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Slide1

Choose to Save

Advanced Level

Slide2

What is Saving?

Results in

Slide3

Why Save?

Your present self impacts your future

self

By saving money

today

you will have financial security in the

future

What are examples of emergency expenses?

Slide4

Saving Reduces Financial Risk and Uncertainty

Very

liquid

(can quickly and

easily be

converted into cash)

Savings is a monetary asset

Contributes to net worth

What monetary assets do you

have for emergencies?

Slide5

How Much Money

S

hould

Be Saved?A

t

least six months worth of expenses in emergency savings

Depends on…

Dependents

Slide6

Saving on anIncome & Expense Statement

Saving is a form of unearned income when used to

pay for

an expense

Saving is an expense when money is

being saved

Slide7

My Saving QuestPart 1: My Wish List

$

$

$

Brainstorm a personal wish list for yourself

Approximately how much

does each item cost?

Place a star

next to the item you would like to start saving for today

Slide8

Identifying Money to Save

What are ways to reduce spending?

Slide9

Identifying Money to Save

Do It Yourself

What can you do yourself to save money?

Slide10

Create a Savings Plan

Slide11

Make Sure Your Goal is Realistic!

Ensure the trade-offs are realistic and opportunity cost of what is given up to save is not too high!

Why can saving be difficult?

Slide12

My Saving QuestPart 2: My Current Spending

Identify three changes you will make to your current income

or spending

today

to start saving for the

future

What is the trade-off for each change?

Place a star

 next to items with a realistic opportunity cost

Slide13

Pay Yourself First

Your present self impacts you future self!

Slide14

Saved Money Provides For Your Future Self….

Time Value of Money -

money available at the present time (today) is worth more than the same amount if received in

the future

… and can increase in value!

Slide15

What is Interest?

Interest

- the

price of

money

Interest rate

- percentage

rate

used to calculate interest

Compounding interest

– earning interest on interest

Slide16

How Do Interest Rates Affect The

Time Value of Money?

Interest

Rate

More Money Earned

$1,000 Saved for 5 Years with Compounding Interest

Slide17

Time

More Money Earned

How Does Time Affect the Time Value of Money?

Felix and his parents

Saved for: 18 years

S

tarted when he was born

Contributed: $50/month

Total Contribution: $10,800

Savannah and her parents

Saved for: 4 years

Started when she was a freshman

Contributed: $350/month

Total Contribution: $16,800

Both earned the

same interest rate

Both currently have the

same balance (about $19,500)

Savannah’s parents contributed

significantly more

College Savings Fund

Slide18

How Does Money Affect the Time Value of Money?

Principal

- original amount of money saved or invested

Money

More Money Earned

3%

interest for 5 years

Principal

Value of Savings

$100

$115.93

$1,000

$1,159.27

$10,000

$11,592.74

Slide19

Year 5

Interest Earned:

$33.26

Amount Investment is Worth:

$140.26

Year 10

Interest Earned:

$56.46

Amount Investment is Worth:

$196.72

Year 15

Interest Earned:

$79.19

Amount Investment is Worth:

$275.90

Year 20

Interest Earned:

$111.07

Amount Investment is Worth:

$386.97

Year 50

Interest Earned:

$845.46

Amount Investment is Worth:

$2945.70

Time Value of Money Magic!

Initial Investment (Principal):

$100.00 at 7% compounding interest

Year 1

Interest Earned:

$7.00

Amount Investment is Worth:

107.00

Slide20

Maximize

Y

our Return!

Save for

as long as possible!

Save as

much as possible, as often as possible!

Save

at the highest interest rate possible!

Slide21

My Saving QuestPart 3: Implementing My Saving Quest

How will you make the saving process automatic?

How much can you realistically save each week?

How can your goal be reached

using the time value of money?

Slide22

Savings is an Essential Component of a Financial Plan

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