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PENNIES MAKE DOLLARS

PENNIES MAKE DOLLARS. Seven Questions About Your Savings. 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?.

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PENNIES MAKE DOLLARS

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  1. PENNIES MAKE DOLLARS

  2. Seven Questions About Your Savings 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?

  3. Seven Questions About Your Savings continued 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?

  4. 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.

  5. Small change makes Big Money!!!

  6. Savings: • putting money aside from present earnings to provide for the future.

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

  8. 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.

  9. Set up a regular plan Pay yourself first Payroll deduction Save bonus money Save coupon money Pay installments to yourself SAVINGS STRATEGIES

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

  11. P. Y. F. Rule # 1 Pay Yourself First

  12. SAVING WEEKLY AT 5% INTEREST Amount Saved Value After Per Week 10 Years $ 7.00 $ 4,720 14.00 9,440 21.00 14,160 28.00 18,880 35.00 23,600

  13. Break a Habit Item Frequency Price Savings/year Soft drink/tea 1/day $1.50 $ 547.50 Beer 1/day $3.00 $1095.00 Magazine 2/month $7.98 $ 191.50 Movie tickets 2/week $22.00 $1141.00 _____________ ________ _______ ________ Total $2978.00

  14. SAVINGS ACCOUNTS • Regular • Money Market • Certificates of Deposit • Saver’s Club • Government Savings Bonds

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

  16. 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 = ($1,000 + $20) = $1,020 x 2% x 1 year = $20.40 2 Year Interest Total $20 + $20.40 = $40.40

  17. Simple Interest = $240 Compound Interest = $240.40 Difference = $.40 Compare Earnings

  18. RULE OF 72 72 INTEREST RATE YEARS TO DOUBLE INVESTMENT = OR 72 YEARS TO DOUBLE INVESTMENT INTEREST RATE REQUIRED =

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

  20. 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..$529.12 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..$529.12 Purchase a 2-year Certificate of Deposit (CD)

  21. Year 3 Continue to save $10 per week at 3.5% interest, compounded monthly. Total in savings account end of Year 3….$529.12 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….$529.12 Adding It Up Total in savings account…………..….…$529.12 Value of 3-year CD at end of year 4….... 619.17 Value of 2-year CD at end of year 4….... 584.78 Value of 1-year CD at end of year 4….... 555.68 Total saved/earned in 4 years...$2,288.75

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

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

  24. The Emergency Fund to cover3 to 6 months’ living expenses in readily available accounts

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