1. Banking &Financial Services A Viking Independent Bank Mrs. Sorrell
Saving money
Banking &Financial Services A
Viking Independent Bank
Mrs. Sorrell

2. U.S. Bureau of Labor Statistics reports that we spend (consume), on average 97 percent of our disposable income (after tax)
63% of Americans do not have enough money to cover a $500 emergency
Avoid savings accounts at bricks and mortar banks, unless you get excited by a 0.01% return
Savings facts

3. Disposable income (income after taxes) minus consumption spending
Allowance, gifts, payment for odd jobs
Employed students=net income after taxes
“Pay Yourself First”
Saving before spending on consumer goods
Saving = Disposable income (income after taxes) -- consumption spending
Saving defined

4. Incentives to saving Matching promise by an adult
Satisfaction of buying a special gift in the future
Banks pay you to use your money=earned interest
Simple interest on savings is annual interest paid on the initial amount saved (principal)
Compound interest is interest paid on both the principal and the added interest
Incentives to saving

5. Saving Terminology Disposable income = consumption + saving
Saving = disposable income – consumption
Interest = Principal * interest rate * time (expressed in years)
Saving Terminology

6. 72 divided by the Rate (of interest being paid on savings) = the number of years it will take for savings to double when interest compounds
Illustrates how compound interest doubles savings more quickly then simples interest
Example: Compound Interest at 8% for 9 years
72 divided by 8% = 9 years
At the end of 9 years, initial savings of $100 will have increased to $200—double the amount of initial savings
The rule of 72