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PF 8.01

PF 8.01. Options for Saving & Investing. Saving and Investing. Reasons individuals may fail to save/invest. Not being able to meet current needs and wants Not being aware of how much needs to be saved for future goals Over-relying on credit for emergencies

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PF 8.01

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  1. PF 8.01 Options for Saving & Investing

  2. Saving and Investing

  3. Reasons individuals may fail to save/invest • Not being able to meet current needs and wants • Not being aware of how much needs to be saved for future goals • Over-relying on credit for emergencies • Over-relying on job security and insurance

  4. “Rules” for saving and investing • View saving and investing as a fixed expense • Rule of Saving: Pay yourself first; take a portion of earnings for saving/investing before spending any of your paycheck • 70-20-10 Saving and Investing Rule: For any money earned, spend 70%, save 20%, and invest 10% • Saving and Investing Plan: For those whose values or lifestyle make saving 30% unrealistic, start a saving and investing plan in order to continually save a fixed amount • Rule of 72: Divide 72 by the rate of interest earned on an investment to find the number of years needed to double an amount of money invested

  5. Directions: See if you can do the math in your head to solve these problems using the 70-20-10 Saving and Investing Rule. • Josh earned $100 from mowing lawns during the month of July. • How much should he save? How much should he spend? • $20 $70 • How much should he invest? • $10 • Janet received $140 in gift money for her birthday. How much should she spend? • $140 divided by 10 and then multiply by 7 • $140/10 = $14 x 7 = $98 • Hal earned $25 today. How much should he invest? $2.50 • Mr. Jones inherited $50,000 from his great uncle. How much should he invest? $5000 • Sarah won $100 from a raffle. How much should she save? $20 • Theo sold enough magazine subscriptions to earn a profit of $200. How much should she save? $40 THINK

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