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P.Y.F.

P.Y.F. 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. Homework. How’s It Going?. What Do You Know?.

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P.Y.F.

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  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

  4. How’s It Going?

  5. What Do You Know?

  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

  8. Saving for Purchases • Substitute savings for credit • 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

  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? Compound Interest Simple Interest

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

  14. The Penny! 100% Interest Compounding interest is the 8th 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 $964,129 vs. $810,073 He added $78,000 more and ended up with $150,000 less!

  18. Savings Per Month

  19. Savings vs. Investing

  20. Savings Savings Account Pay 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 Funds Stocks IRA / 401(k) Bonds

  22. Before Your 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. Questions?

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