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FICA (Federal Insurance Contributions Act) taxes are mandatory payroll taxes that fund Social Security and Medicare programs. Every employee pays 7.65% of their gross pay in FICA taxes, which break...
Read morePre-tax deductions reduce your taxable income, resulting in lower federal and state income taxes. For instance, contributing $200 to a 401k plan can decrease taxable income, allowing you to save fo...
Read morePre-tax deductions reduce your taxable income before taxes are calculated, which lowers both your tax burden and your net pay, but provides significant long-term financial benefits. Common pre-tax ...
Read morePost-tax deductions, such as contributions to a Roth 401k or wage garnishments, are taken from your net pay. Unlike pre-tax deductions, they do not reduce taxable income, meaning their full amount ...
Read moreYour net pay can vary between paychecks for several common reasons. First, overtime hours or bonuses increase your gross pay, which also increases your tax withholding because supplemental wages ar...
Read moreTo increase take-home pay, consider adjusting your W-4 to reduce withholding if you typically receive a large tax refund, increasing pre-tax deductions like 401k contributions, or exploring employe...
Read moreThere are several strategies to increase your net pay without changing your gross salary. First, adjust your W-4 withholding if you typically receive a large tax refund—you may be over-withholding ...
Read moreNet worth is the total value of everything you own (assets) minus everything you owe (liabilities). It's the single most important measure of your financial health because it shows your true wealth...
Read moreInclude all liquid and investable assets: checking and savings accounts, retirement accounts (401k, IRA, Roth IRA), taxable investment accounts, stocks and bonds, cash value of life insurance, and ...
Read moreInclude your home's current market value as an asset and the remaining mortgage balance as a liability since it's a major wealth component you could sell if needed. Cars depreciate quickly, so only...
Read moreLiabilities are all debts you owe: mortgage balance, auto loans, student loans, credit card balances, personal loans, home equity lines of credit (HELOC), and medical debt. Use the current outstand...
Read moreTrack quarterly (every 3 months) for the best balance of consistency and avoiding obsession over market fluctuations. Monthly works if you're actively paying down debt and want motivation, but dail...
Read moreA negative net worth means you owe more than you own—common for recent graduates with student loans or new homeowners who just took on a mortgage. Focus on paying down high-interest debt first, bui...
Read moreBelow 30% is considered very healthy, 30-50% is manageable, and above 50% signals you should prioritize debt reduction. The ratio compares what you owe to what you own—lower percentages indicate st...
Read moreMedian net worth is the middle point—50% of people have more, 50% have less. Average (mean) is total wealth divided by population, which is skewed higher by ultra-wealthy individuals. Median is mor...
Read moreNet worth equals all assets (home equity, retirement accounts, savings, investments, vehicles) minus all debts (mortgage, student loans, credit cards, car loans). Include everything you own minus e...
Read moreNegative net worth is common in your 20s due to student loans and limited savings time. By age 30, most people should reach positive net worth. If you're over 35 with negative net worth, prioritize...
Read moreA general rule: aim to save 15-20% of gross income annually. For someone earning $70,000, that's $10,500-14,000/year in net worth growth. Factor in investment returns (historically 7% on stocks) an...
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