1. Chapter 30.1

2.  Savings are money people put aside for future use. Generally people use their savings for major purchases, emergencies, and retirement income. Savings accounts can earn either simple or compound interest. If one leaves money saved in an account that accumulates compound interest, interest is earned on both the amount saved and the interest earned.

3.  Savings  Savings plans include  Regular savings accounts  Certificates of deposit  Money market accounts NOT  The amount you save depends on the amount you are willing NOT to spend Experts say people should save about 10% of their take-home income.

4.  Experts suggest that the amount being saved should be taken from the income first so you are not tempted to spend it  Saving money should be a part of your budget

5. Opportunity cost Opportunity cost - putting off spending money on an item that you might want right now Benefit Benefit - greater than purchasing an item that you want Savings Calculator

6.  To make major purchases later  A new home  A new car  College  The provide for emergencies  Experts suggest you set aside 6 months of income  To have income for retirement

7. Average retirement income when saving begins at different ages

8.  Most people receive Social Security income  Most people have some sort of retirement plan from work  Theses are usually not enough to support you once you retire. You will need savings too.

9.  Not all savings earn income  When you put your money into a bank’s savings account you are lending them money (you are the creditor)  They use your money to loan to others  This makes saving good for the economy

10.  The percentage of increase in the value of your savings rate of return  Earnings on savings can be measured by the rate of return, or yield.

11.  Simple interest  Simple interest is interest earned on money deposited into a savings account, called the principal. compound interest  When principal and interest are left in an account, it earns compound interest.

12. Compound Interest You have $50,000 in a savings account at 6 percent annual interest. Simple Interest Compound Interest You’ve earned $3,000 after one year. $3,000 is added to the principle. Fifteen Years Later $20,00 of interest is earned. You have $50,000 in a savings account at 6 percent annual interest. Simple Interest Compound Interest You’ve earned $3,000 after one year. $3,000 is added to the principle. Fifteen Years Later $20,00 of interest is earned.

13. The Rule of 72 is used to calculate how long it will take to double the money in an investment. It is calculated by dividing 72 by the annual interest rate to get the number of years.

14.  Millionaire Quiz Millionaire Quiz  When will you be a millionaire? When will you be a millionaire?