Chapter 28
Planning For The Future
What
you?
does money mean to
What are values?

Values are a belief of what is desirable,
worthwhile, and important to us
What do you value?

List what you would save if you could put only
three items that are meaningful to you in a
treasure chest.
Who influences values?
 Values can be influenced by family, friends,
teachers, religious affiliations, work/career,
media, and law…
What do you value?
People have different values which
guide their decisions.
 These decisions may have an affect on
their lifestyle and financial situation.

 For example, if a person values financial
security, he/she may focus on saving,
investing, and/or finding a good job
What type of lifestyle do you
dream about?
Setting Goals

To reach your desired lifestyle you will
need to do some planning and goal
setting
 setting goals allows you to focus on items
that you identify as important.

Goals can be…
 Short-term goals can be achieved in less
than one year.
 Long-term goals can be reached in more
than one year.
Why are goals important:
Having goals allows us to become better
than we are today.
 Successful people have goals
 Goals motivate and inspire people
 Goals guide people as they live their
lives
 Without goals we have nothing to work
towards

SMART GOALS
Specific
 Measurable
 Attainable
 Realistic
 Timely

To Achieve Financial Goals

We need to manage our money
 MONEY MANAGEMENT
○ To process of getting the most from your $$$
 BUDGETING
○ A Plan of how I hope to spend my money
○ Steps in Planning a Budget
1.
2.
3.
4.
5.
6.
Set Financial Goals
Estimate Income
Budget for Fixed Expenses
Budget for Variable Expenses
Record what you Spend
Review Spending and Savings Patterns
2. Estimate Income:

Any money your receive (on a regular
basis)
 Investments, Salary, ???

GROSS INCOME (salary)
 Earned In come

Net Income
 Income less (-) deductions
○ Examples: Taxes, Insurance, 401-K, Social
Security
3. Budget for Fixed Expenses

Fixed Expenses
 Rent, Car, Loans
4. Budget for Variable Expenses
 Variable Expenses
 Cable, Phone, Groceries, Entertainment???
6. Record what you Spend
Write down what you spend during the
month
 Check what you spend against your
budget

 A difference between budgeted amount and
actual is called a budget variance
 Surplus –
 Deficit -
7. Review Spending and Saving
Patterns

Saving…
 Big Purchases
 Big Ticket Items
 Retirement

Budgeting is a continual process…
Average Household Expenses
6%
4%
Housing
Transportation
10%
33%
Other
Food
13%
Personal Insurance
and Pensions
15%
Health Care
19%
Apparel & Services
Income
Income = the actual amount of money you
earn or receive during a given period
 An employee may be paid:

 Weekly
 Biweekly=every two weeks
 Twice a month; 15 and 30th
 Once a month
 Commission
Income
 Wage/Rate=paid
hourly
 US minimum wage is $7.25
 IL minimum wage is $8.25 per hour
 Salary
- receiving the same gross pay
each pay period
 Example: $50,000 per year
Gross Pay
Gross Pay is the total amount you earned for a
specific time
 Number of hours worked * wage (rate per
hour) = gross pay
 Example:

 30 hours worked * $8 per hour=$240 gross pay
Net Pay
Net Pay (take home pay)
 Gross pay-deductions=net pay
 In US net pay = about 30 % less than
gross pay
 So you make $62,000 a year how much
are you really making???

Estimate about: $43,400
W-4

An employer gets the federal income tax
information when an employee gets hired and
must fill out a
 W-4 Form= lists number of withholding allowances
you want
You will claim “0”or “1”on your forms
 The more you claim the less the government
takes out

 Example you have 5 children you need more
money to take care of them
Deductions
Gross pay is reduced by
 Deductions = amounts that are taken out of
your pay before you receive your pay check
 MANDATORY DEDUCTIONS

 Federal Income Tax
 State Tax % of gross income
○ IL is 5 %
○ Some dates do not have state tax (Washington,
Florida, Nevada, Alaska etc…)
 FICA (Federal Insurance Contribution Act)
○ Social Security 4.2%
○ Medicare 1.45%
Other Deductions from your
paycheck

Pension Retirement
 401 K
 403 B
Health Insurance
 Union Dues
 Savings
 Donations; charity

W-2 Form
By January 31st an employee must receive
(from each employer)
 W-2 Form= summary of your total earnings
and withholdings from your job
 NEED THIS TO DO YOUR TAXES!!!
 Lists:

 Total earnings from all sources
 Federal income tax withheld
 Social security tax withheld
 Medicare tax withheld
1040 EZ
By April 15 each person who has worked
must file an income tax return:
 1040 EZ (FORM TO DO YOUR TAXES)

 Single or married
 No dependents
 Taxable income of less than $100,000
 Earned no more than $1500 in interest
Average Salaries for Graduates
Category
2012 Average
Salary
2011 Average
Salary
Percent Change
Engineering
Computer Science
$61,913
$59,221
$59,591
$57,046
3.9%
3.8%
Business
Health Sciences
Communications
Math & Sciences
Education
Humanities & Social Sciences
$53,850
$49,196
$43,717
$42,471
$40,668
$36,988
$51,708
$47,336
$41,988
$41,370
$38,581
$36,252
4.2%
3.9%
4.1%
2.7%
5.4%
2.0%
Overall
$44,455
$42,987
3.4%
Source: National Association of Colleges and Employers (NACE). The data represent
accepted starting salaries (not salary offers), derived from the U.S. Bureau of Labor
Statistics, the U.S. Census Bureau and a master set of data developed by Job Search
Intelligence. Data for the January 2013 report were retrieved in November 2012, and reflect
the final results for the class of 2012.