1.Do I have 3-6 months living expenses in an emergency fund? 2.Do I save regularly? 3.Am I saving enough for future high cost goals (education, house)? 4.Do I save to purchase big ticket items instead of buying on credit? Seven Questions About Your Savings

5.When I use credit, do I save to make as large a down payment as possible? 6.Do I set aside enough into another account to cover my periodic expenses? 7.Am I saving enough for my retirement? Seven Questions About Your Savings continued

The more times you answer “yes” to these questions, the more likely you are a prudent saver. Any “no’s” can help you identify areas where you could do better The more times you answer “yes” to these questions, the more likely you are a prudent saver. Any “no’s” can help you identify areas where you could do better.

Small change makes Big Money!!!

 putting money aside from present earnings to provide for the future.

WHY WE NEED TO SAVE è Everyday Emergencies è Loss of Income è Retirement è Special Family Goals è Irregular Expenses

Emergency !!!! What would YOU do if this happens?  Karen has a serious dental problem. The dental bill is already $800 with more dental care needed. No dental insurance. No savings. No credit card limit remains.

$ Set up a regular plan $ Pay yourself first $ Payroll deduction $ Save bonus money $ Save coupon money $ Pay installments to yourself

$ Save loose change $ Break a habit $ Save lunch money $ Buy items on sale $ “Nothing Week” $ Use a “Crash Budget” $ Evaluate all spending decisions

P. Y. F. Rule PayYourself First First

SAVING WEEKLY AT SAVING WEEKLY AT 5% INTEREST Amount Saved Value After Per Week 10 Years $ 7.00$ 4, , , , ,600

Break a Habit Item Frequency Price Savings/year Soft drink/tea1/day $1.50$ Beer1/day $3.00$ Magazine2/month $7.98$ Movie tickets2/week $22.00$ ____________________________________ Total$

 Regular  Money Market  Certificates of Deposit  Saver’s Club  Government Savings Bonds

Interest = Principle x Rate x Time = $1,000 x 2% x 1 year = $20 Principle left in account 2 years = 2 x $20 = $40 SIMPLE INTEREST

COMPOUND INTEREST First Year Interest = Principle x Rate x Time = $1,000 x 2% x 1 year = $20 Second Year Interest = ( Principle + Interest) x Rate x Time Interest = ( Principle + Interest) x Rate x Time = ($1,000 + $20) = $1,020 x 2% x 1 year = $ Year Interest Total $20 + $20.40 = $40.40

Simple Interest = $240 Compound Interest = $ Difference = $.40

72 INTEREST RATE = YEARS TO DOUBLE INVESTMENT OR 72 YEARS TO DOUBLE INVESTMENT INTEREST RATE REQUIRED =

Savings is the process of telling your money where to go - rather than asking where it went !

SIMPLE SAVINGS PLAN Save over $2,000 in 4 years Year 1 Put $10 per week into a CD, earning 3.5% interest, compounded monthly. Total in savings account at end of Year..$ Purchase a 3-year Certificate of Deposit (CD) Year 2 Continue to save $10 per week at 3.5% interest, compounded monthly. Total in savings account at end of Year..$ Purchase a 2-year Certificate of Deposit (CD)

Year 3 Continue to save $10 per week at 3.5% interest, compounded monthly. Total in savings account end of Year 3….$ Purchase a 1-year Certificate of Deposit (CD) Year 4 Continue to save $10 per week at 3.5% interest, compounded monthly. Total in savings account end of Year 4….$ Adding It Up Total in savings account…………..….…$ Value of 3-year CD at end of year 4… Value of 2-year CD at end of year 4… Value of 1-year CD at end of year 4… Total saved/earned in 4 years...$2,288.75

Would You Like to Have $50,000 or $100,000?

What to Consider When Opening a Savings Account  Yield - APR? Compounding?  Liquidity  Safety  Minimum Deposit  Convenience  Charges  Other Services

The Emergency Fund to cover 3 to 6 months’ living expenses in readily available accounts