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Financial Education

Money Matters

Income and Expenses

As you complete the Income and Expenses Worksheet, you may want to consider the following income and expense sources:

Income

  Wages

  Public assistance�this might include Temporary Assistance to Needy Families, or TANF, and food stamps. (The TANF program might have different names in different states.)

  Child Support

  Alimony

  Interest

  Dividends

  Social Security

Remember, gross income is your total income without deductions. Net income is gross income less Social Security and other taxes. Net income is the amount you actually take home, and what you will want to use on the Income and Expenses Worksheet.

Social Security is a potentially valuable insurance plan. On some pay stubs, this is called FICA, which stands for the Federal Insurance Contributions Act.

Social Security benefits include:

  Retirement coverage�benefits paid every month to eligible retired workers, as early as age 62.

  Disability coverage�benefits paid every month to eligible workers of all ages who have a severe disability.

  Family coverage�benefits paid every month to the spouses and children of eligible retired and disabled workers.

  Survivors coverage�benefits paid every month to the eligible widow or widower and children of a deceased worker.

  Medicare benefits�help with hospital bills, as well as limited coverage of skilled nursing facility stays, hospice care, and other medical services at age 65, or younger if you become disabled.

If you are 25 or older and not already receiving Social Security benefits, you will receive a Social Security statement just before your birthday every year. You can also call the phone number listed on the resources page to request a copy of your statement.

The statement is a record of your earnings you have paid to Social Security taxes during your working years. The statement provides estimates of the monthly disability, and survivors benefits you and your family could be eligible to receive.

Expenses

Fixed Expenses are items you have little or no control over. You will pay a fixed amount for these expenses each month. Some fixed expenses may include your rent or mortgage, property taxes and insurance and trash collection.

Other fixed expenses you may have some control over before the initial agreement. They become fixed expenses after you have signed a contract. You should shop for the best value before committing to the payments. Examples include car payments, car insurance, loan payments, health insurance and child or elder care.

Finally, flexible expenses are items you can exercise some control over their amount. Think about your needs versus your wants and how you might control the cost of these expenses.

Remember, when completing the Income and Expenses Worksheet, you might need to plan for expenses you have to pay quarterly or annually.

If, after you complete your budget worksheet, you find that you have more expenses than income, there are ways to get out of trouble. Remember, everyone has different priorities. You will have to make decisions that are right for you.

Generally speaking, it is probably most important to pay off your necessary household expenses, such as rent or mortgage, utilities and food, first. You need to pay your rent or mortgage to ensure you don't get evicted or have your property foreclosed upon. Think about the health and safety of your family when making these types of decisions.

Many utilities, such as the telephone company, electric company and gas company, have programs to lower your bill if you qualify. If you think you may need assistance, contact your utility company.

If you can pay your monthly household expenses, but are having trouble paying all your loans, consider:

  Paying off the loan with the highest interest rate first to save on interest payments.

  Talking to your creditor. Your creditor may be willing to reduce your payments or change the terms to accommodate your situation. Some creditors might offer extensions, smaller payments over a longer period of time. Some creditors might accept partial payments.

  Getting a debt consolidation loan. Be cautious of this option. If loan fees and interest rates are too high, it may not be the best option for you.

  Getting professional advice. Reputable credit counselors can help you deal with financial problems. Some organizations charge little or nothing for their services.

Be cautious of companies that promise to fix your credit problems right away. Credit repair can be a long process that might take several years. Credit reports, bankruptcies, and credit counseling are covered in the To Your Credit course.