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Saving Your Money

Saving Your Money. Ms. Mah Planning 10: Finances. By identifying your needs vs. wants you can potentially save your hard earned money by not spending it on unimportant items. What would you do if you had to save $20.00 of your own money next month? How would you save this money?

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Saving Your Money

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  1. Saving Your Money Ms. Mah Planning 10: Finances

  2. By identifying your needs vs. wants you can potentially save your hard earned money by not spending it on unimportant items. • What would you do if you had to save $20.00 of your own money next month? How would you save this money? • Save $20.00 a week  $ ____ per month  $ ___ per year • $80 per month and $1,040 per year • Save $20.00 per month  $ ____ per year • What can you do with the money you have not spend?

  3. Reasons to Save • To buy a big item or pay for a big bill that’s coming • To have emergency funds • You loose your job • You get hurt • Unpredictable expenses • To build funds to invest • Can you think of any reasons?

  4. How Can You Save? • Work more • Increasing your income can provide you with more money to save by helping to cover your expenses • Ex: cut lawn, baby sit, return Arizona or Vitamin Water bottles ;) • Spend less • Reduce your spending on wants • Pay yourself first • Set aside 10% of your earnings • Plan for savings and include them in your budge!

  5. Savings Vocabulary Interest: money received over time for letting others borrow your money. Can also be price you pay over time for borrowing money. Simple Interest: interest paid only on the initial deposit Compound Interest: interest paid on the initial deposit and on any interest that has been earned

  6. Simple Interest

  7. Compound Interest

  8. Rule of 72 • An easy way to calculate approximately how long it will take for your savings to double at a compound interest rate. • Divide 72 by the interest rate to find out the number of years it will take to double the amount saved. • 72/5% = 14.4 years to double • Divide 72 by the number of years of saving to find out the interest rate needed to double amount saved. • 72/10 = 7.2% interest needed to double money in 10 years

  9. Banking

  10. What are Financial Institutions? Banks, Credit Unions, Trust Companies Range of services and fees vary Competitive: you can switch if unhappy Make money by taking deposits and lending or investing deposits Pay interest to depositors for the right to hold and use their money

  11. Types of Banking Services Chequing or savings account Debit card Credit card Telephone and online banking Automated teller machines (ATMs) Automatic Deposits and payments Account transfers Line of credit Loans Other (Traveler’s cheques, US dollar accounts, safety deposit boxes, etc.)

  12. Comparing Types of Banks Location, hours, number of offices, number of ATMs Monthly-fees: cheques, ATM withdraws Interest rate earned, minimum deposit to earn interest, compounding method, fees charged if below minimum Special features: discounts

  13. Types of Bank Accounts • Savings account: a deposit account where your money is secure but accessible and usually earns a very limited amoutof interest • Low risk, low interest rates

  14. Types of Bank Accounts • Guaranteed Investment Certificate (GIC) & Term Deposits: a deposit where you agree to leave the money in the account for a fixed period of time (90 days- 5 years). • Get interest at a higher rate than savings account

  15. Types of Bank Accounts • Canada Savings Bond(CSB): when you buy a CSB you are lending your money to the federal government. • Government pays interest until you decide to cash in (redeem) the bond. • Can purchase from most financial institutions

  16. Types of Bank Accounts • Tax-Free Savings Account: can contribute up to $5,500 annually and investment income earned is tax-free. • Can invest in guaranteed investment certificates, term deposits, etc.

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