Top 4 Reasons to Save – create your own list first!
Check out this link: http://www.visualeconomics.com/savings-accounts/
Reasons People Should Save Emergencies – It is recommended individuals have a minimum of three to six months of salary in savings accounts for emergencies. Examples of emergencies can include illness, losing a job, or immediate need to replace a large item such as a washing machine. Expenses – Savings accounts can be used as a budgeting tool to manage monthly expenses. Future Purchases – Money can be used to meet future goals such as a college education, new car, down payment on a home, or a new stereo. Investing – After an individual has established a savings account, money should be invested monthly for future income.
Your Definitions… Think of a def. for both savings and investing and write under“My Definition”.
Definitions of “Savings” “…the amount left over when the cost of a person's consumer expenditure is subtracted from the amount of disposable income that he or she earns in a given period of time.” Dictionary.com, Financial Dictionary
Definitions of “Savings” “For those who are financially prudent, the amount of money that is left over after personal expenses have been met can be positive...those who tend to rely on credit and loans to make ends meet will have negative savings. Savings can be turned into further income through investing.”
Definitions of “Savings” Personal saving: (S) Saving is what is left over from disposable personal income after consumption.
What common pieces do these definitions all share?
How well do these definitions seem to align with the “Pay Yourself First” principle?
Even these DEFINTIONS from fairly legit. sources convey a common cultural attitude about saving / our financial priorities!
Definitions of “Savings” A more objective definition…
“Saving is income not spent, or deferred consumption. Methods of saving include putting money aside in a bank or pension plan.Saving also includes reducing expenditures, such as recurring costs. In terms of personal finance, saving specifies low-risk preservation of money, as in a deposit account, versus investment, wherein risk is higher.”
Saving vs. Investing Our curriculum asserts these commonly accepted differences between saving and investing: Savings Investing Def: Purchase of assets with the goal of increasing future income Def: Portion of income not spent on consumption
Saving vs. Investing Our curriculum asserts these commonly accepted differences between saving and investing: Savings Investing Used to pay for: Emergencies Large Purchases Used to pay for: Higher Education Retirement
Liquidity Assets: Everything an individual owns with monetary value. Liquidity: How quickly and easily an asset can be converted to cash. Examples of Assets Cash Clothing Houses Electronics Savings Accounts Furniture Automobiles Make a list of your assets.
Liquid Assets In most cases, investments are not as liquid as savings. Savings are known as liquid assets, because they are easily accessible in emergency situations. Of your assets, which are the most liquid?
Saving vs. Investing The Importance of Each… Savings Investing Enhances and helps build wealth. Provides the foundation for financial security.
Saving vs. Investing Click the image below to watch a video on YouTube that spells out the key differences between saving and investing.
Saving vs. Investing Other points mentioned in video: Investing Savings (generally) Long Term Higher Risk (generally) Short Term Lower risk
References Dollar Sign (used on title slide) http://www.flickr.com/photos/adriarichards/4369276799 Twenty Dollar Bill (used in background) http://www.flickr.com/photos/badwsky/3377160997 Family on Couch (gif) http://search.coolclips.com/media/?D=wb030670# Pay Yourself First (gif) Created by myself, Marie Opland Hand Holding Money (gif) http://www.gifs.net/gif/index.php3?n=image.php3&image_id=8218&image_name=Money_in_hand Student Raising Hand (gif) http://dir.coolclips.com/Education/School/Classroom/Students/Students_wb030423.html All other images are from Other images from Microsoft Clipart, available in PowerPoint Information on slide 12http://www.fefe.arizona.edu/