Things to Know About Making Money

Ways to get money

There are several ways that you can get money:

• Someone can hand you physical cash.
• They can deposit or transfer money into an account, such as a bank account.
• They can give you a check, which is a paper statement that details the money they give you (these are rare now).
• A person can give you a card, such as a gift card or prepaid credit card, that’s “loaded” with money. That means the card has a balance of a certain amount that you can spend wherever the card is accepted.

How you make money

“Making money” doesn’t mean that you actually print some dollars out. You get the money by earning it. Someone pays you money for something you do or something you give them.

For example, you agree to wash dishes every night after dinner. Your parents say they will pay you $5 per week for doing that chore. So, you make $5 per week for doing dishes.

You need to make money to have money that you can spend.

Earning paychecks

When you make money when you’re young, you get paid directly. For example, if you babysit for a neighbor, they may hand you physical cash.

But when you start working for a business or company, they will pay you through paychecks. On a set schedule, they will give you all the money you’ve earned working for them over that period.

A common schedule is that you will get paid every two weeks. At the end of two weeks, you get a paycheck that pays for the work you did in those two weeks.

In the past, most people received paychecks in the form of a physical check. You had to take that check to a bank to cash it or deposit it.

Now, companies pay paychecks digitally by something called direct deposit. You give them an account number and they deposit your paycheck into that account every two weeks.

Taxes and deductions

When you earn paychecks through a company, you should be aware that you will not get 100% of what you earned for that pay period.

Instead, the company will deduct (take out) taxes and other deductions. Income taxes are used to pay the government. Each year, people must pay taxes on the money they earn. Companies usually take this money directly out of your paycheck, so you don’t owe the government money.

There can be other deductions, too. For example, if you have a retirement account through the company you work for, they will take money out of your paycheck and deposit it into your retirement account.

Smart Money Tip: Pay attention to your paychecks!

Now that everything is digital, it’s easy to ignore your paychecks and just wait to see the money deposited to your account. But you should go online and check your paychecks. That way, you know what is getting deducted from your checks and where your money is really going.