1. Choose to SaveAdvanced Level

2. 2.4.1.G1accumulation of excessfunds by intentionallyspending less than youportion of income notspent on consumption(purchase of goods andResultsin Take Charge Today August 2013 Choose to Save Slide 2What is Saving?Saving earnSavings services)Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 3. 2.4.1.G1Your present self impacts your future selfBy saving money today you will have financial security in the futureShort-term goals& expenses Pay for itemsthat arent partof a typicalspending planWhat are examples of emergency expenses? Take Charge Today August 2013 Choose to Save Slide 3Why Save?EmergencysavingsCash set asideto cover the costof unexpectedeventsFinancial security Lower stress Lower negativeemotionsFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 4. 2.4.1.G1Saving Reduces Financial Risk andUncertaintySavings is a monetary assetContributes to net worthVery liquid (can quickly andeasily be converted into cash)What monetary assets do youhave for emergencies? Take Charge Today August 2013 Choose to Save Slide 4Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 5. 2.4.1.G1How Much Money ShouldBe Saved?At least six months worth ofexpenses in emergency savings6 months $12,000Depends onJobsecurityDependents coverage Take Charge Today August 2013 Choose to Save Slide 5$2,000monthlyexpensesIncomeInsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 6. 2.4.1.G1Saving on anIncome & Expense StatementSaving is a form of unearned incomewhen used to pay for an expenseSaving is an expense when money isbeing saved Take Charge Today August 2013 Choose to Save Slide 6Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 7. 2.4.1.G1My Saving QuestPart 1: My Wish ListBrainstorm a personal wish list for yourself$MyWishList$ $Approximately how muchdoes each item cost?Place a star next to the item youwould like to start saving for today Take Charge Today August 2013 Choose to Save Slide 7Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 8. 2.4.1.G1Identifying Money to SaveWhat changescan you make toreduce currentspending?Considerlarge, oftenmonthly,expenses Take Charge Today August 2013 Choose to Save Slide 8ExaminecurrentspendingAsk yourself ifitems are aneed or awantConsidersmall, oftendaily,expensesWhat are ways toreduce spending?Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 9. 2.4.1.G1Identifying Money to SaveIncreaseIncomeDecreaseExpensesInstead of paying someoneInvesting time and skillsWhat can you Take Charge do Today August yourself 2013 Choose to Save to Slide 9save money?Do It YourselfTrade-offFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 10. 2.4.1.G1Create a Savings PlanWhat areyou savingfor?Set agoal!How canthe goalbeachieved?When willthe goalreached?Is the goalrealistic? Take Charge Today August 2013 Choose to Save Slide 10How muchneeds tobe saved?beFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 11. 2.4.1.G1Make Sure Your Goal is Realistic!Giving upthepurchase ofsomethingin thepresentWhy can saving be difficult? Take Charge Today August 2013 Choose to Save Slide 11Ensure thetrade-offs arerealistic andopportunity costof what is givenup to save is nottoo high!Savingmoney forfutureFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 12. 2.4.1.G1My Saving QuestPart 2: My Current SpendingIdentify three changes you will make to your current incomeor spending today to start saving for the future Trade-off Trade-off Trade-offWhat is the trade-off for each change?Place a star next Take to Charge items Today August 2013 with Choose to Save a Slide realistic 12opportunity costFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 13. 2.4.1.G1Pay Yourself FirstYour present self impacts you future self!predeterminedamount ofDo so eachtime you areDo so beforeusing moneyfor spendingpaid Take Charge Today August 2013 Choose to Save Slide 13Save amoneyMake itautomatic!Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 14. 2.4.1.G1Saved Money Provides For YourFuture Self. and can increase in value!Time Value of Money -money available at thepresent time (today) isworth more than thesame amount if receivedMoneyTimein the future Interest Take Charge Today August 2013 Choose to Save Slide 14RateFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 15. 2.4.1.G1What is Interest?Interest rate percentagerate used tocalculateinterestWhen you dontwithdraw interestearned from anaccount theinterest earnsadditional interest Take Charge Today August 2013 Choose to Save Slide 15Interest the price ofmoneyInterest maybe earned orpaidDepositoryinstitutionsoffer secureaccounts tosave moneyCompoundinginterest earninginterest oninterestFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 16. 2.4.1.G1How Do Interest Rates Affect TheTime Value of Money?InterestRate$1,000 Saved for 5 Years with Compounding Interest$1,051.01 $1,159.27 $1,276.281% 3% 5% Take Charge Today August 2013 Choose to Save Slide 16More MoneyEarnedFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 17. 2.4.1.G1How Does Time Affect the TimeValue of Money?TimeMore MoneyCollege Savings FundFelix and his parentsSaved for: 18 years Started when he was bornContributed: $50/monthTotal Contribution: $10,800Savannah and her parentsSaved for: 4 years Started when she was a freshmanContributed: $350/monthTotal Contribution: $16,800Both earned the same interest rateBoth currently have the same balance (about $19,500)Savannahs parents Take Charge contributed Today August 2013 Choose to Save Slide significantly 17moreEarnedFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 18. 2.4.1.G1How Does Money Affect the Time Valueof Money?Money3% interest for 5 yearsPrincipal Value of Savings$100 $115.93$1,000 $1,159.27$10,000 $11,592.74 Take Charge Today August 2013 Choose to Save Slide 18Principal -original amountof money savedor investedMore MoneyEarnedFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 19. 2.4.1.G1Time Value of Money Magic!50454035302520151051Year 20Interest Earned: $111.07Amount Investment is Worth: $386.97Year 15Interest Earned: $79.19Amount Investment is Worth: $275.90Initial Investment (Principal): $100.00 at7% compounding interestYear 1Interest Earned: $7.00Amount Investment is Worth: 107.00Year 10Interest Earned: $56.46Amount Investment is Worth: $196.72$0.00 $1,000.00 $2,000.00 $3,000.00 Take Charge Today August 2013 Choose to Save Slide 19Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona0Dollar ValueYearsYear 5Interest Earned: $33.26Amount Investment is Worth: $140.26Year 50Interest Earned: $845.46Amount Investment is Worth: $2945.70 20. 2.4.1.G1Maximize Your Return!TimeSave for as longas possible!InterestRateMoneySave at the highest interestrate possible! Take Charge Today August 2013 Choose to Save Slide 20Save as much aspossible, as oftenas possible!Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 21. 2.4.1.G1My Saving QuestPart 3: Implementing My Saving QuestHow much can you realistically save each week?Write a goalSpecific Measurable Attainable Realistic Time-boundHow will you make the saving process automatic?How can your goal be reachedusing the time value of money? Take Charge Today August 2013 Choose to Save Slide 21Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 22. 2.4.1.G1Savings is an Essential Component of aFinancial PlanReducesnegativeemotionsaccomplishedwhenautomaticOpportunityfor savings toincrease invalue Take Charge Today August 2013 Choose to Save Slide 22Reduces futurefinancialuncertaintyRequirestrade-offs bemadeBestFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona