1

2

Short-Term Goals

• Pay yourself first

• Reduce spending

• Savings options

• Compounding interest

Agenda

3

Saving vs. Investing

• Investing for long-term goals– More than five years– Retirement– College education

• Saving for short-term goals– Less than five years– Emergency fund– Car or house down payment– Vacation

Saving vs. Investing

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Pay Yourself First

• Today’s habits pay off tomorrow– Include savings in your budget– Save for emergencies– Save for major purchases

Saving vs. Investing

5

Reduce Spending

• Clothes– Buy the basics– Shop sales– Shop thrift stores– Make minor repairs

• Personal Care– Shop discount

stores

• Food– Eat out less– Split a meal– Skip daily cup

of coffee– Shop with a list– Buy generic brands– Clip coupons– Buy in bulk

Reduce Spending

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Reduce Spending

• Transportation– Economy car– Used car– Carpool– Public

transportation

• Entertainment– Entertain at home– Pack a picnic – Use student

discounts– Free concerts – Free community

events

Reduce Spending

7

Savings Options

• Banks and credit unions– Checking account– Money market account– Savings account– Certificate of deposit (CD)

Savings Options – Getting Started

8

Savings – Getting Started

• Checking account– Lowest interest rate– Most transactions

• Savings account– Higher interest rates than checking

Savings Options – Getting Started

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Savings – Larger Amounts

• Money market accounts– Higher rates than checking and savings– Limited number of monthly withdrawals

• Certificate of deposit (CD)– Require minimum deposit– Pays higher interest rate– No transactions for a set period– Early withdrawal penalty

Savings Options – Getting Started

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Rule of 72

Rule of 72

11Savings growth calculated at 6% interest.

Power of Compound Interest

• Student A

• Age 25

• $100/Month

• 10 Years

• Contributes $12,000

• $73,537 at age 60

• Student B

• Age 40

• $100/Month

• 20 Years

• Contributes $24,000

• $46,435 at age 60

Compound Interest

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Power of Compound Interest

Contributions $12,000

Total Interest $22,435

Savings growth calculated at 6% interest.

Total Value $46,435

Contributions $24,000

Total Interest $61,537

Total Value $73,537

Student A Student B

Compound Interest

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Savings Growth

• $50 a month – $8,194 in 10 years

• $100 a month – $16,388 in 10 years

• $250 a month – $40,970 in 10 years

Savings growth calculated at 6% interest.

Compound Interest

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How To Succeed

• Identify financial goals

• Track expenses and list your debts

• Create a financial plan

• Save in ways that fit your lifestyle

• Start a savings plan—and stick to it!

• Pay off debt

Review

15

What’s Next

• Session:

• Date:

• Time:

• Location:

What’s Next

16