SAVINGS

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SAVINGS

• Key Terms liquidity, term, money market
  account, certificate of deposit, savings bonds

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Factors for Choosing Savings Options

• Safety and Risk
• Liquidity
• Earnings
• Taxes
• Restrictions
• Fees/Service Charges

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SAFETY AND RISK

• FDIC
• Federal Deposit Insurance Corporation
• Insurance means safety!

• NCUA
• National Credit Union Association
• Individual account options

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LIQUIDITY

• Definedthe ease with which savings or
  investments can be turned into cash to be spent
• Fixed termperiod of time during which money must
  be kept on deposit

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EARNINGS

• Check out the APY
• (Annual Percentage Yield)
• Higher APY greater earnings

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TAXES

• You are required to pay income tax on interest
  earned.
• Some savings options offer tax advantages.

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RESTRICTIONS

• There may be certain requirements!
• For example
• Required deposit amount
• Maintain a certain balance
• Limited transactions

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FEES AND SERVICE CHARGES

• Questions concerning fees and charges
• ATM charges?
• Monthly fees?
• Fees if below minimum balance?
• KNOW ALL ABOUT YOUR ACCOUNT!

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SAVINGS OPTIONS

• Savings Accounts
• Money Market Accounts
• Certificates of Deposit
• Savings Bonds

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SAVINGS ACCOUNTS

• Most liquid
• Low minimum balance
• Fewer restrictions
• Interest usually low
• Monthly statement
• Deposits
• Withdrawals
• Interest earned

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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

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MONEY MARKET ACCOUNTS

• Do not confuse with money market funds
• Mutual fund (investment)

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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

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CERTIFICATES OF DEPOSIT

• Defineda certificate issued by a financial
  institution to indicate that money has been
  deposited for a certain term

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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

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SAVINGS BONDS

• Definednontransferable debt certificates issued
  by the U. S. Treasury.
• When you buy, you are loaning money to the
  federal government.

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SAVINGS BONDS

• THREE TYPES OF SAVINGS BONDS
• Series EE
• Series HH
• Series I

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WHY SAVE?

• Accumulate money for future purchases
• To earn income

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SAVE OR INVEST?

• MAIN PURPOSE
• Savingto set aside money for some anticipated
  future need
• Investingcommitting money for the purpose of
  making a profit over time

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SAVING INVESTING

• Setting aside money for future use
• Bonus Interest Earned
• No Risk
• Withdrawals at any time
• Time to decide if you really want item
• Allows you to spend wisely

• Committing money to make profit over time
• Grows in long run
• Risks involved
• Not easily accessible
• Often begins with saving

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REASONS FOR SAVING

• EMERGENGIES
• RECURRING EXPENSES
• FUTURE PURCHASES
• FINANCIAL GOALS
• RETIREMENT

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Food for Thought

• Saving delays purchase until you have money
• Takes time

• Credit leads to more spending
• Pay interest
• Buy more
• Its easy

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FINANCIAL GOALS CHANGE

• FAMILY LIFE STAGES
• 1. Marriage
• 2. Parenthood
• 3. Children Moving Out
• 4. Aging

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SAVINGS PLAN

• STEPS TO SAVINGS
• 1. Decide what youre 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

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AUTOMATIC SAVINGS

• Automatic Transfers
• checking to savings or
• savings to checking
• Direct Deposit
• employer to employees bank
• account
• Payroll Deductions
• save/invest by paycheck withdrawal

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REMEMBER

• STICK TO YOUR GOAL!
• PAY YOURSELF FIRST!