Week One Money Management

8/14/2019 Week One Money Management

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LECTURE WILL BEGIN SHORTLY

OHIO/MARSHALL SPOKES

VICKI MENTZER-INSTRUCTOR

CREATED BY:DENA CONNER

GRADUATE AND CLASS AIDE

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Money Management

Week One



Introduction

• In this section, you will be introduced to financial planning or moneymanagement. You will learn what the financial planning process isand what it can do for you. You will be able to apply the processthrough activities. Most of all, you will be able to take control of your finances, beginning immediately.

• As do most people, you probably have a limited amount of time andmoney available. But you have many needs and wants on which tospend those resources. There are entertainment, gasoline, childcareexpenses, and food. Maybe even a car! Saving for the latest CDmay not be difficult. But how do you save for a car or a house?

Learning to use the financial planning process can help you.Planning can put you in control.



Needs vs. Wants

• Many people have trouble distinguishing between needsand wants.

• Needs are basic for your survival.

• Wants are desirable to make your life more comfortable

• Or you might say that wants are luxuries you could livewithout, but they’re nice to have

• Financial planning involves managing all your resourcesto achieve your goals and objectives. Your time, talents,

and money are some of those resources. Knowing thedifferences between your needs and wants will help youmanage your money better.



Activity

• Worksheet # 1

• List five items or activities in the center column that you plan to have or to do

soon.

• Now, go back and look at each listed itemor activity that takes money.

• Now put a check mark in the NEED or WANT column.



Needs And Wants Continued

• How easy or difficult was thisactivity for you?

• Each of us needs food,clothing, and shelter.

• However the food don’t have tobe expensive steak.

• The clothes don’t have to behigh priced designer clothes.

• While food and clothing are

needs, steak and designer clothes are wants.

• Remember, you make the



Decision Making

• Decision making is the process of considering and analyzing informationrelated to your goals, whether they are

financial or personal, in order to make andaction plan.

• It requires you to consider alternatives.



The Decision Making Process

Identify Goal1

Evaluate Results6

Gather Information2

Examine Alternatives3

Analyze Outcomes4

MakeDecision

5



Financial Planning Process• Step One: Gather Personal and

Financial Information

What are your interests?

What are your values?

Where do you get the money

you spend?How much do you get?

What are your spendinghabits?

• Step Two: Establish Clear Financial Goals and Objectives

•Step Three: Process AndAnalyze Information

Review your information.

What might be missing?

Where can you find themissing information?

•Step Four: Develop aComprehensive Financial Plan•Step Five: Implement The Plan•Step Six: Monitor the Plan



Payroll Deductions

• Amounts subtracted fromgross income resulting inyour net income, resultingin your net income, or

take-home pay. Most of the money that issubtracted is for taxes.Money may also besubtracted for other

payments such as

insurance.



Taxes

• Fees placed on income, property, or goods to support government programs.These programs may be at the state,

national, or local level. Deductions for taxes are required by law.

• Generally, there are four common payroll

deductions. They are federal income tax,state income tax, Social Security tax, andMedicare tax.



Federal Income Tax

• A few for the support of federal programs.It is a payroll deduction collected by theemployer each pay period and paid to the

Internal Revenue Service (IRS). Mostworkers have federal income taxesdeducted from, their gross income.



State Income Tax

• A fee collectedby your employer and

paid to the staterevenuedepartment tosupport stateprograms.



Social Security Taxes

• A fee to pay for retirement and other social insuranceneeds, this is

collected under theFederal InsuranceContribution Act(FICA). This funds afederal program,

which provides oldage, survivors, anddisability insurance.



Medicare Taxes

• Collected frommost employees tofund the hospital

insurance providedunder the system.

• The amounts for

social security andMedicare are a settax rate subtracted



Reasons for a Personal

• Helps determine whereyou are spending your money currently.

•

Helps you decide where tospend your money in thefuture.

• Helps you develop asavings plan.

• Puts you in control of your financial future, beginningNOW!



Important Notes

Review Of Test Questions



Important Note

• Write a definition for money management

• MANAGING OR CONTROLLING MONEYIN A SENSIBLE OR WISE MANNER,BUDGETING YOUR INCOME TO MEETYOUR EXPENSES.



Important Note

• Understanding that food is an example of a need and steak is a want. Give another example of a need vs. a want.

• ACCEPT ANY REASONABLE ANSWER



Important Note

• The amount of income from your wages or salary before payroll deductions is called:

• GROSS INCOME



Important Note

• The amount of income from your wages or salary after payroll deductions is called:

• NET INCOME



Important Note

• One important tool for MoneyManagement is using a budget. Name twotypes of fixed (the same every month)

expenses you would include in a monthlybudget. _________,__________

•RENT,INSURANCE

• CAR PAYMENT, LOAN PAYMENT, ETC.



Important Note

• List two examples of personal financialgoals.

• TO SAVE 10% OF EACH PAYCHECK,TO PAY OFF ALL CREDIT CARDSWITHIN TWO YEARS, ETC



Important Note

• Name one factor to consider whenchoosing a bank for opening a checkingaccount.

• LOOK AT SERVICE CHARGES,LOCATION OF BRANCHES NEAR

HOME OR WORK, USE OF A BANKCARD ETC.



Important Note

• What is the common term for thededuction on your pay stub called FICA?

• SOCIAL SECURITY



Important Note

• The more exemptions you claim on your W-4 the fewer taxes are taken from your monthly pay. True or False

• TRUE



Important Note

• Define the term “Values” and give anexample of a value.

• ACCEPT ANY SYNONOM FOR VALUESSUCH AS: PRINCIPLES, STANDARDS,MORALES, ETHICS, IDEALS, ETC.

• EXAMPLE SHOULD BE CONSISTENTWITH STUDENT’S DEFINITION



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