Money Management Guide
By: Summer Tracy
Depository institution – A business that provides financial services
Commercial Banks and Credit Unions
Commercial Bank: For profit and open to everyone.
Credit Union: Not for profit/Owned by members and open only to those who meet membership requirements, such as a common employer.
Checking and Savings Accounts
Savings Account: An account for money not intended to be used for daily expenses. Access to money is more limited than a checking account. Earns interest.
Taxes - A sum of money demanded by a government to support the government itself as well as specific facilities or services
Types of Taxes
Payroll Tax: A tax on earned income that supports Social Security and Medicare programs.
Federal Income Tax: Tax on earned and unearned income that funds: Operations of federal government, national roads, education, national defense ,disaster relief ,national parks & museums, and government assistance programs.
State Income Tax: Similar to federal income tax but funds state affairs.
Property Tax: A tax on property such as land, buildings/homes, and motor vehicles.
Excise Taxes: Taxes collected from the seller or retailer and as such often remain hidden in the price of a produce or service
Taxes and Money Management
Statement of Financial Position - A financial statement that describes an individual or family’s financial condition on a specified date by showing assets, liabilities, and net worth
Calculating Net Worth
Net Worth = Assets - Liabilities
Assets = Liabilities + Net Worth
Liabilities = Assets - Net Worth
Income and Expense Statement: Lists income and expense transactions that have taken place over a specific period of time (usually a month or year)
Your present self impacts your future self
Spending Plans - An income and expense statement sometimes referred to as a budget which records both planned and actual income and expenses over a period of time
Why is a spending plan important?
- Analyzes the opportunity costs of your trade offs to maximize financial well being
- Helps set and reach goals
- Helps increase net worth
Spending Plan Development Process
DevelopStep 1: Track current income and expenses
Step 2 : Personalize your spending plan
Step 3: Allocate money to each category
Step 4: Implement and control
Step 5: Evaluate and make adjustments