troy public library creating an account learning to budget review presented by greenpath
TRANSCRIPT
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Troy Public Library
Creating an AccountLearning to Budget
REVIEWPRESENTED BYGREENPATH
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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
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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
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Saving and Investing• Savings Accounts• Certificates of
Deposit• Money Market
Account
• Mutual Funds• Bonds• Stocks• Annuities• Real Estate
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New WorthActivity
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Troy Public Library
Emergency FundsPRESENTED BYGREENPATH
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“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
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“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
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Liquidity
Click icon to add picture
how easily you can turn an investment or savings into cash
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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.
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Financing Your Goals
Where should I keep my emergency savings and savings for short term goals?
Let’s Explore the Possibilities!
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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
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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.
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Short Term Options (for
emergency fund and major purchases)
–Traditional Bank Savings Accounts–Money Market Accounts–Certificates of Deposit
(CDs)
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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
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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
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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
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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
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T.N. & C.J.’s Emergency Situations
T.N. & C.J.’s Emergency!
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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