1. SAVINGS – Plan for Financial Security

2. Why Save?Savings is a trade off. You agree to save now in order to spend in the future.  Save for the Unexpected Car breaks down, lost job, home repairs.  Save for Opportunities In case something comes up, good deal or great opportunity.  Save for Major Purchases Want something expensive, car, television, vacation, boat or college.  Save for Flexibility Give flexibility in life choices. Buy when items are on sale.  Save to Achieve Goals Security deposit on an apartment larger house, retirement, or even retire early.

3. Saving Strategies  Pay Yourself First When you make a deposit into your checking automatically put some into your savings. Consider it to be a required payment.  Save by the Numbers Tell yourself you are going to save 10% of your income each pay period. If you earn $500 every two weeks, then you would put away $50.  Reward Yourself Give yourself a reward that doesn’t cost very much. Just to tell yourself nice job.  Saving and Values Pick and choose what is important to you. A nice vacation that you are saving up for, or a few small items that are worth just as much.

4. Automatic Saving Payroll Deductions: Some employers offer to have your paycheck automatically deposited. With this they may offer payroll deductions. Where you can automatically have a set amount transferred out of your paycheck into a savings account. Checking Account Transfers: Some checking accounts will let you set up an automatic transfer from one account to another. Therefore you can have a specific amount transferred out of your checking account into a savings account.

5. Savings Options Regular Savings Accounts  Typically a minimum amount is required  Can easily withdraw money  No risk involved (insured up to $100,000)  Use an account register  Use savings deposit/withdrawal slips  Good for when you are first starting out. With a regular savings account a bank doesn’t know how long you are going to keep your money with them. If they knew for sure they could then invest it in ways that could earn higher income. For this reason banks will pay you a higher interest rate if you promise to leave your money on deposit for several months or years.

6. Certificate of Deposit: is a deposit in a savings institution that earns a fixed interest rate for a specified period of time. You will be penalized for withdrawing your money early. You will be paid a higher interest rate than just a standard savings account. The longer the time period, the higher the interest rate. Bad thing is if interest rates go up, you are locked in at the rate you agreed to. CD: a special type of savings account Higher interest rates=holders agree to more restrictions (less liquid). Leave money in for a set amount of time. Longer the time period=higher the interest rate (yield). After the length of time has passed, the CD has then matured. Penalty for early withdrawals Smaller savings = lower the interest rate Interest rate is fixed

7. Money Market  MMDA (money market deposit account)  Bank uses money to make short-term investments  As interest rates go up, bank will pay you more. When they go down, they pay you less.  Lower interest rates than CD, but higher than regular savings.  The more money, the better the interest rate.  Usually have a high minimum deposit (around $1000 or $2000)  Can withdraw money at anytime without being penalized.  Some banks even offer money market checking accounts. (Restrict # of checks)  When offered at a federally insured bank your money is insured.  Can earn higher interest rates than a savings account.  Interest can change often.  May limit the number of transactions you can make

8. Individual Retirement Account  IRA’s: saving plans for retirement with tax benefits.  Income tax is deferred until you withdrawal the money at age 59½ or later.  Penalty for withdrawing before 59½ plus taxes. (10% tax) Government Bonds  Government gets money from taxes and borrowing.  Sometimes they overspend more than what they collected with income taxes.  They sell bonds to earn money. It is their way of borrowing.  A bond is a written promise to pay a debt by a specified date.  When you buy a bond they owe you the amount plus interest.  Most bonds are issued for a specific time or term.  Could be as little as 3 months or 10 years.  At the end of the term the bond has matured and the government will then repay you.  You don’t need to own your bond for its entire term; you can sell it at any time.  Very safe.  Tax advantages. Federally taxed, but not taxed by the state.

9. Banking Services  Bank Money Orders: good as cash, can guarantee payments, pay upfront.  Traveler’s Checks: purchased in amounts of $10, $20, $50, $100, or more. Cash almost anywhere in the world. Record serial numbers  Official Bank Checks: bank verifies you have the funds, and writes the check themselves.