1. PAY YOURSELF FIRST
Introductory Level

2. What will happen tomorrow? Savings prepares us for unexpected events.
Savings is the portion of income not spent on current expenses ideal for:
Emergency vet visits
Flat Tires
Appliance breaking
Medical emergencies not covered by insurance

3. What if savings aren’t available for emergency expenses?
Debt may be used
Credit cards, loans, or going without the item
Financial Stress
Unable to live the style one is accustomed to
Give up going out with friends, participating in activities, etc.

4. What are reasons to save?
The future is unpredictable
Money should be saved to pay for unexpected events or emergencies
Savings provides a state of well-being

5. What would you like to save money for?
Fun reasons to save
Vacation
College
Car
New Outfit
New Electronics
Video Games
What would you like to save money for?

6. How much savings is considered
financially secure:
Recommended Amount
Example
A household that has $2,000 per month of expenses should have at least $12,000 in savings
$2,000 x 6 months
At least six months worth of expenses

7. Steps to reach savings
Save10-20% of net income until appropriate amount of savings is reached
Net income – (take home pay) Income after taxes have been taken out of a paycheck

8. Where can money be saved?
Safest
Piggy Bank
Depository Institution
Jar
Coffee Can
Under a Mattress

9. Depository Institution
What is a name of a depository institution in our community?
Depository Institution is a business that offers financial services to people
Money is insured from loss
Offers accounts that earn interest

10. What is Interest?
Interest - price of money
Interest Earned-calculated percent of a total amount of money in an account
This percent is the interest rate

11. Money Market Deposit Account Certificate of Deposit
Savings Account
Money Market Deposit Account
Certificate of Deposit
Definition
Characteristics
Holds money not spent on current expenses
Pays a higher interest rate than a savings account
Pays interest on a lump sum of money
Specific time requirements
When time period is complete, money and interest earned can be withdrawn
Higher interest rates for longer time periods
Money stored until needed
Interest earning
Minimum deposit often required
Number of monthly withdrawals often limited

12. Value of money saved in these accounts increases!
Time value of money- money paid in the future is not equal to money paid today

13. What affects TVM Interest Rate Amount $ Time
Save for as long as possible!
Begin saving early
Amount $
Save as much as possible, as often as possible!
Interest
Rate
Save at the highest interest rate possible!

14. What would you do with an extra $80?
$500 saved at 3% interest
Year
Amount of money
account is worth
Initial amount saved
$500.00 1
$515.00 2
$530.45 3
$546.36 4
$562.75 5
$579.64
What would you do with an extra $80?

15. Time Value of Money Magic!
Year 20
Interest Earned: $111.07
Amount Savings is Worth: $386.97
Year 15
Interest Earned: $79.19
Amount Savings is Worth: $275.90
Initial Savings: $ at 7% interest
Year 1
Interest Earned: $7.00
Amount Savings is Worth:
Year 10
Interest Earned: $56.46
Amount Savings is Worth: $196.72
Year 5
Interest Earned: $33.26
Amount Savings is Worth: $140.26
Year 50
Interest Earned: $845.46
Amount Savings is Worth: $

16. Pay yourself first PYF Strategy Why?
ALWAYS set aside money for saving before spending any money
PYF
Strategy
Creates a habit & state of well being
Why?

17. To successfully practice PYF, set goals
Goal- End result of something a person intends to accomplish
Financial Goal-
Specific objectives to be accomplished through financial planning

18. Importance of goals in PYF
Helps identify and focus on items that are most important
Guides decision-making to help achieve what is most important
Such as choosing saving for a vacation over spending money on a coffee

19. What is a trade-off you are willing to make to purchase a dream item?
Being financially secure in the future requires one to trade-off frivolous spending in the present.
Trade-off is giving up one thing for another
Every decision involves a trade-off

20. Is the trade-off worth the goal?
Examine Spending
Adjust spending plan to meet goals
Understanding why something is given up makes goals easier to reach.

21. Choose saving money for the future over spending money in the present.

22. Examine Current Spending
“Pay Yourself First”
Set financial goals
Examine Trade-Offs
Examine Current Spending

23. Because of an unknown future, save money to pay for unexpected events
To be considered financially secure, save at least six months worth of expenses
To reach this amount, save 10-20% of net income “PAY YOURSELF FIRST”
Money saved at a depository institution is protected against loss and can earn interest

24. Take advantage of time value of money
Save as much as possible, for as long as possible, at the highest interest rate possible!
Save for your emergency fund first; then save to achieve goals
Savings goals become more attainable when trade-offs and spending plans are examined