Reading a Paycheck
One of the big points in today’s lecture is to make the distinction between purchasing additional or higher levels of medical insurance as opposed to being “self-insured.” I use the example of a relatively healthy, risk averse 20 something with low level coverage that requires $1000 per E.R. visit plus 20%. A severely broken bone may result in a bill of $1,500. However, you could purchase a higher level of insurance for $300 per month. This would eliminate the $1000 E.R. copay. So what should you do? Simple math shows that it would take five months to pay $1,000 into the insurance and that you would have to go to the ER twice a year in order to break even.
The second point to stress is the 401K matching and that you should maximize the matching contribution but really no more. Extra money toward retirement should be put into a IRA or better yet a RothIRA. We will demonstrate the difference later in the course.
Video: Prince Johns Version of Taxes
Define the terms:
IRS (Internal Revenue Service
Paycheck Vocabulary worksheet
(Journal Questions 1-) What-happened-to-my-paycheck If you’re between 18 and 30 you need to put 15% into your retirement accounts. Time is Money and it’s even truer when you’re earning it. How should you allocate your gross-income?