Income and Careers
How will my education and career choices impact my future income potential?
How can I tell if my choices were good financial investments?
Sources of Income
Wages/Salaries/Commissions
Investment/Interest
Self-Employment profits
Inheritance/Gifts
Scholarships/Awards
Benefits/Insurance
Lottery……… http://www.thedailybeast.com/articles/2012/03/30/15-things-more-likely-to-happen-than-winning-mega-millions.html
Income Terms
1. Wages: the amount of money paid to an employee each pay period
2. Insurance: A method for spreading individual risk among a large group of people to make losses more affordable for all
3. Income: Money received (paychecks, interest, etc.)
4. Cost of Living: price of food, transportation, housing, and other necessary expenses
5. Pension Plan: Retirement plan funded in part by an employer with a set benefit
6. Benefits: Non-Cash compensation companies offer in addition to paychecks
7. Leave: a period of time away from your job; sometimes paid for.
8. Retirement: the age at which you stop working full time
9. Investment: The use of money to earn a financial return
10. Commission: A fee received by a broker or agent for buying or selling securities or real estate
11. Inheritance: Property passing at the owner’s death to their heirs
12. Gift: Something given voluntarily to someone without payment in return
13. Workforce: The people engaged in or available for work, either in a country or an industry
14. Unemployment: When a person cannot find a job but is actively searching for one
15. Entrepreneur: A person who takes the initiative and risk to start and run a business
16. Withholding: Part of an employee’s earnings paid directly to the government by an employer
17. Taxes: An involuntary fee paid by workers to pay for government programs
Which income terms represent direct sources of income?
Wages
Benefits
Investment
Commission
Pension Plan
Inheritance
Gift
Wages
http://www.cc.com/video-clips/8fg72p/the-colbert-report-minimum-wage---mcdonald-s-spending-journal
Should the minimum wage be increased to from 7.25-15 dollars per hour?
Benefits
Leave: vacation, holidays, sick days
Insurance: health, disability, life, dental
Pension Plans
Personal Retirement Plans (401k IRAs)
Tuition Reimbursement
Travel Expenses
Access to Financial Advice
Payroll Savings Plan
Stock Option Purchase
Paychecks
When a person gets a paycheck there are a couple of items which will help you know what you are getting and why.
Gross pay- how much you made total before withholdings were taken out
Net pay- after withholdings are taken out it’s the money you actually get to keep
YTD- year to date; a total of your earnings so far that year
Deductions- all the different ways money is withheld from your paycheck
Taxes and Withholdings
https://www.youtube.com/watch?v=ujdN7uK5kDk
Unemployment
Unemployment occurs when someone loses their job
In the event of unemployment, the government may provide unemployment insurance to those who qualify
This allows qualified individuals to continue receiving a paycheck while they search for work
https://www.youtube.com/watch?v=8JZjdj39TF0
Entrepreneur
Entrepreneurship is the fastest growing career in the U.S.
An entrepreneur is someone who
Is willing to take risks
VERY disciplined
Happier being their own boss
Is competitive!
Entrepreneurship
Risks
• No Guarantees it will work
• No regular paycheck
• Long hours, nights, weekends, holidays
VS Rewards
• Be your own boss
• Keep your profits
• Control your destiny
Investments
Good Financial Planning should include some form of investment.
By investing you can make your money earn more money for you.
https://www.youtube.com/watch?v=23zghpS9034
The cost of waiting to invest Ben invested $2000 dollars a year for 8 years in his retirement account, then nothing afterward until he retired.
Arthur invested nothing for the first 8 years of his career then $2000 a year every year from then until retirement (38 yrs).
Who do you think had more money for retirement?
How much did it cost Arthur to start his investing later in life?
The Time Value of Money (TVM)
When saved or invested, the value of money can increase exponentially over time.
