Title: Unit 1 Introduction (Teacher Only)
Course: Kentucky Sample Personal Finance Curriculum > Section: Unit 1: Careers, Education & Income

Unit 1: Careers, Education & Income
Description
Students will learn about sources of income for most people and the type of income related to each source. They will learn about human capital and the return to investments in human capital. They will also learn about income and payroll taxes, gross income, and net income.
Talking Points
1.People earn income by providing resources in the marketplace.

- If they provide labor, they receive income in the form of a wage or salary.

- If they provide natural resources—land or trees or resources found underground—they earn rent.

- People can earn interest income by allowing other people borrow their money. People earn interest when they keep money in savings accounts and certificates of deposit (CDs). People also earn interest, dividends, and capital appreciation or gains through financial investments that they make.

- People who own or start new businesses (entrepreneurs) earn income in the form of profit.

2.The choices people make over their lifetimes about education, jobs, and careers affect their incomes and their opportunities

3.People with more education and more job skills tend to earn higher incomes than those with less education and fewer job skills.

4. Getting more education and learning new job skills can increase a person’s human capital and productivity. Human capital is the education and skills that a person possesses.

5.Investing in human capital involves obtaining more education and more job skills. Such investments generally pay off with higher levels of income over a lifetime. However, there are opportunity costs associated with obtaining education, training, and skills.

6. Obtaining more education and training can require identifying and obtaining outside funding sources. These sources could include loans, grants, work-study, or the military. Determining how to pay for post-secondary education can impact people's future financial goals.

7. The Free Application for Federal Student Aid (FAFSA) is often one of the first steps in determining which funding sources are available to an individual.

8. A career is based on working at the same type of job/occupation or profession for many years. Different careers require different types of education and training.

9. People choose jobs or careers for which they are qualified based on the income they expect to earn and the benefits they expect to receive. Benefits include things such as health insurance coverage and retirement plans. People also make choices based on expected job satisfaction, independence, risk, family, or location.

10. Income earned from working and most other sources of income are taxed. Taxes are required payments to the government. Governments use the revenue from these taxes to operate and provide goods and services.

11. Taxes that most people pay on income include

- Federal income taxes and, in some states, a state income tax;

- Payroll taxes for the Federal Insurance Contributions Act (FICA), which include both Social Security payments and Medicare payments; and

- Taxes on interest and dividends earned as well as taxes on capital gains.

12. The amount of income tax and FICA paid affects net pay.

- Gross pay is the amount people earn for the work that they do.

- Net pay is the amount people receive after taxes and other deductions are taken out.

13. The amount of income tax held out of a person’s paycheck depends on the amount the person earns, and the information reported on the person’s W-4 form. The form tells employers what factors to consider when determining the amount of tax the employee pays and includes whether the employee

- Is single or married,

- Is the head of a household, or

- Has a spouse who is employed.

14. Another factor that affects an employee’s net pay is deductions for employee benefits. For example, if the company offers health care, typically an employee pays a portion of the monthly cost. This payment is deducted from the employee’s pay. And, if the company provides a 401(k) or Roth 401(k) retirement account, the employee’s contributions are deducted each pay period either before or after taxes are paid, depending on the type of retirement account.

15. Once all taxes and other payments are deducted from a paycheck, the amount remaining is net pay.

16. Once people pay their obligated bills, the amount remaining is their disposable income.

Standard and Benchmarks
Kentucky Academic Studies for Career Studies- Financial Literacy Standards
FL.H.1 Identify the financial impacts of a career choice.

1. Examine the relationship between personal financial goals and career choice.
2. Evaluate the correlation between education, training and potential lifetime income.
3. Compare the advantages and disadvantages of being an employee verses being self-employed.

FL.H.2 Analyze how economic conditions can affect income and career opportunities (e.g. job outlook and cost of living).

FL.H.3 Evaluate the costs of funding sources for post-secondary education and training.

1. Identify funding sources (e.g. loans, scholarships, grants, work-study, military) to assist in post-secondary education opportunities and application costs.
2. Examine the process for and benefits for Free Application for Federal Student Aid (FASFA) completion.

FL.H.4 Analyze components of employment compensation:

1. Compare compensation methods including hourly, salary and commission-based packages.
2. Evaluate benefits packages and retirement plan options and how they add value to your overall compensation.
3. Recognize that salaries and benefits may be negotiable.

FL.H.5 Analyze the factors that determine net income.

1. Interpret a paycheck stub.
2. Differentiate between gross, net and taxable income.
3. Define the purpose of IRS forms (e.g. W-4, I-9, W-2, and 1099).