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Topic 3 Earning Your Money

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					Topic 3: Earning Your Money

     HIGH SCHOOL OF BUSINESS™
       WEALTH MANAGEMENT
Topic 3.01
How do you get the money you need

• Wage – compensation for work.
• Salary – wages received on a regular basis, usually weekly, bi-
  weekly, or monthly. Sometimes the term is used to include other
  benefits, including insurance and a retirement plan.
• Rent – payment, usually monthly, for use of space or property.
• Dividends – portion of a corporation's after-tax accounting profit
  that's paid to shareholders or owners. The companies that offer
  dividends are most often companies that have progressed beyond
  the growth phase, and no longer benefit sufficiently by reinvesting
  their profits, so they usually choose to pay them out to their
  shareholders.
• Transfer payments – money given by the government to its
  citizens. Examples include Social Security, unemployment
  compensation, welfare, and disability payments.
Topic 3.01
How do you get the money you need

 Distinguish between earned and unearned income.
   Income derived from active participation in a trade or
    business, including wages, salary, tips, commissions and
    bonuses.
   Any income that comes from investments and other sources
    unrelated to employment services.
       Examples of unearned income include interest from a savings
        account, bond interest, tips, alimony, and dividends from stock
 Topic 3.02 What financial paperwork do you
 complete when hired
 On-boarding – process including activities that prepare an employee
  for their first day. For example, there may be insurance forms, tax
  forms, personal information forms that need to be completed so that
  the new hire can begin work and be compensated.
 W-4 Form – a tax form prepared by an employee for an employer
  indicating the employee's exemptions and Social Security number, and
  enabling the employer to determine the amount of taxes to be withheld
  for the employee.
 Personal allowances – exemptions from withholding for the
  taxpayer, spouse, and dependents, used in calculating the amount of
  income tax to be withheld from periodic wage payments. The
  employee/taxpayer completes Form W-4 indicating the number of
  allowances to be considered for purposes of withholding.
Topic 3.02 What financial paperwork do you
complete when hired

 Exemption – a direct reduction taken from taxable
  income for a specific reason, as allowed by the IRS.
 I-9 Form – the Immigration Reform and Control Act of
  1986 (IRCA) required employers to verify that all newly-
  hired employees present "facially valid" documentation
  verifying the employee's identity and his or her legal
  authorization to accept employment in the United States.
  The I-9 form is provided by the federal government for that
  purpose. Every employee hired after November 6, 1986
  must complete an I-9 form at the time of hire. Employees
  must complete Section 1 of the form within three days of
  starting work.
Topic 3.02 What financial paperwork do you
complete when hired

 Identify types of on-boarding activities.
   There are two high-level goals of the onboarding process:
     To make new employees feel welcome and comfortable in their
      new surroundings.
     To minimize the time before new employees are productive
      members of their new workgroup.
Topic 3.02 What financial paperwork do
you complete when hired

 The high-level objectives of a good on-boarding
 program include:
    Helping the employee to identify with their new employer.
    Allowing the employee to understand some of the company's values
     and priorities.
    Building an optimistic attitude towards the company.
    Avoiding misunderstandings.
    Helping the employee feel valued.
    Encouraging socialization and creating a sense of belonging.
    Reducing new employee anxiety.
    Setting of performance expectations.
    Decreasing the learning curve.
Topic 3.03
How much money will you take home

 Pay period – length of time employee works before being
  compensated; weekly, bi-weekly, or monthly are popular pay periods.
 Gross income – all income except as specifically exempted by the
  Internal Revenue Code. For example, an inheritance is specifically
  excluded from gross income.
 Net income – In business, what remains after subtracting all the costs
  (namely, business, depreciation, interest, and taxes) from a company’s
  revenues. Net income is sometimes called the bottom line. For an
  individual, gross income minus taxes, allowances, and deductions. An
  individual's net income is used to determine how much income tax is
  owed.
 Deduction – An expense subtracted from adjusted gross income when
  calculating taxable income, such as for state and local taxes paid,
  charitable gifts, and certain types of interest payments.
Topic 3.03
How much money will you take home

 Pension – Post-retirement benefits that an employee might receive
  from some employers. A pension is essentially compensation received
  by the employee after he/she has retired.
 401(k) – A defined contribution plan offered by a corporation to its
  employees, which allows employees to set aside tax-deferred income for
  retirement purposes, and in some cases employers will match their
  contribution dollar-for-dollar. Taking a distribution of the funds before
  a certain specified age will trigger a penalty tax. The name 401(k)
  comes from the IRS section describing the program.
 FICA – The federal law which requires employers to withhold a portion
  of employee wages and pay them to the government trust fund which
  provides retirement benefits. An acronym for Federal Insurance
  Contributions Act. More commonly known as social security.
Topic 3.03
How much money will you take home

 Discuss reasons for interpreting a pay stub.
    If you need further explanation on any portion of your paycheck or if
     a particular calculation doesn't seem correct, consult your Human
     Resources Department for assistance.
    Don't procrastinate! Exercise good money management skills by
     being proactive. If a calculation is incorrect, the issue may reappear
     on every paycheck.
    Also, you may not be making the best choice for a retirement plan
     contribution, or losing money if your earnings are not calculated
     properly.
    It is ultimately your responsibility to ensure that you are being
     properly compensated.

				
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posted:4/28/2013
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