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SAVINGS

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					    SAVINGS
Key Terms: liquidity, term,
money market account,
certificate of deposit, savings
bonds
Factors for Choosing   Savings Options
   Safety and Risk
   Liquidity
   Earnings
   Taxes
   Restrictions
   Fees/Service Charges
     SAFETY AND RISK
FDIC                      NCUA
Federal Deposit           National Credit Union
  Insurance                Association
  Corporation

Insurance means safety!   Individual account options
        LIQUIDITY
Defined—the ease with which
 savings or investments can be
 turned into cash to be spent

Fixed term—period of time during
 which money must be kept on
 deposit
           EARNINGS
   Check out the APY
    (Annual Percentage Yield)

   Higher APY = greater earnings
               TAXES
   You are required to pay income
    tax on interest earned.

   Some savings options offer tax
    advantages.
       RESTRICTIONS
   There may be certain
    requirements!

For example:
            Required deposit amount
            Maintain a certain balance
            Limited transactions
    FEES AND SERVICE CHARGES

   Questions concerning fees and charges
          ATM charges?
          Monthly fees?

          Fees if below minimum balance?




             KNOW ALL ABOUT YOUR ACCOUNT!
    SAVINGS OPTIONS

 Savings Accounts
 Money Market Accounts

 Certificates of Deposit

 Savings Bonds
    SAVINGS ACCOUNTS
   Most liquid
   Low minimum balance
   Fewer restrictions
   Interest usually low
   Monthly statement
          Deposits
          Withdrawals

          Interest earned
    MONEY MARKET ACCOUNTS
   Deposits invested by financial institution
   Yield higher earnings
   Higher interest rate
   More restrictions
   May write checks
             Limited number
             Withdrawals limited
             Deposits limited
    MONEY MARKET ACCOUNTS

   Do not confuse with money
    market funds

   Mutual fund (investment)
CERTIFICATES OF DEPOSIT
   CERTIFICATES
        Specify the amount deposited

        Specify the interest rate

        Specify the length of term



        Terms usually: 3 months-5 years
        Minimum $1,000-$100,000
CERTIFICATES OF DEPOSIT



Defined—a certificate issued
 by a financial institution to
 indicate that money has been
 deposited for a certain term
         SAVINGS BONDS
   Non-transferable debt certificattes
   Issued by U. S. Treasury
   You purchase; you loan
   Extremely safe
   Government backed
   Tax exempt (local and state tax)
   Federal Tax Deferred
    SAVINGS BONDS
Defined—nontransferable
 debt certificates issued by
 the U. S. Treasury.

When you buy, you are
 loaning money to the
 federal government.
           SAVINGS BONDS
   THREE TYPES OF SAVINGS BONDS
        Series EE
        Series HH

        Series I
          WHY SAVE?

1.   Accumulate money for future
     purchases

1.   To earn income
   SAVE OR INVEST?
MAIN PURPOSE:

   Saving—to set aside money for
   some anticipated future need

   Investing—committing money
   for the purpose of making a
   profit over time
    SAVING                        INVESTING
   Setting aside money for      Committing money to
    future use                    make profit over time
   Bonus: Interest Earned       Grows in long run
   No Risk                      Risks involved
   Withdrawals at any time      Not easily accessible
   Time to decide if you        Often begins with
    really want item              saving
   Allows you to spend
    wisely
  REASONS FOR SAVING
EMERGENGIES

RECURRING EXPENSES

FUTURE PURCHASES

FINANCIAL GOALS

RETIREMENT
        Food for Thought
   Saving delays       Credit leads to
    purchase until       more spending
    you have money        Pay interest

                          Buy more
   Takes time            It’s easy
    FINANCIAL GOALS CHANGE

   FAMILY LIFE STAGES

    1.   Marriage
    2.   Parenthood
    3.   Children Moving Out
    4.   Aging
       SAVINGS PLAN
STEPS TO SAVINGS

 1. Decide what you’re saving for
 2. Set a specific goal
 3. Break long-term goal into short-term
    goals
 4. Save regularly and consistently
 5. Keep your savings goals in mind
  AUTOMATIC SAVINGS
Automatic Transfers
   checking to savings or
   savings to checking
Direct Deposit
   employer to employee’s bank
   account
Payroll Deductions
   save/invest by paycheck withdrawal
   REMEMBER


STICK TO YOUR GOAL!

PAY YOURSELF FIRST!

				
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posted:3/20/2008
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