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Saving and Investing


Saving and Investing Unit 1 Lesson 5 Introduction People work hard to increase their take-home pay, but often they don t take time to plan and use their money wisely. – PowerPoint PPT presentation

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Title: Saving and Investing

Saving and Investing
  • Unit 1
  • Lesson 5

  • People work hard to increase their take-home pay,
    but often they dont take time to plan and use
    their money wisely. Smart money management means
    carefully planning for its use today as well as
    in the years to come, either through saving or
    long-term investing.

  • For many young adults, the opportunity cost of
    starting a savings program with a small income
    seems challenging. And, for those who choose to
    save, the number of options available can be
    overwhelming. This lesson will clear up some of
    the confusion by introducing various methods of
    saving, such as savings accounts, stocks, and
    mutual funds.

  • This lesson focuses on PYF Planning your
    future. At Finance Park, students will be
    required to save and track investments. PYF shows
    students how long-term investing can fund future
    needs and wants, such as automobiles, housing,
    college, and retirement.

Key Terms
  • Budget
  • An itemized summary of probable expenditures and
    income for a given period.
  • Opportunity Cost
  • The next best alternative given up when making a
  • Invest
  • To commit money in order to gain a profit or

Key Terms
  • Mutual Fund
  • A business that pools peoples money for
    investment in stocks or bonds of various
  • Savings Account
  • An interest-bearing account where people put
    money aside for future use.
  • Stock
  • A share of a corporation sold to the public.

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Planning Your Future
  • The pie chart shows typical expenditure
    categories in a budget.
  • It is extremely important that everyone uses a

Planning Your Future
  • To spend your money wisely, it is important to
    create and follow a monthly budget. Also
    important to smart spending is planning for the
  • You will be more successful in saving, investing,
    and budgeting if you know what you want your
    money to do for you. What are your goals? Do you
    want to save money for something you need or
    something that you want? Do you plan to use your
    money soon or to spend it sometime in the future?

Planning Your Future
  • Following a budget for everyday expenses is
    essential to spending your hard-earned money
    wisely. Including saving and investing in your
    budget helps to ensure youll meet your goals.
    The key to success is careful planning and
    sticking to that plan.
  • The first step to achieving your goals is to
    define them. Answering the following questions
    may prove helpful in developing a smart plan and
    ultimately reaching your goals.

Planning Your Future
  • What are your goals? Do you want a new bike or a
    car? Do you want to live on your own someday? Do
    you want to go to college? It is essential that
    you clearly define your goals to understand what
    you are planning.
  • How much money will you need to achieve your
    goals? Are your goals attainable?
  • When will you need the money? Will you need some
    right away or perhaps several years in the
    future? Knowing when you plan to use the money
    will help you determine how you will need to
    raise it.

Planning Your Future
  • One you have answered the questions, you are
    ready to create your saving and/or investing
  • Did you find that you need the money soon? If so,
    a savings account may need to be part of your
    plan. Putting money into a savings account is a
    safe way to save money and earn a modest interest
    rate. You have quick access to your money in a
    savings account.

Planning Your Future
  • Are you saving for college or furnishings for
    your apartment someday? If so, investing your
    money for the longer term may be an option.
    Stocks and mutual funds allow you to invest your
    money and earn, over time, a higher rate or
    return than money placed in a savings account.
    Stocks and mutual funds are not as safe as your
    savings account the money you put into these
    investments is not insured like your money in the
    savings account. You can lose part or all of the
    money you invest. However, stocks and mutual
    funds can pay you a greater return on your
    investment than the interest earned on your
    savings account. If you can wait to use the money
    and take the risk of investing, stocks or mutual
    finds may be the option for you.
  • Identifying your goals, understanding the best
    way to reach your goals, creating a plan, and
    staying with your plan are essential steps to
    ultimately getting what you want out of your

Writing Assignment
  • Page 23
  • Determine a goal, research its cost, and create
    the best plan for raising the money necessary to
    reach it.
  • Page 37
  • Complete the Word Map.

Time Is On Your Side
  • The larger the amount of money you save
    regularly, the more savings you will have at the
    end of the time period.
  • The higher the interest rate you are paid, the
    more savings you will have at the end of the time
  • The more time you have to save, the more savings
    you will have at the end of the time period.
  • The more you increase the amount, interest, or
    time the greater your savings.

Page 24
Time Is On Your Side
  • 1.) If you saved 14 per week at 5 interest, how
    much will you have at the end of 10 years?
  • 2A.) If you saved 19.20 per week for five years
    at 5 interest, how much will you have?
  • 2B.) After 20 years?
  • 3A.) If you saved 19.20 per week for five years
    at 10 interest, how much will you have?
  • 3B.) After 20 years?
  • 4.) Describe a wise savings plan in terms of the
    three critical variables of amount, interest, and

Page 24
Time Means Money
  • If you saved 19.20 a week
  • At 7 interest for 10 years, you would save
  • 14,484
  • At 9 interest for 15 years, you would save
  • 31,722
  • At 6 interest for 20 years, you would save
  • 38,632
  • At 8 interest for 5 years, you would save
  • 6,161
  • At 9 interest for 20 years, you would save
  • 56,029