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  1. Savings Ms. Perez

  2. Bell ringer What is one item that you have saved to purchase? What is one thing that you want to purchase in the future that you will need to save for?

  3. Reasons for saving Emergencies Expensive purchases Recurring expenses Retirement Special goals

  4. Long term and short term goals • Short term • Less then one year • Long term • Over one year

  5. Write down one long term and one short term savings goal Keep this piece of paper, you will answer more questions today

  6. Where to save? Banks Credit unions MAKE SURE THE $ is insured by Federal Deposit Insurance Corporation(FDIC)

  7. Annual percentage Yield(APY) How much interest the bank will pay you on your $$ The higher the APY the more $ you make Example if your APY is 4% and you invested 100 dollars the bank will give you $4 of interest

  8. Annual Percentage Rate APR Annual cost of borrowing $ Usually associated with loans, morgages, etc.

  9. APR DOES NOT EQUAL APY Generally APR listed is lower then AYP APY uses compounding interest

  10. Investments When savings are used to earn income

  11. compound interest vs. simple interest • Compound interest • Paying interest on your savings plan PLUS the accumulated interest • Interest on interest

  12. Simple interest Interest that is paid ONLY on the original amount deposited, not on past interest paid.

  13. Which type of interest do you want? Why?

  14. Compound vs. simple

  15. Two ways to think • Save now, have money for the future? • Spend now, I might not be here later? • What will saving my money result in? • How does age effect savings?

  16. Methods for saving money Payroll deductions Money market accounts CD’s

  17. Pay roll deduction • $ taken out of pay check • Monthly usually • Can be multiple • For retirement • For savings

  18. Money market account (MMA) Savings account Less flexibility then a traditional checking/savings account Only allow certain # of withdraws allowed a month Usually require a balance in excess of $1000 Average yield 3%, usually Higher interest, minimum amount of $ in account, limited # of with drawls

  19. Certificates of Deposits (CD’s) Time Deposit Banks pay a fixed amount of interest for a fixed amount of time of a fixed amount of money Require a minimum deposit Can’t take $ out without penalty fee

  20. Write this down on the same sheet of paper Which type of savings account would work best in your life right now? Why

  21. Think back to your bell ringer-write this down on the same piece of paper What is the approximate cost of this item? How much could you save a month to put towards this item? How many months would it take you to save for this item?

  22. Cross word puzzle time