Savings & CDs Money Sense Tips

What are the Advantages of Saving?

• Attaining short and long-term goals
• Accumulating enough to go on vacation or purchase a car
•  “Back-up” money in case of an emergency (“rainy day fund”) 

 Keys to Using Your Money Wisely to Create $AVINGS

1. Write down clear and concise goals for today, tomorrow, and the years ahead
2. Differentiate between “needs” and “wants”
3. Figure out where your money is going now and where you would like it to go in the future
4. Create a spending plan and stick with it
5. PAY YOURSELF FIRST
   1. Figure out how much you need to pay in bills every month
   2. Create a NEW bill to yourself for some percentage of what is left over after you have paid all your bills
   3. Pay that bill to yourself directly into your savings account so that you don’t consider that money as “spendable”
   4. Then use the remaining amount of money for other goods and services you want

Why should I put my money in a savings account?

Money in savings accounts earns interest, which is a certain percentage that is added back to the initial sum as long as the money stays in the account.

Additionally, when you earn compound interest, you earn interest on both the money that you put into the account AND the interest that your money has earned

When your interest is earning interest, you know that your money is really working for you!!!

If you invest $1,000 in a savings account at the rates of interest below, you will have:

How much money per day should I save in order to save $1,000 a year?

$1,000/12 months = $83.33/month

$83.33/4 weeks = $20.83/week

$20.83/7 days = $2.98/day

How long will it take to double my money?

The rule of 72 is a nifty guide to figure out how hard your money is working for you. It is sometimes difficult to determine how your money is impacted by a small percentage change in interest.  For example, there doesn’t seem to be a large difference between 5% and 6%, right?

In fact, interest rates make a big difference. To see how long it will take for your money to double at a particular interest rate, take the number 72 and divide it by the interest rate:

72 ÷ interest rate = number of years for your money to double

5% interest: 72/5 = 14.5 years

6% interest: 72/6 = 12 years

10% interest: 72/10 = 7.2 years

12% interest: 72/12 = 6 years