Where does it all go? The "it" is money. Most people find
that money seems to disappear, but sometimes if you keep track of
money, it might not disappear quite so fast. Even if it does disappear,
you at least know what you spent it on. Throughout this unit you will
be keeping track of the money for the Carson family.
The Carsons have less money coming in each month than some families, but they have much more coming in than many families. The money that Mr. Carson and Mrs. Carson earn for working is called income. The money that the Carsons spend is called expenses. Most people hope that their income is greater than their expenses. People that are always spending more than they earn are headed for trouble.
One way to help keep track of money spent is to make a budget. A budget is a plan that can help organize a person’s or a family’s money.
To begin a budget for the Carsons, you must first figure out how much money the Carsons earn. There are Mr. and Mrs. Carson, their son Karl, 18, and their daughter, Meagan, 12. The money that the family earns is income.
When working the problems in this unit, always figure that there are 4 weeks in a month.
PROBLEM #1: Figure Mr. Carson’s monthly income for January. Mr. Carson makes $21.50 an hour. He works 8 hours a day and works 5 days a week.
Hourly Pay x Hours Worked each day x Days Worked each week =Weekly Pay (x4) = Monthly Pay
$ x x = $ (x4) = $
PROBLEM #2: Figure Mrs. Carson’s monthly income for January. Mrs. Carson makes $9.00 an hour. She works 5 hours a day and works 5 days a week.
Hourly Pay x Hours Worked each day x Days Worked each week =Weekly Pay (x4) = Monthly Pay
$ x = $ (x4) = $
PROBLEM #3: Figure Karl’s monthly income for January. Karl makes $6.00 an hour. He works 5 hours a day and works 3 days a week.
Hourly Pay x Hours Worked each day x Days Worked each week =Weekly Pay (x4) = Monthly Pay
$ x x = $ (x4) = $
PROBLEM #4: Figure the Carson’s total monthly income for January. The amount the Carsons earn before income taxes, Social Security and other taxes are deducted (or subtracted) is called gross income.
Mr. Carson’s monthly income: $ Problem #1
+ Mrs. Carson’s monthly income: $ Problem #2
+ Karl’s monthly income: $ Problem #3
$ TOTAL MONTHLY GROSS INCOME FOR CARSONS IN JANUARY
Another word about TAXES!
Taxes consist of money that a government collects from people and businesses. Taxes are collected by the government to run the government and all of its agencies. There are different kinds of taxes. Sales taxes are charged on most items sold. People pay "use" taxes as well: real estate taxes, toll taxes, personal property taxes, etc. The money collected from all these taxes is used to pay for different things. The taxes that people pay on the income they earn is called income tax. Most people pay a federal income tax and a state income tax, although some states don’t collect a state income tax.
Most people owe their income tax on April 15th. People file an income tax return that shows how much they earned in income as well as how much they owe in taxes. Throughout the year, workers have money withheld from their paychecks for income taxes. This is called tax withholding and the amount of money that is withheld depends on how many dependents the worker has. Dependents are those people that count on others for financial support. Most dependents are children, but many times being blind, having a disability, or something else can qualify an adult as a dependent. In the Carson family, Karl and Meagan are dependents- Mrs. Carson is not. Having more dependents results in less money being withheld, thus more money in the paycheck.
Again, gross income reflects earnings before taxes are withheld.
PROBLEM #5: Figure the amount of money that the government withholds in taxes. Figure the government withholds 20% of the Carson’s gross monthly income for different taxes.
HINT:When working with percents, move the decimal point two places to the left (20% = .20)
Monthly Gross
income
$ x 20% = $ AMOUNT OF TAXES IN JANUARY
Net Income is the amount of income after taxes and other deductions are withheld. Besides taxes, people can have money withheld for insurance, pension or retirement plans, child care and other things.
PROBLEM #6: Figure the Carson’s net income for the month of January
Total Gross Monthly Income $
LessTaxes - $
NET MONTHLY INCOME $
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