troy public library creating an account learning to budget review presented by greenpath

Troy Public Library

Creating an AccountLearning to Budget

REVIEWPRESENTED BYGREENPATH

Two Main Products Offered by Financial Institutions

• Transaction Accounts-An account from which payments can be made to a third party

• Deposit Accounts-An account that earns interest and usually has some restriction regarding withdrawals

Transaction Accounts Checking

• Transactions Accounts– Lifeline checking– Basic checking – Relationship checking– Student/Senior checking – Express checking– Interest-bearing checking– Rewards checking

• Deposit Accounts– Basic Savings– Money Market Accounts– Mutual Funds– Certificate of Deposit

Saving and Investing• Savings Accounts• Certificates of

Deposit• Money Market

Account

• Mutual Funds• Bonds• Stocks• Annuities• Real Estate

New WorthActivity

Troy Public Library

Emergency FundsPRESENTED BYGREENPATH

“Why do I need an emergency funds”• Feel more financial secure

• Provides ability to deal with financial emergencies and get back to normal quickly

• Helps avoid taking on debt with interest charges (credit card) for repairs or emergency purchases

“Why do I need goals and savings”

• Savings for short term goals—those you hope to achieve in a year or two– Vacation or travel– Down payment on a house or car

• Savings for major purchases you plan to make– Replace a large appliance– Computer or large electronics

Liquidity

Click icon to add picture

how easily you can turn an investment or savings into cash

Dena Wise, Ph.D.Professor, Family & Consumer SciencesUT Extension, Knoxville, Tennessee

Portions of this presentation were adapted from “Money Crunch,” by Robin Moody, Dena Wise and Ann Berry, FINRA/The University of Tennessee Extension, 2007.

Financing Your Goals

Where should I keep my emergency savings and savings for short term goals?

Let’s Explore the Possibilities!

Emergency/Major Purchase Fund

• Set aside some extra money in a safe and liquid account to cover emergency expenses and short term financial goals.

– Car repairs– Replacing appliance– Covering expenses if you are

temporarily without work– Major purchases you plan to make

within a year or so

How Much?How Much Should You Keep in the Emergency/Short Term Goals Fund?

Don’t keep excessive amounts in the fund because short term savings options have the lowest rate of return.

Short Term Options (for

emergency fund and major purchases)

–Traditional Bank Savings Accounts–Money Market Accounts–Certificates of Deposit

(CDs)

Savings Account• Most liquidity means you can

most easily access your money

• No penalties for withdrawals and transfers

• Lowest return on investment / lowest earned interest rate

Money Market• Similar to a traditional savings

account

• Minimum deposit required

• Limited withdrawals per month

• If balance falls below minimum, you will lose the higher interest rate

Certificates of Deposit• Available in 6 month increments up

to several years

• Often a minimum deposit – but low enough to be affordable

• Penalty for cashing in early

• Highest short term returns

Where to Keep the Fund

1-2 months’ savings• Savings account• Money market

account (at bank)

3-6 months’ savings• Bank CD• Money market

mutual fund• Treasury bill

T.N. & C.J.’s Emergency Situations

T.N. & C.J.’s Emergency!

Dena Wise, Ph.D.Professor, Family & Consumer SciencesUT Extension, Knoxville, Tennessee

Portions of this presentation were adapted from “Money Crunch,” by Robin Moody, Dena Wise and Ann Berry, FINRA/The University of Tennessee Extension, 2007.

Troy Public LibraryFinancing Your Future