1. P.Y.F.

2. Welcome! Explain why it is important to save Determine goals for saving money Identify savings options Determine which savings options will help you reach your savings goals Recognize which investment options are right for you

3. Homework (Passport page 40)

4. How’s It Going?

5. What Do You Know? (Pre-Test page 4)

6. Pay Yourself First What does it mean to “pay yourself first”? –Put money in savings before paying your bills Why would you want to save money before paying your bills? What are some of the things you might want to save money for?

7. Emergency Savings Financial Benefits Impact <$500 ES >$500 ES Bill payment Concern paying monthly bills70%36% Difficulty paying mtge or rent4216 Checking management Not met mo. minimums past year18%13% Overdrawn account past year5222 Credit card management Carry a balance74%62% Pay mo. minimum or somewhat more5135 Paid fee in past year3526 High-cost loans Payday8%3% Car title73 Pawnshop80 Psychological Benefits Impact <$500 ES >$500 ES Worried about personal finances in past year 85% 69% Worried a lot5321 For worriers: Lose sleep6442 Worse health5429 Less productive at work4223

8. Saving for Purchases Substitute savings for credit Determine purchase cost / time until purchase Make payments to your savings when vehicle loans are paid off

9. Retirement Savings www.choosetosave.org IRA savers credit Employer matched retirement = FREE MONEY Don’t rely on Social Security alone

10. Daily Decisions One Coffee a Day = $5 $25 week One month’s rent 354 gallons of gas $100 month More than 3 car payments $1,200 year More than 2 months of groceries & dining out 2 months of child care

11. How Your Money Grows Principal ~ what you save or invest Interest –Simple principal x interest rate % x time –Compound (principal + interest ) x interest rate %

12. Which Would You Want? YearPrincipalInterestEnding Balance 1$100$7$107 2$100$7$114 3$100$7$121 4$100$7$128 5$100$7$135 Total Interest $35 YearPrincipalInterestEnding Balance 1$100$7$107 2 $7.49$114.49 3 $8.01$122.50 4 $8.58$131.08 5 $9.18$140.26 Total Interest $40.26 Simple InterestCompound Interest

13. Which Do You Want? One penny doubled each day for a month OR $500

14. The Penny! 100% Interest Day 1$0.01Day 11$10.24Day 21$10,485.76 Day 2$0.02Day 12$20.48Day 22$20,971.52 Day 3$0.04Day 13$40.96Day 23$41,943.04 Day 4$0.08Day 14$81.92Day 24$83,886.08 Day 5$0.16Day 15$163.84Day 25$167,772.16 Day 6$0.32Day 16$327.68Day 26$335,544.32 Day 7$0.64Day 17$655.36Day 27$671,088.64 Day 8$1.28Day 18$1,310.72Day 28$1,342,177.28 Day 9$2.56Day 19$2,621.44Day 29$2,684,354.56 Day 10$5.12Day 20$5,242.88Day 30 $5,368,709.12 Compounding interest is the 8 th wonder of the world!

15. A.P.Y. Annual Percentage Yield The amount of interest you will earn on a yearly basis expressed as a percentage Includes the effect of compounding Should be used to compare saving products, not the interest rate

16. Rule of 72 The time it will take for your $$$ to double. $50 4% interest 72 ÷ 4% = 18 years $500 Double in twelve years 72 ÷ 12 = 6%

17. Time is On Your Side $3,000 a year 8 years $24,000 total $3,000 a year 34 years $102,000 total $964,129 vs. $810,073 He added $78,000 more and ended up with $150,000 less!

18. Savings Per Month Current AgeNeed to Save Monthly 25$158 30$263 35$442 40$754 45$1,317 50$2,412 55$4,881 60$12,931

19. Savings vs. Investing Time Frame RiskObjectiveTypeLiquidityReturn Saving ShortVery little Emergencies Large purchases Savings Account Money Market Very Liquid Low Usually safe Investing Medium to long Low to high Retirement Financial Freedom Mutual Funds Stocks Real Estate DependsLow to high Not a guarantee

20. Savings Savings Account Pays interest May require minimum balance Low opening deposit Money Market Higher interest rates Higher opening deposit Higher balance = higher rate Can access money if needed Certificate of Deposit / Share Certificate Fixed rates Hold money for specific length of time (6 mos – 5 years) Can’t access money without penalty Longer term = higher rate

21. Investing Mutual FundsStocks IRA / 401(k) Bonds

22. Before You Invest Save money (6-month savings cushion) Talk to: Your bank or credit union A reputable financial advisor An investment firm Do your own research

23. What Have You Learned? (Post-Test page 16)

24. Homework (Passport page 42)

25. Questions?