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8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
8.01 savings tools_b_fefe_1.14.2
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8.01 savings tools_b_fefe_1.14.2

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  • 1. Savings Tools Take Charge of Your FinancesFamily Economics & Financial Education Personal Finance 8.01 Savins & Investments
  • 2. 1.14.2.G1 To Develop a Savings Fund: Determine how much money is appropriate for a savings fund Determine which savings tools in which to place money © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 2Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 3. 1.14.2.G1 Savings Tools$ Savings tools are secure and liquid accounts offered by depository institutions assisting in the management of a savings fund © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 4. 1.14.2.G1 Savings Tools$ Determine which savings tools are appropriate to assist in the attainment of personal financial goals © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 5. 1.14.2.G1 Low Risk$ Savings tools are very secure$ Most depository institutions offering savings tools are backed by government insurance © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 6. 1.14.2.G1 FDICThe most common type of governmentinsurance is offered by the Federal DepositInsurance Corporation (FDIC ) FDIC is a federal government agency insuring certain depository institutions against loss If a depository institution covered by FDIC fails, FDIC will restore the lost funds up to $250,000 per account © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 7. 1.14.2.G1 Checking Account$ DEFINITION $ INTEREST  Tool used to transfer  May be non-interest funds deposited into or interest earning an account to make a  Interest rate is usually cash purchase the lowest available for the savings tools © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 8. 1.14.2.G1 Checking Account$ ACCESSIBILITY  Most liquid of all the savings tools $ Funds are easily accessed by:  Checks  Automated teller machines (ATMs)  Debit cards  Telephone  Internet © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 9. 1.14.2.G1 Checking Account$ FEATURES  Can have minimum balance requirements  Can charge transaction fees  Can have a limit on the number of checks written monthly  Reduces the need to carry large amounts of cash Before opening a checking account, learn all of the requirements and restrictions. © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 10. 1.14.2.G1 Savings Account$ DEFINITION $ INTEREST  Account to hold  Interest earning money not spent on  Lower interest rates consumption compared to the other savings tools except checking accounts © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 11. 1.14.2.G1 Savings Account$ ACCESSIBILITY  More liquid than all savings tools except a checking account $ Funds may be accessed or transferred between accounts through:  Automated teller machines  Telephones  Internet © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 12. 1.14.2.G1 Savings Account$ FEATURES  Allows for frequent deposits or withdrawals  Easily accessible  Money storage for emergencies or daily living  Available at depository institutions  May require a minimum balance or have a limited number of withdrawals per month © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 13. 1.14.2.G1 Money Market Deposit Account$ DEFINITION $ government  segment of the financial market insured account offered at most in which financial instruments depository with high liquidity and very short institutions maturities are traded  Used as a means for borrowing and lending in the short term, from several days to just under a year. © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 14. 1.14.2.G1 Money Market Deposit Account$ INTEREST  Minimum balance requirement with tiered interest rates $ The amount of interest earned depends on the account balance $ For example: a balance of $10,000 will earn a higher interest rate than a balance of $2,500 © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 15. 1.14.2.G1 Money Market Deposit Account$ ACCESSIBILITY  Less liquid than checking and savings accounts $ Accessibility is limited to a certain number of transactions per month (usually 3-6) © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 16. 1.14.2.G1 Money Market Deposit Account$ FEATURES  Minimum amount required to open the account, often $1,000  If the average monthly balance falls below a specified amount, the entire account will earn a lower interest rate © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 16 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 17. 1.14.2.G1 Certificate of Deposit$ DEFINITION $ INTEREST  An insured interest  Varies depending upon earning savings tool that the time length and allows restricted access to amount of money the funds deposited  Deposits have to be held $ The longer the period of for a certain length of time, the higher the interest rate time $ Usually 7 days to 8 years © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 18. 1.14.2.G1 Certificates of Deposit$ Contract for specific time period$ If funds withdrawn before MATURITY DATE, penalty is deducted from your money$ Earn higher rate because bank can lend money to borrowers for longer period and earn more © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 19. 1.14.2.G1 Certificate of Deposit$ ACCESSIBILITY  Less liquid than checking, savings, and money market deposit accounts  Large fees (penalties) are assessed if funds are withdrawn before the end of the designated time period © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 20. 1.14.2.G1 Certificate of Deposit$ FEATURES  Minimum deposits range from $100-$250,000  Low risk and no fees if funds are held for the designated time period  7 days minimum, 8 years maximum Common maturity terms  3-6-9-12-1824-36-48-60 months © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 20 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 21. 1.14.2.G1 Savings Bond$ DEFINITION$ Bonds are purchased for discount of 50% of the face value from the U.S. Government $ Loan given to a corporation or the government © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 21 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 22. 1.14.2.G1 Savings Bond$ INTEREST  Can be redeemed once the investment doubles  Maturity date- when bond is redeemed  Amount of time it takes to double in value depends on the current interest rate offered $ Invest $50 for a $100 savings bond $ The bond can be redeemed once the investment doubles to reach $100 © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 22 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 23. 