying a car, going on vacation, getting married, having a child.
There Are More Than Just One Option When Saving
- With saving you have 3 options, one being a regular savings account. This is when your bank offers a higher interest rate than a checking account.
- Another is a CD. This account requires a minimum balance to be kept in the account for a minimum amount of time as well.
- And finally there are Money Market Accounts (MMA) which is a cross between a savings account and a checking account, and sometimes require a minimum balance.
Factors To Consider When You Have A Savings Account
- When you have a savings account you should consider 3 important factors.
- 1 the safety of the account, look for FDIC which insures 250,000 if your bank goes bankrupt.
- 2 would be convenience, are you able to access your savings? Can you link your checking account for easy transfers?
- 3rd would be earning potential interest rate, or how much per year will your savings grow? If any.
It Is Very Important To Have Financial Goals
- Prior to taking this course I was unsure of my financial goals, but I was sure that I wanted to have everything done right without ever going into debt.
- A way to prevent debt would be to set financial goals. By the time that I turn 18 i plan to be saving $50 from my job so that I can help my mom with college costs.
- By the time I am 25 my goals would be to start contributing 10% of income to my retirement plan. Also to save for a down payment on my own home.
- By the age of 45 I plan to be almost paid off with my home and if I have kids then their college funds will be saved.
- Finally by the age of 65 I will evaluate my retirement savings and by that age i will be able to retire and do much more with the years of planning ahead.
The Major Take Out From The Semester For ME.
The major things that I have taken out from this semester would be how to save my money more. Starting this semester I would always spend my money on unnecessary food, or things that I do not need, but now I see the true importance behind saving. It lasts forever if you know how to manage it. And you really taught me how to do so. Thanks. (:
Credits:
Created with images by free pictures of money - "Money" • Office for National Statistics - "Effects of tax and benefits on household income" • John-Morgan - "Taxes"