Factors
that affect how much your money will grow in a savings
account.
Question:
Let's
say you want to buy a new computer in two years.
It will cost you $800 and you have $250 to start.
What's
the best and safest way to make your money grow
and reach this goal?
WHAT
DO YOU THINK????
Play the lottery
Save your money under your mattress
Loan your money to your friend and charge him 10% interest
Put your money in a savings account
If
you play $5 a week for two years...
If
you add $5/week for two years..
If
you add $5/week for two years... (Since there are 52 weeks
in a year, this equals about $22 a month)
Note:
Assume an interest rate of 2.5%
What
is interest??
Answer:
Interest
is a kind of fee that is paid to you for keeping
your money in a savings account. It's usually
expressed as a percentage-like 5%. So, for
example, if you start with $100 and your account
has an annual interest rate of 5%, at the
end of the year, you will have earned $5 (for
a total of $105) just for keeping your money
in the account. The higher the interest rate,
the more money you'll earn.
So,
you see, it makes sense to put your money in
a savings account!
1.
You
earn interest when your money is in a savings
account.
2.
Your money is safe when it is in a savings account.
Both the NCUSIF
(the National Credit Union Share Insurance Fund)
and FDIC
(the Federal Deposits Insurance Company) guarantee
that you won't lose your money your financial
institution. If anything happens to your institution,
these agencies will repay you for the money
you lost up to $100,000.
EXPLORATION
Where
do you save your money?? Take
a moment to write down all the places where people can save
money.
A
bank is a financial institution where people save
their money. Banks offer services such as savings
accounts, checking accounts and CDs
(certificates of deposits). Banks make money by
charging fees for these services. Banks usually
pay slightly higher interest for money stored
in a savings account, because they know that they
will have the money in their possession for a
longer period of time.
A
credit union is a financial institution that is
owned by its members. Credit unions offer services
such as savings accounts, checking accounts and
CDs. The members
of the credit union decide how much is charged
for each financial service. A member of a credit
union usually lives, works, or worships in the
same community. When you join a credit union,
you become part owner of the credit union.
Question:
So,
now that you know about financial institutions
and interest rates, what are some of the factors
that you'll need to keep in mind to figure out
how much you'll need to save each month?
Answer:
The
factors that affect how much your money can
grow are:
1.
The amount of money you deposit in your
savings each month.
2. The amount of time your money stays in
the bank.
3. The rate of interest earned on savings,
such as 5%.
Money
Center 
Saving
Money
