VIRTUAL BUSINESS CHALLENGE PERSONAL FINANCE–2017

STUDENT RESPONSIBILITIES EVERYDAY DURING THE SIMULATION:

  1. Login daily
  2. Pay bills on-time
  3. Adjust 401(k) contribution % and bank account type, as needed
  4. Read simulation communications via email, Dashboard Alert, and push notifications
  5. Maintain their CFS reconciled
  6. Take quizzes and surveys
  7. Review pay stubs and W-2
  8. Use the Student Quick Tips to help navigate the simulation and perform common tasks
  9. Use the Knowledge Base to answer questions about the game, scoring, website navigation, etc.

TODAY:

GOAL: Today you will learn various deductions taken from gross pay to determine net pay and then allocate estimated monthly income funds to pay expected bills and to determine amount left for discretionary spending.

  1. Navigation Tip #1: Review paycheck stubs for accuracy at Student Home>Employer.
    1. Paycheck stubs and bank statements are the most important (and often most overlooked) statements.
    2. Do you know the differences between salaried/exempt employees and hourly employees?
      1. Salaried/exempt employees are compensated for 40 hours per week on an ongoing basis.
      2. Hourly employees are compensated for actual hours worked (up to 40 hrs/wk) at the hourly rate and overtime hours are compensated at a minimum 1.5 the hourly rate.
    3. In the simulation, you are exempt not eligible for a raise and/or bonus. (reflected in the employment offer letter included in the info packet.)
    4. It is extremely important to review paystubs for correct personal information (name, address, and employee ID number) and notifying the employer immediately if there is an error. Inaccurate information could have negative tax implications.
  2. Navigation Tip #2: Do I have to pay for that? Mandatory vs. optional deductions
    1. Mandatory deductions in the H&R Block Budget Challenge are:
      1. FICA Tax: Social Security Tax and Medicare Tax to support retirees, the disabled and children of deceased workers.
      2. Federal Income Tax: Collected to fund public services for example, national defense.
      3. State Income Tax: Collected by most states to fund state public services for example, roads.
    2. Optional deductions in the H&R Block Budget Challenge are:
      1. Employee 401(k) contribution: Money an individual contributes to their 401(k) retirement account. You can change your 401(k) contribution percentage per paycheck at Student Home>401(k).
      2. Health insurance premium: Pre-tax money an individual pays for health insurance coverage. For simplicity, all participants in the simulation have a health insurance deduction and are not permitted to opt out. In the U.S., not taking advantage of employer-offered health insurance (or opting out) is allowed. However, individuals are now required to have qualified health insurance or else pay a fee (tax penalty on their federal tax return), unless they apply for and are granted an exemption.
  3. Navigation Tip #3: Saving in your 401(k) helps you pay less taxes
    1. A 401(k) Retirement Plan allows participants to contribute earnings pre-tax in to a retirement savings account. The contributions and the earnings on the contributions are tax-deferred.
  4. Open & print this: W2_Test Drive_Gross Pay to Net Pay_attachment slide 1
    and this: W2_Test Drive_Gross Pay to Net Pay_attachment slide 4
    .
  5. Calculate the components of the paycheck.
  6. Open & print this sheet with Additional Employment costs: W2_Test Drive_Gross Pay to Net Pay_attachment slide 2
  7.  Open & print the Monthly Income Estimate sheet: W2_Test Drive_Gross Pay to Net Pay_attachment slide 3
  8. Double your bi-weekly net pay to get a rough monthly income estimate.
  9. Fill out the expenses using approximate expense amounts from the simulation.
  10. Cut the monthly income into the routine bill expenses.
  11. REMEMBER: the portion of your total pay remaining is available for daily types of expenses (housed in the credit card in the simulation), savings or planning for an unexpected event.
  12. Contemplate:
    1. If this employee did not have enough money to pay bills how could she increase her net pay without getting another job or a raise in pay?
    2. What percentage of gross pay does this employee have to spend? What has to be paid out of that?
    3. Why is it usually beneficial to enroll in an employer sponsored health insurance plan?
    4. Why do you think Medicare is a mandatory deduction and what would happen if it were not mandatory?
    5. What are some other possible Employer costs of employment that were not included here?
    6. Verify personal information on paycheck stub for accuracy.
    7. Does the employer offer a 401(k) plan to full time employees? If so, are you participating?
    8. Are you maximizing the employer 401(k) match for your plan?
  13. In Budget Challenge, you have the ability to change your employee 401(k) contribution, but the employer match is determined by the plan selected during registration and is not changeable. In the real world, employers only have a single 401(k) plan, but multiple options are provided at the beginning of this simulation to replicate the evaluation process that would take place if you were comparing multiple job offers.
  14. Review the Budget and Cash Flow Spreadsheet.
    1. Does your current 401(k) contribution percentage leave enough to pay routine bills on time?
    2. Is there enough money left in case of an emergency?
    3. Is there cash left over that could be contributed to increase retirement savings?
  15. Use the Payroll Calculator found at the bottom of Student Home>Vendor Selections to review your paycheck components. This tool is helpful to forecast net pay when changing 401(k) contribution percentages. Keep in mind, 401(k) contribution changes take effect at the beginning of the next pay cycle.
  16. DID YOU KNOW: Employee 401(k) contributions are pre-tax, which is a huge financial benefit.
  17. TERMINOLOGY:
    1. Paycheck stub: Document detailing an employee’s gross pay, deductions and net pay amounts.
    2. Gross pay: Money received for performing work or a service prior to deductions.
    3. Net pay: Money received after taxes and deductions have been withheld.
    4. Deduction: Amount withheld from an employee’s paycheck by their employer.