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Provice an easily accessible place for people to store their money to meet daily living expenses.
Savings account
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The portion of current income not spent on consumption. (NOT SPENDING)
Savings
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Putting money away into a savings account or investing it before bills are paid.
Pay yourself first
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How quickly and easily an asset can be converted into cash.
Liquidity
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2 reasons why people do not save and argument for each of them.
people don't have their consumption of their needs and wants figured out yet. people don't know how much they need to be saving or investing for a future goal.
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Steps to a spending plan.
be willing to make adjustments. if the savings plan is not working, evaluate why.
#4
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Evaluate spending and determine where money can be saved.
#2
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Track spending for one month to determine where money is currently going
#1
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Decide what amount will be put into savings per month put your decision into writing and stick with it!
#3
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use saving accounts for:
- daily use
- emergencies
- future purchases
- future investing
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annual return on the investment, varies between investments, however, it is usually higher than any return on a savings account.
rate of return
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Approximately what percentage of a person's paycheck is deducted?
Almost 31%
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what does it mean to say the US operates on an ongoing payment system?
Taxes are immediately paid on income earned.
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what are the 3 methods an employer may use to pay his/her employees?
- Paychecks: most common method
- Direct Deposit: paychecks go straight to the bank
- Payroll Card: ATM's
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how does direct deposit work?
employers directly deposit employee's paychecks right into the bank account.
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how does a payroll card work?
its a card that electronically carries the balance of the employee's net pay. it does have a a fee. if you don't have a bank account, your paycheck goes on this card.
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what 2 forms must an employee complete when beginning a new job?
form w-4 and form i-9
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what do taxes provide citizens?
compulsory charges imposed on citizen by local, state, and federal government. it's used to provide public goods or services.
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what is the difference between progressive and regressive taxes.
- progressive- larger % of income from high income tax payer
- regressive- not based on one's ability to pay
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how are federal taxes determined?
the more a person earns, the more he/she, can pay in taxes.
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what services are provided by the internal revenue service?
collects federal taxes, issured reguations, and enforces tax laws written by the us congress.
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what does the form w-4 determine?
the % of gross pay which will be withheld for taxes
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what is a dependent?
a person who relies on a taxpayer for finanical support.
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