1.14.2.G1 Savings Bond$ ACCESSIBILITY  Least liquid of all the savings tools $ Access to funds is restricted © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 23 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 24. 1.14.2.G1 Savings Bond$ FEATURES  Safe, secure, and affordable  Purchased for $25.00 - $10,000.00  Taxes $ Interest earned on a bond is tax deferred until redeemed $ If the bond is used to pay for college, the interest it earned will be tax exempt when redeemed (if invested in 529 plan* see next slide) © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 24 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 25. 1.14.2.G1 529 college plans$ A 529 Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code which created these types of savings plans in 1996. © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 25 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 26. 1.14.2.G1 Liquidity Checking AccountMost LowestLiquid Interest Savings Account Money Market Deposit Account Certificate of DepositLeast HighestLiquid Savings Bond Interest © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 26 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 27. 1.14.2.G1 Choosing a Savings Tool$ Different savings tools can be utilized to assist in reaching personal financial goals$ Higher interest rates are a trade-off for lower liquidity © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 27 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 28. 1.14.2.G1 Choosing a Savings Tool$ When and how often access is needed to funds helps determine which savings tool to use © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 28 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 29. 1.14.2.G1 Choosing a Savings Tool$ By understanding the features of different savings tools, an individual can choose which tools will help them reach their financial goals. © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 29 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 30. 1.14.2.G1 Depository Institutions$ Features of savings tools vary between different depository institutions  Interest rates  Accessibility options  Fees  Penalties  Minimum balance requirements © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 30 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 31. 1.14.2.G1 Depository Institutions$ Research and compare savings tools at different depository institutions in order to find the best option$ Not limited to one depository institution  Can have different savings tools at different depository institutions © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 31 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 32. 1.14.2.G1 Savings Tools Scenarios$ Read each Savings Tool Scenario$ Discuss which savings tool would be recommended for each scenario © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 32 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 33. 1.14.2.G1 Savings Tools Scenario #1Mariah has twin daughters that will be graduating from high school in two years. They both have agoal to attend college after graduation, and Mariah wants to help them reach this goal by paying for some of their schooling. She has $2,000 for each daughter that she would like to save and then be able to access in two years. Which savings tool would you recommend Mariah utilize and why? © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 33 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 34. 1.14.2.G1 Savings Tools Scenario #2 Conner and Lisa were recently married and purchased a new house. They received $1,000 as awedding present from Lisa’s parents. They want touse this money to buy new furniture for their house in six months. Which savings tool would you recommend Conner and Lisa utilize and why? © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 34 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 35. 1.14.2.G1 Savings Tools Scenario #3 Sean is a high school student that just received his first paycheck from his new part-time job at thelocal grocery store. He currently has no expenses topay, and his goal is to save every paycheck from hisjob to buy a new car in two years. He needs to find a savings tool that will help him reach his financial goal. Which savings tool would you recommend Sean utilize and why? © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 35 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 36. 1.14.2.G1 Savings Tools Scenario #4 Brittany recently moved into her first apartment.Before, she was living with her parents and had very few expenses to keep track of. Now that she has topay rent and utilities for her apartment, she needs to find a savings tool that will help her manage her money and ensure she can pay her bills every month. Which savings tool would you recommend Brittany utilize and why?$  © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 36 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 37. 1.14.2.G1 Savings Tools Scenario #5Bryan has a goal to become financially secure bydeveloping an emergency fund. He has been savingtwenty percent of his net income for the past year and now has $2,000. He plans to maintain this balance and only use this money for emergency expenses. Which savings tool would you recommend Bryan utilize and why? © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 37 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 38. 1.14.2.G1 Savings Tools Scenario #6 Paul and Grace want to purchase a house in two years. They want to begin saving money to use forthe down payment on a home. They are able to save $300 per month and need to know which savingstool would be the best option for them to put their money in. Which savings tool would you recommend Paul and Grace utilize and why? © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 38 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 39. 1.14.2.G1 Summary © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 39Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
  • 40. 1.14.2.G1 Summary$ Savings tools are very secure$ Most depository institutions offering savings tools are backed by FDIC insurance$ Different savings tools can be utilized to assist in reaching personal financial goals$ Features of savings tools vary between depository institutions © Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 40 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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