Innovative Independence
Monetary Skills
Understanding monetary skills is crucial, especially in modern days. Knowing these skills help with self-sufficiency. It empowers teenagers to be self-reliant and self sufficient. This also helps plan for the future. Knowing how to save for distant milestones are certainly good goals to have. Hopefully by reading this, you will learn how to avoid debt and fully understand legal and social responsibility when it comes to money.
Taxes and Other Equally Thrilling Skills
Simplified
Taxes are legally required payments to local, state, and federal governments. Tax money is used to pay government bills and fund services for the citizens.
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Every year, businesses and individuals alike must pay taxes on any income earned. Taxes are usually due on the 15th of April
Terms
Tax Return
forms filed with a tax authority that reports income and expenses. They allow tax payers to calculate tax liability and request tax refunds for the overpayment of taxes.
Individual Income Taxes
A tax on wages, salaries, interest, and other sources of income. It is imposed by the State in which the income is earned
Tax Deductions
Expenses that the government allows you to subtract from your taxable income to further lower your tax bill.
IRS
The U.S. Government Agency that is responsible for collecting federal taxes and enforcing tax laws.
How
Do I file my taxes?
It is recommended that your taxes are filed electronically through IRS Free File. You can also use tax preparation sites or authorized e-file providers.
What
Happens if I file my taxes late?
You may receive a failure-to-file penalty and/or failure-to-pay-penalty. This is calculated based on how late you file and the amount of unpaid taxes due.
When
Will I get my tax refund?
If you file your taxes electronically, you can expect your return in up to 3 weeks from when the IRS receives your forms. Mailed returns will take much longer, but your refund may arrive faster if you request a direct deposit.
Your Financial Record
What is this?
In summary, they are documents that provide evidence of business transactions. These records should include invoices, receipts, subsidary ledgers, general ledger, and the trial balance.
Financial records are also needed by individual tax payers. They are used to complete their tax returns.
Defining the Terms That Even I Don't Know
Subsidary Ledgers
an accounting record that contains detailed information about a specific subset of a company's accounts.
General Ledger
A record of a company's assets, liabilities, income, and expenses
Trial Balance
A Statement that takes the balances of ledgers and compiles them into a debit and credit account column. Basically, it ensures mathematical accuracy of business transactions.
Tax Returns
The form where a taxpayer makes a statement of income that is used by the tax authorities to assess the liability for tax.
Budgeting
So What Exactly Is This?
A Budget is a guide that you create to lead you on your financial path. This way you can reach your own personal goals. It keeps your finances under control and also indicates when you might need to make adjustments with spending. It helps you save money for your future!
A Basic Guide for the Next Steps
Choose a System
This is the framework for how you budget. We all have different approaches when it comes to money, and there are systems that will fit you.
Watch Your Project
Make sure you record your spending by using online budgeting or other saving tools.
Automate Savings
Automating your money will make your life so much easier. Try setting up automatic payments from your paycheck to your emergency savings and other accounts
Practice
Actively manage your budget by regularly revisiting it. Everything changes over time, so make sure its consistently updated.
50/30/20
This is a very common method of budgeting. According to this plan, you spend 50% of your money on necessities, 30% goes to wants, and 20% (at least) goes into savings.
Emergency Funds
What is it?
It is a cash reserve specifically put aside for unplanned expensive or other monetary emergencies.
Why do I need it?
Without emergency funds, a financial shock can leave a lasting impact. Basically, an emergency fund is some money that will be here whenever you need it due to an emergency!
How do I make one?
01
Goals
With a specific goal, you can stay motivated. It can be rough when you're first getting started. Don't worry, there are materials online that can help. For example, there are many calculators online that can determine how long it will take you to reach your goal-based on how much you are able to put money away
02
Create a System
Make sure you make a system to help you make consistent contributions. Aim to make for a specific amount and then put that much away each day, week, or however long of a period you prefer.
03
Monitor Progress
Make sure you are regularly checking your savings. You can use automatic notifications or just write down a running total of your contributions.
04
The End!
Don't forget to give yourself some credit for what you've just accomplished! Congrats on making emergency funds!!
Credit
Improving Credit
Factors
There can be multiple factors that can help improve your credit score, but depending on your situation, it can be difficult to determine where you need to start. Here are some very simple methods to help you out!
1
Make On Time Payments
2
Pay Revolving Account Balances
3
Don't Close Your Oldest Account
4
Diversify the Types of Credit You
5
Limit New Credit Applications
6
Search for inaccurate Information on Your Credit Report
Checking Accounts
Basic Info
This is a place where you can make cash withdrawals and deposits. You can also use it for electronic purchases and transfers.
They are basically to be used when you need some quick cash. You can add money through paychecks, direct deposits, or transfers.
If you open an account through a bank, your money is insured up to $250,000. Basically, your money should always be safe.
Checking accounts don't usually pay interest. In the off chance that it does, the rate will be low.
Making deposits and closing your checking account will not impact your credit score, but overdrawn checking accounts will be factored. Just make sure you always repay the money you overspend!
To open an account, its fairly simple. You just need to prove your identity and proof of your residential address to your bank. From there you need to make an initial deposit and submit your application.
You may be charged a maintenance fee from your bank if you use an ATM outside the bank's network.
Writing Checks
01
Account Holder and Other Information
In the top left corner of the check, there should be the name and address of the checking account holder
02
Check Number
In the top and bottom right corners, there should be the check number. This helps the account holder keep track of how many checks they've used.
03
Routing/Accounting Number
These are a series of numbers that are on the bottom of the check. The routing number is the left most series.
How To
01.
Date the Check where it is indicated
02.
Fill in the recipient's name where it says, " pay to the order of"
03.
In the designated area right of the recipients name, write the amount of dollars in num
04.
with letters, write the dollar amount underneath the recipient's name
05.
Sign the check where it is indicated