1. Savings Unit 9: Financial, Economic, and Business Technology Competency 3: Demonstrate skills necessary to create a financial plan.

2. Saving Financial security begins when you can start saving. –What is financial security? A point in life when you know that there will be enough money to pay for a short term need. Savings plans enable you to provide for future needs, seen and unseen. –What are seen and unseen needs?

3. Why should you save? The best reason to save is to be able to handle expected and unexpected needs. What problems can arise from not having any savings set aside? –Frustration –Financial Trouble –Bankruptcy

4. Short Term Goals What are short term needs? –Needs that arise that require a larger amount of money than what is allowed by budget. –You should have short term goals, which is to save money for short term needs. Examples: –Emergencies (Unemployment, sickness, accidents) –Vacations –Social Events (Weddings, family gatherings)

5. Long Term Goals What are long term goals? –Planning for major future purchases. Examples of Long Term Goals –Home Ownership (down payments) –Education (College) A good time to save for education is at a child’s birth. –Retirement –Investment Investing is risky! Should be done in addition to saving.

6. How Money Grows Principal –The amount of money you deposit. Interest –Money that the bank pays you for using your money. Compound interest –Interest is found by multiplying the interest rate by the principal, and then interest is added to the principal. The more often interest is compounded, the greater your earnings.

7. Where You Can Save Commercial banks (Bancorp, Regions) Savings Banks Brokerage Firms Credit Unions

8. Savings Accounts Once you have decided to establish a savings program, you need to know about the different types available. Regular Savings –High liquidity (how easily assets can be turned into cash) because you can withdraw your money at any time. –Some banks charge fees when you withdraw more times than the maximum for a certain time period

9. Savings Accounts Certificate of Deposit (CD) –Sum of money deposited for a set length of time. –Less liquid than regular savings. –Interest rates are higher. –You are penalized if you withdraw your money early. –Maturity Date The date when you are able to withdraw without being penalized.

10. Savings Accounts Money Market Funds –Combination savings/investment plan in which money deposited is used to purchase securities. –Interest is compounded daily. –No fee for withdrawals. Money Market Accounts –Similar to funds –Minimum balance of usually $500 –May be a restriction on number of checks to write

11. Selecting a Savings Plan Consider these things when selecting a Savings Plan: –Liquidity – How quickly it turns to cash. –Safety – You want your money safe from loss. –Convenience – Availability to your money. –Interest Earning Potential (yield) – You want your money to make more money! –Early Withdrawal penalties

12. Saving Regularly You should have a savings goal. –Your money will only grow if you spend less than you take in. –You must save regularly, you must have the will to save money! –Savings Clubs You agree to deposit money and not touch it for a certain amount of time, e. i., Christmas Club –Automatic Payroll Deduction Having a certain amount withheld from your paycheck and deposited into savings.