Review

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Review
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FINANCIAL PLANNING
Step 1 Set SMART Financial Goals S
Specific M Measurable A Attainable R
Realistic T Time bound

• Step 3 Create a Financial Plan
• Indentify your financial goal
• Establish criteria analyze your needs and wants
  and identify your expectations
• Examine options
• Weigh pros and cons
• Make your decision
• Evaluate the results

• Step 2 Analyze Information
• What are your sources of income
• Where do you spend your money

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Factors Influencing Decisions

• Values whats important to you?
• Peers what will your friends think or say?
• Family what are your family preferences?
• Feelings what are you feeling at the time of
  the decision?
• Risks and consequences what do you stand to win
  or lose?
• Habits its the way you always do things

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Decision Making Strategies

• Spontaneity first thing that comes to mind
• Compliance going along with others
• Procrastination putting things off
• Agonizing thinking about it too much
• Intention the choice thats intellectually and
  emotionally rewarding
• Desire its what you want regardless of the
  risk
• Avoidance trying to avoid the worst result
• Security always choosing the safest route
• Synthesis evaluating all the options and
  choosing the one you like best

5
Opportunity Cost

• What a person gives up when a decision is
  madewhich could be their time, health, energy,
  or money

Delayed Gratification

• Saving money over time to make a major purchase.
• Waiting to buy a new product until the price goes
  down.

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Goals

• Short-term less than 3 months
• Intermediate 3 months to a year
• Long-term a year or further away

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Methods of Being Paid

• Paycheck most common
• Direct Deposit most secure
• Payroll Card use like an ATM card

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Methods of Calculating Pay

• Hourly
• Overtime (1 ½ times regular pay for hours worked
  over 40 per week)
• Salaried
• Commission
• Straight commission
• Base plus commission

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Federal Forms

• W-4 Employees Withholding Allowance Certificate
• Allowance determines amount to be withheld for
  income taxes
• Dependent a person who relies on the taxpayer
  for financial support
• Form I-9 Employment Eligibility Verification
  Form
• Passport, drivers license, Social Security card,
  birth certificate

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Paycheck Terminology

• Paycheck stub
• Gross Pay total pay earned before deductions
• Net Pay Gross pay minus deductions. Sometimes
  called take home pay.
• Deductions -- on average 31 of your paycheck is
  taken out for taxes
• Federal income tax
• State/local income tax FICA (7.65 of gross pay)
• Social Security (6.2)
• Medicare (1.45)
• Medical insurance
• Retirement plan (Roth IRA, 401K, Pension Plan)

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Budgeting

• A budget is a spending plan for a given period of
  time
• It includes income, fixed expenses, variable
  expenses, and periodic or occasional expenses
• PYF Pay Yourself First always include savings
  as an expense item within your budget

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Budget Percentages
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Keeping TrackGet Organized

• Balance your checkbook monthly.
• Reconcile your account to make sure errors
  werent made
• You might have missed an ATM transaction or other
  items you may have overlooked
• Keep all bank statements for at least one year
• Pay stubs
• Verify that each pay stub shows the correct pay
  and deduction amounts
• Keep your pay stubs for a yearcheck your last
  pay stub with your W-2 form that you receive in
  January.

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Getting Organized, Continued

• Tax documents completed returns and all tax
  documents should be kept for at least 7 years
• Insurance documents keep the declarations
  pages that show your coverages and any
  deductibles.
• Loan and credit card statements always check
  charges and payments on your monthly statements
  for accuracy. Keep monthly statements for at
  lease a year
• Receipts and Warranties for Items

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Methods for Keeping Your Budget on Track

• Envelope system
• Tally system
• Using your checking account register
• Budget spreadsheet
• Personal finance software like Quicken or Money.

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Bobs Paycheck

• 33 40 73 Regular Hours
• 73 10.25 748.25
• 7 Overtime Hours
• 7 10.25 1.5 107.63
• Total Gross Pay 855.88
• Federal income tax 128.38
• Oregon income tax 77.03
• FICA 65.47
• Roth IRA 50
• Total Deductions 320.88
• Net Pay 855.88 - 320.88 535

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Marias Paycheck

• Monthly salary 45,000 / 12 3750
• Federal Income Tax 750
• Oregon Income Tax 337.50
• FICA 286.88
• Health Insurance Premium 50
• 401K 375
• Total Deductions 1799.38
• Net Pay 1950.63