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
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