Money Management Guide

All about taxes, income and more!

Depository Institutions

A Depository Institution is a business that provides financial services. There are two types: commercial banks and credit unions. A commercial bank is for-profit, generally offers more services, and is open to anyone who wants to use it. In contrast, a credit union is not for profit, but has membership qualifications.

Statement of Financial Position

Net Worth is a measure of one's financial wealth. It is the monetary value of all of that person's possessions, minus what is owed to others. In short, Assets - Liabilities = Net Worth. Assets are everything a person owns with monetary value. Liabilities are debts or obligations owed to others.

Types of Taxes

Income and Expense Statement

Quite simply, income is money received, whether it is a paycheck or a gift. There is a tax on it, as seen above. Expense is money spent. The largest chunk of this is taxes, as well as living expenses. Net gain or net loss is calculated by income - expenses. If the number is positive, it is net gain. If it is negative, it is net loss. A zero is called a zero balance.

A Spending Plan

Essentially, a spending plan is a budget based on personal income and expenses. The five steps to creating one are as follows:

  1. Track current income and expense
  2. Personalize your spending plan
  3. Allocate money to each category
  4. Implement and control
  5. Evaluate and make adjustments