Chapter 10

Saving for the Future

Why Save??

• Short-term needs:

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Why Save?

• Long-term needs:

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Financing Your Education

• How to pay for college?– Work - – Scholarships – Student loans –

– Grants –

– Work-study Programs –

How much to save?

• How much you can save is based on:

1. Discretionary income –

2. The __________ you attach to saving

3. Your anticipated ________________

4. Your ___________

Keys to Saving

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2.

3.

How your money grows

• Principal –

• Interest –

• Compound Interest –

How your money grows

• The ______ _____interest in compounded, the ________ your earnings.

• Yield –

• Annual Percentage Yield -

Where to save• ________________ – chains; usually “full

service;” FDIC insured

• __________________________ – specialize in savings accounts and real estate loans; FDIC insured

• ______________– Not-for-profit, member owned institutions; “share accounts;” NCUA insured

• _________________ – offer securities (stocks and bonds); Not FDIC insured

Regular Savings Accounts

• Liquidity –

• Tradeoff?

• You are free to make deposits and withdrawals without penalty.

Certificate of Deposit• Certificate of Deposit (CD) –

• Maturity date –

• __________ must be paid if money is withdrawn _______

• Rates are ______ than a savings account b/c _____ __________

Money Market Account

• Money market account –

• Offered by ______ and ________________

• ______ _______ but often limited to a certain number of withdrawals per month

• Usually require large _______ ______ and high ___________ ___________

Money Market AccountsMM Deposit Account

• Offered by ______• Higher rate for higher

deposits• Rate can ________ as

account balance increases

• ________ insured

MM Fund

• Offered by __________ ______

• Type of mutual fund that invests in low-risk securities

• Risk of loss of principal• ___ _____insured

Factors to consider when saving

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- First Niagara - Wells Fargo

Saving Regularly

• It is important not just to save, but to save regularly.

• Direct Deposit -

• Automatic Payroll Deductions –