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Income

Income is the amount of money you earn from working a full or part-time job or for

providing a service, such as cutting grass, babysitting, or tutoring, etc. Income can be seen as an

addition or increase coming in on a weekly, bi-weekly or monthly basis. You can also count

allowances and cash gifts as part of your income.

Do you already earn income? When you get your paycheck, do you ever wonder about

all of the different words shown on your paystub? Did anybody bother to explain what all of

those pesky words mean?

Paycheck Breakdown

Gross Pay is the amount of income you make before any kind of deductions are subtracted

Net Pay is the amount of income you make after deductions and taxes

Deductions may be items such as Federal taxes, state taxes, FICA, medical insurance and any

other special items as explained by your employer

Paycheck Taxes

Federal Tax – Everyone has this tax come out of his or her paycheck. It is paid to the Internal

Revenue Service, which is a government agency

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State Tax – Everyone pays taxes to the state government in the state they live

FICA – stands for Federal Insurance Contributions Act. It is a law requiring everyone to help

contribute to the county’s social security and Medicare program so that there is some form of

benefit for someone who is retired, disabled persons, or children on deceased workers.

Example of Pay Stub

Anywhere Employer, Any State, Date: 00-00-0000

NA, 11111
Pay to the order of Financially Pay Period – Week 00/00/0000 –
Wise Student 1 week
11 Anywhere Lane, Any State, Net Pay - $285.00
NA 11111
Earnings Taxes
Hours 40.00 Federal $70.00
Pay Rate - $10.00 per hour FICA/Medicare $30.00
State $15.00

Gross Pay - $400.00 Total Deductions - $115.00

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Budget Know How

A budget is a personal spending plan you create to help you to know how much income

you have coming in and how much you having going out! In the end you will know if you are in

the red (negative) or in the black (positive). The number one lesson to remember is that

budgeting does not have to be hard. It is all about the tracking!

First – Starting tracking income and everything you spend in a week. Start

keeping all receipts. Categorize receipts by the date. Circle the date and the total

amount spent on each receipt. This will make it easier for you track dates and

amounts.

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Second – Breakdown expenses on a weekly tracking form by category.

Categories can vary by individual personal budgets. For example:

Week 1 Monday Tuesday Wednesday Thursday Friday Total

Food
Housing
Transportatio
n (Public, taxi,
carpool)
Car (gas, car
payments,
maintenance,
insurance)
Entertainment
(media, sports,
subscriptions,
Events etc)

Meals Out
Cell Phone
Gifts
Clothes
Savings
Bumps in the
Road
(Unexpected
events)
Total

You should track your expenses for about four weeks to be able to create a monthly budget.

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Third – Move all four weeks of tracking to a monthly summary budget sheet.

Monthly Spending Summary

Month ______________________________

Monthly Net Income Food Example - $200

– Example - $285 x 4
weekly checks
$1, 140
Housing Example - $250
Allowance Transportation Example - $0
$0 (Public, carpool)
Cash Gifts Car (gas, car Example - $350
$0 payments,
maintenance,
insurance)
Other Entertainment Example - $100
$0 (movies, music,
subscriptions, etc)
Total Income Dine-out Example - $100
$1,140 (doordash, fast-
food,etc)
Cell Phone Example - $50
Clothes Example - $75
Gifts Example - $20
Savings
Bumps in the Road
(Unexpected Events)

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Total -5.00

Fourth – Depending upon your expenses outlined in your Monthly Budget Summary, you may

be in the Red (negative) or in the Black (Positive).

You will want to evaluate your Needs versus Wants to see how you may adjust your spending

and monthly expenses.

Needs are defined as those things you need to sustain or improve your daily survival.

Wants are defined as those things not essential to your survival, but you would love to have if

you can.

Needs Wants
Food Designer clothes
Transportation Video games
Shelter Big screen TV
Heat, Water, Electric, Internet Jewelry
Health Insurance Tattoos

Focus Questions.
1. What is the difference between gross income and net income?

2. Tell me the difference between savings and debt, and how they are both created.

3. What is a budget? Why is budgeting important?

4. What are some of the taxes removed from the sample payment record?

5. Name three sources of income. Which one is most important?

6. What are three advantages of a successful budget?

7. Explain the distinction between needs and wants.

8. After going through this module, how has the insight gained impacted your attitude about
budgeting?

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