Savings. Pay yourself first Next, pay your expenses leftover money is called discretionary income.

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Presentation transcript:

Savings

Pay yourself first Next, pay your expenses leftover money is called discretionary income

Savings Accounts High Liquidity

Types of Savings Accounts A Certificate of deposit is a savings deposit that earns a specific amount of interest over a fixed amount of time.

A money market account is a type of savings account in which your money is invested in securities such as government securities. ndIntExt=INT&WT.srch=1 ndIntExt=INT&WT.srch=1

Savings Bonds Another option for putting money away to earn interest. _bonds.htm

Choosing a savings account option 1.For what purpose are you savings? 2.How long will you be able to “park “ the money in the account before you need to get it out? 3.Do some accounts pay higher interest rates than others? 4.Are there penalties for early withdrawal?

Earning Interest Compound interest - Figuring interest earnings on both the original amount and any previous interest that has been added to the balance future/earning-compound-interest.html?cm_mmc=EBZ-CorpRep-_- Google-PS-_-how%20compound%20interest%20works-_- Interest%20Phrase%20Earning%20Compound%20Interest%20Phrase money/saving/compound-interest

Annual percentage yield The APY, or rate of return, is the amount of interest your deposit would earn in one year, expressed as a percentage.

Rule of 72 Simple way to estimate the effect of interest rates Dividing 72 by the interest rate will tell you approximately how many years it will take to double your investment.