I: How to plan for the future.

1. Unit 9Goal 7.1 Financial Planning, Budgeting, and Taxes.Objective; Make financial plans and a balanced budget.

2. I: How to plan for the future. • A:Make a budget: A budget makes sure you have enough money to spend and save. A budget allows you to see where your money is being spent and it helps you make sure your income matches your expenses. • Income: The money you make from a job, or investments i.e. dividends, bonuses, capital gains, interest on savings. • Expenses: Money paid out of your income. • Fixed expenses: tend to be the same each month. Ex: Rent or mortgage. • Variable expenses: tend to fluctuate each month. Ex: clothing, groceries.

3. II: Credit Cards • A: Credit cards: are forms of payment on credit. You buy something now and pay for it later. Managed properly, credit cards offer us convenience, a sense of security, and allow us to build a healthy credit history. Irresponsible credit card use can result in excessive debt and become a long-term financial liability. • B: Debit Cards: resembles a credit card but is linked to a checking or savings account. Funds are withdrawn immediately from the linked account with each purchase. Debit card transactions are debits. • C: Credit Card Fees : Credit cards charge fees for their usage. • 1. Annual Fee: • 2. Annual Percentage Rate (APR): • 3. Finance Charge: • 4. Late Fee: • 5. Minimum Monthly Payment: • 6. Monthly Periodic Rate: • 7. Transaction Fee:

4. III: Taxes: Americans pay taxes every year to the Federal and State Government. Taxes are due on April 15th or the taxpayer will incur a penalty unless they file for a late return. A:Types of Taxes off income. 1. Estate Tax: tax paid on inheritance from relative or individual. 2. Income Tax: tax paid on salary from job. 3. Capital Gains Tax: tax on the gains (money made over and above the original selling price) made from selling stocks, land, or other investments. B: Tax Credits: Tax credits reduce the amount of tax you are liable for. Two types of tax credits-nonrefundable and refundable. 1. The Child and Dependent Care Credit is a nonrefundable tax credit based on expenses incurred for the care of a qualifying person. 2. The American Opportunity Credit is worth up to $2,500 per student for four years of post-secondary education. The credit is 40% refundable, up to $1,000, so it can benefit even those with no tax liability. 3. The Lifetime Learning Credit provides a maximum non-refundable tax credit of $2,000 per year for all students attending an eligible educational institution in your household. The Lifetime Learning Credit may be limited by your income and amount of tax.

5. C: Refundable tax credits: A refundable tax credit is a tax credit that can reduce your tax liability below zero (0). Because it is possible to receive a refund from this type of credit, they're referred to as refundable. Examples. • 1. The Earned Income Tax Credit (EIC) is a refundable tax credit that reduces or eliminates the tax paid by low-income workers. • D: Tax Deductions: Tax deductions are expenses that reduce the amount of income subject to tax. • There are two types of deductions most taxpayers will qualify for: • Standard: • Itemized • The Standard deduction: • The standard deduction is a fixed dollar amount based on your filing status.

6. Itemized deductions include: • Miscellaneous itemized deductions • Archer medical savings accounts (MSAs) • Casualty and theft losses • Charitable contributions • Deductible taxes • Health savings account (HSAs) • Interest expenses • Medical and dental expenses • Mortgage points • Employee business expenses • Student loan interest

7. IV: Filing Taxes • A: The 1040 is the form a taxpayer fills out to file for a tax refund or to pay taxes. If you have paid too much to the government you will receive a tax refund. If you have paid too little then you owe money to the federal or state government. • B: Recommended records to file taxes: • Preparing your tax return will be easier if the records you need are organized and readily available: • Proof of identification • Social Security numbers for you, your spouse, and dependents • Birth dates for you, your spouse, and dependents • Wages and earnings statements: Forms W-2, W-2G, 1099-R, etc. These forms come from employers, investment firms, etc. • Interest and dividends statements from banks, brokerages, etc. • A copy of last year's tax return • Bank routing and account numbers • The amount you paid for childcare and the childcare provider's tax identification number • Receipts for charitable donations

8. Go to the following website http://www.1040.com/federal-taxes/filing-basics/ Read Tax Return Filing Basics. Answer the following question and discuss with a partner. • 1. What are the two ways to file a tax return? • 2. What can you do if you cannot afford to hire someone to do it for you? • 3. What form of identification do you need to claim your spouse and children?

9. Classroom/Homework Activity: • Look on page 550-551 of your textbook and make a budget using the dollar amounts given. • 1.Fill in a budget spreadsheet (create one in your notes). • 2. Answer all 4 questions under Analyzing economics.

10. EDUCATION AND EARNING POWER • Take a look on page 526 of your textbook. • Analyze the chart. • 1. What are the median incomes for men and women who are employed full time? • 2. What is the difference in median income between female high school graduates and females who attain bachelor’s degrees? • 3. Is the unemployment rate greater for worker’s with only a high school diploma? Why? • 4. What is underemployment? How is it different from unemployment?