1. Saving For Your Future Chapter 10 Notes Money Management Financial Security –Financial Security begins when you start ___________________________________ ! –Saving means ____________________________________________________! –Savings Plans enable you to provide for future needs… both foreseen and unforeseen. –The existence of savings, no matter how small, gives you a measure of financial independence. –In this chapter you will discover how you can save more efficiently regardless of income! Why you should save The best reason to save some of your income is to __________________________________________: –________________________ ____________________________________________________: –________________________ Different Reasons People Save _________________________________________ – needs often arise that require a bit of cash, above and beyond what was normally budgeted. These needs are typically paid for out of savings: –Examples include emergencies, weekend trips, social events like weddings and birthday parties, major purchases from things wearing out etc… _________________________________________ – many individuals and families anticipate some major purchases in the future and save to make them possible. –For Example: Home Ownership, college education for kids, new car, and retirement. Probably the best reason to save is the peace of mind that comes from knowing that when ___________ ___________________________________________________________________________________ Another reason to save is to ___________________________________________________________. –If you set aside some money from each paycheck, you will feel secure knowing that there is money available if and when it is needed. How much you save… The amount of money you will save will vary according to several factors: –_____________________________________________________________________________ _____________________________________________________________________________ –_____________________________________________________________________________ –_____________________________________________________________________________ _____________________________________________________________________________ How much your money grows The amount of money deposited is called _______________________________________. Money paid by the financial institution to the saver for the use of their money is called _____________ When interest is computed on the original principal plus accumulated interest, it is called _________________________________________________. Albert Einstein called ____________________________________ the “Eighth Wonder of the World” Compounding can work miracles! The longer you have your money accumulating the better. http://www.moneychimp.com/calculator/compound_interest_calculator.htm http://www.moneychimp.com/calculator/compound_interest_calculator.htm Where you save: _______________________________________ – banks like Bank One and US Bank. –Commercial Banks offer convenience to customers in the form of services to go along with accounts, including ATM’s, Debit Cards, Online Bill Pay, & Direct Deposit. –97% of Commercial Banks are FDIC Insured. That means that the US government guarantees your money is safe (Up to $100,000). –Rates differ from bank to bank and the market is very competitive. Compare banks before making a decision!

2. _________________________________________________ – Credit unions are _________________ ___________________________________________________________________________________. –Credit Unions generally offer ________________________________________________ on savings and lower interest rates on loans! They are insured through the National Credit Union Administration for up to $100,000 – just like the FDIC. –A savings account at a credit union is often referred to as a share account. Credit union members save their money in the form of shares. –Basic services are otherwise fairly similar to commercial banks: ATM Cards, checking accounts, cd’s, money orders, loans, direct deposit, online banking etc… Different Ways to Save ____________________________________________________________________ – opened at your bank or credit Union. The major advantage is __________________________________________. –Liquidity refers to _____________________________________________________________. A regular account is said to be liquid because you can withdraw your money at anytime without penalty. –For this reason, ____________________________________________________________. Check out these links for examples: http://www.bankone.com/answers/BolAnswersDetail.aspx?top=you&segment=PFS&topic =Savings&item=BankOneRegularSavingshttp://www.bankone.com/answers/BolAnswersDetail.aspx?top=you&segment=PFS&topic =Savings&item=BankOneRegularSavings http://www.bankofamerica.com/deposits/checksave/index.cfm?template=save_regular –Some regular accounts charge _________________________________. Avoid these if you can! If all of your interest is eaten up by the fees you’re wasting the power of your money! Ways people save __________________________________________________________ (_______) – represents a sum of money deposited for a set length of time – for example, $500 for six months. –________________________________________________________________________, and requires a minimum amount be deposited. –___________________________________________. Click on the following link for examples: http://www.capitalone.com/investments/cd/index.php?linkid=WWW_Z_Z_Z_SP1_C2_05 _T_SP2http://www.capitalone.com/investments/cd/index.php?linkid=WWW_Z_Z_Z_SP1_C2_05 _T_SP2 –___________________________________________________________________________ _____________________________________________________. That is, you will be paid back less than what you put in! A money market fund is a combination savings/investment plan in which money deposited is used to purchase certain types of securities (bonds, stocks, mutual funds etc…). –Money may be deposited or withdrawn without a fee. Interest is usually compounded daily. Interest rates vary so shop around. Here are some examples: http://www.bankrate.com/brm/rate/mmmf_mmaratehome99.asp?web=brm&params=MI,2 85&prodtype=chksav&market=285&product=33&state=MI&sort=7http://www.bankrate.com/brm/rate/mmmf_mmaratehome99.asp?web=brm&params=MI,2 85&prodtype=chksav&market=285&product=33&state=MI&sort=7 http://www.metlifebank.com/MoneyMarket.do –A minimum balance is usually required and there is often a limit to the number of checks that you can write or withdraws that you can make per month. Factors for you to consider _____________________________________ – how quickly you can get your cash back. Could be important based on age, health, and family situation. __________________________________– you want your money to be safe from loss. Is it insured? ________________________________ – does the plan have the location and services that you want? __________________________________________ (______________) – You want the interest to be as high as possible. Usually the more liquid the deposit the less interest you will earn. Higher earnings result from making the commitment to keep the money there longer. _____________________________________________________ – Are there penalties for withdrawing money early? You should always know the answer to that question! Saving Regularly It is important not just to save but to save regularly! _______________________________________________________! No savings plan is effective unless you have the willpower to set aside the money. If you’re afraid you don’t have the willpower then set up an _________________________________ _______________________ for your savings plan! –You can authorize your employer to make automatic deductions from your paycheck each month. That money can be channeled to a payroll savings plan of your choice!