3. SQUARE: You are good with detail and tend to be very logical, analytical and task
oriented. You are good with savings and are able to stick to a structured plan.
RECTANGLE: You are good with detail but are more flexible than the square. You
are an organized team player and usually very fair. You are best at savings because
you are flexible and have a desire to involve family members.
TRIANGLE: You are a sharp powerful risk taker. You make lists and act. You control
your money but are willing to take risks with it. You have a ready-aim-fire personality
CIRCLE: You are a lover. You are nurturing, sensitive, talkative, and very social.
Plainly put, you are good with people. Because you are giving, you have difficulty
saying no and this is hard on your savings
SQUIGGLE: You are very open-minded and creative and have many friends. You
have a love of freedom but do not care for detail. You change quickly, so it may be
difficult to pin you down. Your spontaneity can make you an impulsive spender who
has difficulty saving.
4. Saving?
• 43% of Americans live paycheck to
paycheck
• 50% of Americans have less than
$1,000 in liquid assets
• Average household owes 20% more
than what it makes in one year
• National Saving Rate is 3.6%
6. Reasons to Save
Some reasons to save:
Retirement
Emergency Fund
Set aside
Buy things you need
“If you have a purpose for saving, you are most likely to save…”
8. "What are the most important
strategies for saving money?"
A. Time
B. Consistent Savings
C. Higher Rate (or rate of return)
D. Compounding
E. All of the Above
E. All of the Above
9. Put time on your side
$4,000 a year, 10 percent return
AGE BILL TOM
25 to 34 0 40,000
35-44 40,000 0
Amount invested 40,000 40,000
VALUE at age 45 68,850 186,380
10. Watch your Savings Grow
76,301
Save $50
a Month
With a
5% Yield
29,775
7,764
3,400
614
1 year 5 year 10 year 25 year 40 year
11. Rates of Return- How long?
A savings account pays a 4% Interest rate,
how long until your money doubles?
____72_______=
Dividend/Interest Rate
72 divided by 4 = 18 years
12.
13. What are your options?
• Regular Savings Accounts
• Money Market Accounts
• Holiday Savings Accounts
• Term Investments
• 401 K
• Traditional IRA
• Roth IRA
• Saving Bonds
15. Money Market Account
• Higher minimum opening balance
• Minimum balance required (higher balance)
• Dividends calculated on daily balances,
generally paid monthly
• Rates based on Balance Ranges
16. Term Investments Accounts
• Minimum opening balance required
• No additional deposits permitted in some cases
• Fixed Rate, higher rates for higher opening deposits
• 90 day to 10 year terms
• Penalty may apply for withdrawal of principal before
maturity date.
17. 401K
• Retirement Savings through workplace savings plan
• You can increase your take home pay (due to tax
deferrals)
• Some companies match your contributions
• Automatic payroll deduction makes it easy to save
• Most of your plan's investment choices are managed
by professionals
• Most plans allow access to your contributions in an
emergency
• Maximum pre-tax amount per year: 15,000 (in 2006)
• Catch-up contribution up to 5,000 (2006) when you are
turning 50
• Must take first withdrawal at 70 ½
18. Traditional IRA
• Traditional IRA contributions are generally tax deductible
• Annual Contribution is 4,000 for single individuals
• Distributions may begin at age 59½ and are required to begin at
age 70½.
• Distributions taken prior to age 59½ may be subject to a 10% IRS
early withdrawal penalty, exceptions:
– Purchase of a first home ($10,000 lifetime limit)
– Qualified higher education expenses
– Disability
– Death
– Substantially Equal Period Payments (early retirement)
• Medical exceptions
19. Roth IRA
• Contributions are not tax deductible
• Annual contributions of 4,000 individually
• Unlike the Traditional IRA, your Roth IRA earnings are tax-free when
distributed, rather than tax-deferred, if you meet certain criteria. This is a
great benefit when saving for retirement.
• Earnings from the Roth IRA are tax-free and penalty free if:
– The contributor has participated in a Roth IRA for at least 5 years and
– The contributor is at least 59½ years old, dies or is disabled, or if the
funds withdrawn are used to buy a first home.
• Contributions can continue past 70 ½ if still earning income.
21. Use Credit Wisely
• Bad debt means borrowing money strictly for
consumption purposes:
• Necessary debt means borrowing money to obtain a
home, a vehicle, or an asset needed in your work. (will
provide long term wealth)
22. Credit Card Balances
• Under 15%:
RELAX
• 15%-30%:
BE CAUTIOUS
• Over 30%
DANGER
23. The Cost of Credit
Outstanding balance $1,000.00
Interest rate 16.9%
Minimum monthly payment (2%) $20.00
Years to pay off 7 Years!
Interest cost over loan period $742.00
24. The Cost of Credit
Outstanding balance $1,000.00
Interest rate 16.9%
Minimum monthly payment $45.00
Years to pay off 2 years & 3 months
Interest cost over loan period $208.00
By paying just $25.00 more than the minimum,
you would save over $525 and be paid off 5 years earlier!
25.
26.
27. Revolving credit card crunch
1
A lower credit limit
Can increase
debt-to-credit
5 ratio
A higher balance
could mean an even 2
worse debt-to-credit A higher ratio leads to
ratio, an even lower a lower credit score
credit score and Ideally, a debt-to-credit
(about 1/3 of score)
even higher ratio should be below
rates 50 percent.
4
A higher rate means 3
your credit tab goes up A lower credit score
If the balance is not leads to higher
paid off each month interest rates
28. Use Credit Wisely
Only charge what you can pay in full
Eliminate late payment fees; pay on time
Understand terms and conditions of each card