TVM can be used to see the opportunity costs of choosing not to save or invest your money
Example: Spending $1000 from a savings account that earns 4% a year would have an opportunity cost of $40 ($1000 x .04 interest/year = $40)
$1000 saved and compounded at 4% over 10 years would have been worth $1480
Is Education an Investment?
https://www.youtube.com/watch?v=w7Kqg0UUyfg
Value of Education
These figures show that for the average person, finishing
high school is worth about $10,000 more (compared with
dropping out). And finishing college nearly doubles the
worth of that number to $22,000 more!
Uneducated = Unemployed Education pays in higher earnings and lower unemployment rates
Source: www.bls.gov: Employment statistics of the civilian population 25 years and over by educational attainment.
How will I pay for my Education? There are many different routes one may
choose in order to pay for their Post-Secondary (after high school) education
Personal funds- Your own money or your parents
Student Loans- Most will not require you to start paying them back until you graduate or stop going to school
Scholarships- Money awarded to you because you applied and met their requirements
Grants- Free money from the government given to those who qualify
How can I get government Grants?
In order to qualify for government grants you will have to fill out the FAFSA (Free Application for Federal Student Aid)
Go to FAFSA.ed.gov
Use the FAFSA Forecaster to see if you might qualify for Federal Grants
Investment Basics
People invest their available resources (Money, Time, Energy) primarily looking for a Return on Investment or ROI
Total Gain from Investment – Cost of Investment
Example: If you invested $1000 dollars in a company only to sell your shares in the company a year later for $1200
your ROI would be $200
= ROI
Return On Investment
To determine if an investment was worth the resources applied, investors calculate the Rate of Return or ROR.
(Total Gain from Investment – Cost of Investment)
Cost of investment
Example: If you invested $1000 dollars in a company only to sell your shares in the company a year later for $1200
your ROR would be 20% ($1200-$1000/$1000)
= ROR
Career Choices Impact on Income
Imagine the world had to start over. That there is nothing left but the natural world and 100 people.
As a group, decide on the 7 most important occupations you would need in order to restart society and why you would need each one.
Income Factors
Education, Training, Skills and Talents
+ Demand for your skills, training, etc
– the number of competing workers
=Earning Potential
The amount you are likely to make in your career
Will the demand for your skills always remain the same?
https://www.youtube.com/watch?v=XrJjfDUzD7M&src_vid=vdvo5FlRqmM&feature=iv&annotation_id=annotation_2862183529
What does this means for you?
If you stop learning and growing you may be out paced and replaced before you are done working
Cost of Living
The decision of what career path to take should also take into account where you might live
Different areas of the country and world have different costs of living
A sufficient salary to live on in St. George may be completely unrealistic to live on in New York
http://money.cnn.com/calculator/pf/cost-of-living/
Should you take the job
Lets imagine you currently work at a business in St. George which pays $49,000 a year with basic benefits like health insurance and retirement (valued at $500 a month)
You then are offered a position in San Francisco California which offers you $79,000 a year with a similar benefits package.
Should you take the job?
Creating a Résumé
What is a Résumé- a document with information about you which is organized to help you get a job
Why should I create and use a résumé- It tells the employer who you are and what you can do
When should I use a résumé- Any time you apply for a job. It is often done in addition to the company’s application
Career Placement Test
Creating a Resume
Important information to include on a Résumé Objective Statement- state the position you are seeking and the
contributions you can bring to the company
Work Experience- Any paid experience you have in the field you hope to work in
Education- Information on training; could include GPA and Graduation dates from High School
Accomplishments- Anything you can point to which shows a record of success
References- People (generally over 21) who can speak well about you if contacted. Usually employers will ask for 3 different non-related references (can be included on separate pages)
Hobbies and Volunteer Experiences can also be included
Creating a Resume
Rules for making a Résumé more Professional
Try to limit it to 1 page
Do not use the word I
Use as little wording as you can while still being concise and descriptive
Use strong Verbs when describing your accomplishments like: achieved, controlled, coordinated, designed
Use Skill wording when describing yourself like: Capable, Flexible, Responsible, Resourceful
Make sure it is free of spelling errors!!
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