1.02 Financial- Guided notes

The Earning Phase 

The Clock vs. The Contract

• Wage: You are trading your _____time___________ for money. If you work more hours, you earn _____more___________ money.

• Salary: You are trading your ______time__________ for a flat fee. You receive the same amount regardless of how many hours you work.

The "Gross" vs. The "Net"

• Gross Income: The total amount you earned BEFORE the government takes ________taxes________ for things like roads and schools.

  Income is any money you receive, whether from a job, an allowance, or a gift.

• Net Income: Also known as ____take home ____________ Pay. This is the actual cash that lands in your pocket. It is the only number that matters for your life!

The Spending Phase

Once you have your Net Income, it begins to disappear through Expenses.

Categorizing Your Costs

1. Needs (The "Must-Haves"): These are your ______essential__________ costs. Without these, your life changes drastically.

   • Examples: Water, electricity, ______housing__________, and healthy food.

2. Wants (The "Nice-to-Haves"): These make life fun but are not ________necessary________ for survival.

   • Examples: Branded hoodies, fast food, and the latest ______technology__________.

The Saving Phase 

Saving is simply the money that is left over when your ____net____________ Income is higher than your ________expenses________.

• Why Save? It protects you from "________life________ Happens" moments (like a broken phone) and allows you to buy bigger things later without feeling stressed.

The Golden Equation

Complete the formula below:

Net Income -  ___Expenses__________  =  ____Savings____________

• If the result is a POSITIVE number, you are ______building__________ wealth.

• If the result is a NEGATIVE number, you are in _____debt___________!