Saving

Benefits of Saving

Save for Unexpected Expenses• Lost/stolen

items• Accidents• Repairs

Save for Unexpected Opportunities• Good deals

Save for Major Purchases• Home• Car• Computer

Save for Flexibility• More money

means more choices

Save to Achieve Life-Span Goals• College

education

Savings Strategies

Make a savings deposit with

every paycheck; don’t spend it

Save a set percentage of whatever you

make

Use a small reward every

time you make a deposit to encourage

yourself

Focus on what you value most when you are considering

spending money

Set up an automatic

savings plan with your bank

What Savings Options Do I Have?

Savings Account

• Safest way to save and earn interest

• FDIC insured

Certificate of Deposit (CD)

• Pay higher interest rate than savings account

• Fixed interest rate for a fixed time period

• Require a minimum deposit

• Penalty for early withdrawal

• FDIC insured

Money Market Account

• Pay higher interest rate than savings account

• Interest rates changes

• Require a minimum deposit

• Can withdraw money any time without penalty

• Some are FDIC insured, some are not (check)

Government Savings Bonds

Bond – a written promise to pay a debt by a specified date

Savings bonds are non-marketable (can’t be sold to another person)

Pay taxes on interest only when redeemed

Series EE savings bonds – fixed interest rate

Series I savings bonds – interest rate varies

Comparing Interest Rates

Annual percentage yield (APY) – the actual interest rate an account pays per year

Fixed vs. Compound Interest Principal – the money you have on deposit

in a savings account, CD, or other savings option Interest is calculated on your principal

Simple interest – interest paid once a year at the end of the year on the average balance in a savings account

Compound interest – interest paid on the principal and on previously earned interest, assuming the interest is left in the account