I'm 17 years old, I still live at home where my parents ofcourse offer food, and the such.
Realistically, at this point the only items I need to pay for (being that of a deduction to monthly income) is my insurance, cell phone bill, and of course an allowance for vehicle fuel.
With that being said, my insurance is $2,000 per year -- which breaks down to abour $170.00 per month.
My cell phone bill (that I owe on) is around $40.00 per month.
In about a week, I would allow myself about $40.00 for gas aswell.
That is a total of around $250.00 (let's call it $300.00) for expenses per month.
At my job, I'm on a salaried position, which is presently at around $72,000 per year -- that breaks down to $6,000 a month ($1,500 a week).
After paying for everything that needs to be paid for in a months time, that leaves me with around $5,700 per month.
I'm planning on depositing about $5,000 +/- into my savings account per month -- giving myself an allowance of around $700.00 for general spendings (dinner for my girlfriend, and myself, etc).
I need some opinions on this -- is this a good salary for someone of my age? Is this a good salary for someone who's older than myself, living on their own?
I need to find out exactly how I stand in this world at the present, and how I would theoretically stand in the world (with still having this salary) if I were older, and were living on my own.
I do find it hard to actually beleive you make that amount, but what the heck, you make good for a 30 year old, a 50 year old and actullly make more than about 2/3 of the people in the US at this time.
At 17 a good salary would be about 20,000 a year for a new person starting a company, with no college, no job skills and no experience.
But with that saidk you need to be also paying your parents at least a small amount for living at thier home.
There used to be a rule of thumb that said you were doing well if your salary was better than your age. While inflation has affected that, anything over $17K is gravy.
However, I'm as skeptical as Chuck here. Obviously you have not gotten a paycheck yet. Yes, $72K/year translates to $6K per month. But what about tax witholding, health insurance and other potential deductions? Your 6K/mth is now down to around $4K or less.
I don't know what your driving habits are, but mine are light and I average closer to $80/mth in slaking my car's thirst.
I also agree with Chuck that you NEED to be paying your parents some room and board. Figuring you live in urban or suburban Ky (with a salary like that), I would say you should be giving them between $250 and $500 mth.
So now your fixed expenses are up to at least $600/mth. Assuming the aforementioned $4K/mth net earnings, I would hold out $1K for fixed and variable expenses. The remaining $3K you can save. if your company offers a 401(K), I would put in the maximum you can to get the company match.
I am, rather curious, about what sort of job pays a 17 year old $72K/yr?
True, but really I won't have to pay anything besides what I listed. This is all going under the table so to speak - away from taxes from the company.. as far as the company isn't withdrawing the taxes.
If the company is not witholding taxes or anything else then you are not an employee but an independent contractor. This means you will get a 1099R at the end of the year and you will be responsible for paying the taxes at that point. Note also that you WILL need to pay an estimated quarterly amount in taxes. The IRS doesn't like gross under witholding.
This also means, as an independent contractor, that your contract can end at any time. Once the software you are developing is done, they may no longer have any need for you.
Another issue is health insurance. If you are not getting it thru the company and your parents policy no longer covers you (usually that stops at 18 unless you are a full time student), then you NEED to purchase insurance for yourself, so that's another expense you need to contemplate.
I must say though, that a "salaried" position is unusual (but not unheard of) in an independent contractor. Generally such are paid by the job with maybe a periodic stipend paid.
I really doubt that a company would be paying $72K "off the books". Its more likely that you have misunderstood the employee/contractor relationship.
One point I should add, you are to be commended for attempting to plan this out and to save a large portion of your earnings. But I do hope you aren't to be condemned for trying to evade taxes (and for stiffing your parents).
That is simply not true. You do not have to be an accountant to understand about finances, etc. Anyone can educate themselves and learn about it on their own.
sivart,
I agree with Scott. You are NOT an employee, but rather an independent contractor if they company is not withholding taxes. Therefore, YOU must set money aside to pay the Tax Man come April.
And if it is one of those illegal operations, where all the money is dirty, then guess what, if you are caught, you will go to jail for a long time and have huge fines to pay. So why chance it? You are 17, do you want to spend the rest of your life in jail?
Yes if you are not being paid as a employee, you are a contractor, thus you will not have any health insurance, life insurance, disability or dental insurance. At 17 you normally don't think you need these but you need a good health insurance plan and also a retirement plan, money put in now will grow over the years greatly.
But you will have alot of tax lialbilty, since they are not paying you as an employee, you will have to pay income tax both state and federal, and also your medicare insurance, as a employee you pay 7 and 1/2 percent but as a independant contractor you will have to pay 15 percent.
You should figure at least 30 percent of what you bring in will be due to taxes. And at this amount you will need to do quaterly filing, or you could owe penalties at the end of the year.
If you reword this in the tax section, Atlanta Tax Expert can shed more info on this.
No legal company would pay that large of amouint under the table, since they have to account for money going out.
And of course you may be really great but even graduates from places like Georgia Tech going to work as software engineers don't start normally at that high of wage.
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