Presentation on theme: "Time Value of Money Value of money saved in accounts increases! Time value of money- money paid in future is not equal to money paid today."— Presentation transcript:
Time Value of Money Value of money saved in accounts increases! Time value of money- money paid in future is not equal to money paid today
Factors affecting the Time Value of Money Time Save for as long as possible! Amount of Money Save as much as possible, as often as possible! Interest Rate Save at the highest interest rate possible!
Year 5 Interest Earned: $33.26 Amount Savings is Worth: $140.26 Year 10 Interest Earned: $56.46 Amount Savings is Worth: $196.72 Year 15 Interest Earned: $79.19 Amount Savings is Worth: $275.90 Year 20 Interest Earned: $111.07 Amount Savings is Worth: $386.97 Year 50 Interest Earned: $845.46 Amount Savings is Worth: $2945.70 Time Value of Money Magic! Initial Savings: $100.00 at 7% interest Year 1 Interest Earned: $7.00 Amount Savings is Worth: 107.00
How do you choose to save money over spend money? Pay Yourself First! A Strategy Creates a habit Saving is not what is left at end of month Set aside money for saving before spending any money Save then spend! Why?
To successfully practice pay yourself first… Set goals! Goal- End result of something a person intends to accomplish Financial Goal- Specific objectives to be accomplished through financial planning
What are you willing to give up to obtain the item you want to purchase? This is a trade-off! Trade-off - giving up one thing for another Every decision you make involves a trade- off! What is a trade-off to saving money for the future? Being more financially secure in the future by saving money is a trade-off to spending money in the present
In order to choose saving money over spending money… Pay Yourself First To successfully practice this strategy… Examine trade-offs Set financial goals Examine current spending