Personal Finance. Make saving a priority in your money routine: First decide how much you can save each month. Each pay period, pay yourself first. Next.

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Presentation transcript:

Personal Finance

Make saving a priority in your money routine: First decide how much you can save each month. Each pay period, pay yourself first. Next pay your fixed expenses (rent, food, transportation) Use the leftover, disposable income, for entertainment and shopping. When you receive unexpected income put it towards saving.

Most of us have basic savings accounts. These are a great idea, but as you earn more money in your life it makes more sense to find a different type of savings account. Although basic savings account have a high degree of liquidity, which means that it is easy to deposit and withdrawal money. The average interest rate on a basic savings account is less than 1%.

Certificate of Deposit Definition: A savings deposit that earns a specific amount of interest over a fixed amount of time. Added Info: You have to put a minimum amount of money into a CD and leave it there for the entire time period Examples: They have less liquidity than a basic savings account, but they have higher interest rates. The average interest rate is about 3%

Money Market Account Definition: A savings account in which your money is invested in securities. Securities: are documents that indicate ownership of treasury bills, savings bonds, and CDs that can be traded on the investment market. Added Info: IT requires a minimum balance and a minimum deposit and limits the amount of money you can withdrawal from it. Example: IT has a higher average interest rate than a basic savings account and CDs. The interest rate on Money Market accounts are referred to as annual percentage yield. About 10%!

Savings Bond Definition: Nontransferable bonds issued by the U.S. government initially sold at half their face value Added Info: You pay 25 dollars for a 50 dollar bond, when the bond reaches its maturity date it will be worth face value. Example: A savings bond that you bought for 25 dollars will be worth 50 dollars in twenty years.

Each time interest is recalculated, the amount you receive is based on the new larger amount in your account, this is called compounding interest. The annual percentage yield (APY) is the amount of interest your deposit will earn in a year, expressed as a percentage. Return- is the amount of interest earned.