Saving for the Future
The best reason to save money is to provide for future needs, both expected and unexpected.
Short-Term Needs - Expenses beyond your regular monthly items. These expenses often come from the savings account. (Emergencies, Vacations, Social Events, Repairs, and Major Purchases)
Long-Term Needs - Expenses that are costly and require years of planning and saving. These include things like Home Ownership and Education.
Scholarships - Cash allowances awarded to students to help pay education costs. Scholarships are awarded usually for scholastic achievement and athletic achievement. Scholarships usually require students to meet certain standards, such as maintaining a certain GPA.
Student Loans - Money borrowed for your education. Student Loans are available from the federal government or from other lenders, such as banks. Many students will acquire many loans throughout their years of study, and they consolidate them. Loan consolidation means that all their student loans are combined into one large loan, which results in one monthly payment, rather than many payments.
Grants - Forms of educational funding, usually funded by the government, that do not have to be repaid and usually do not require students to maintain certain standards.
How Money Grows
Principal - The amount of money you deposit into a savings account. This is the base on which your money will grow. For the use of your money, the financial institution pays you money called Interest. This is known as Compound Interest, or interest paid on the original principal plus accumulated interest.
Short-Term Needs - Expenses beyond your regular monthly items. These expenses often come from the savings account. (Emergencies, Vacations, Social Events, Repairs, and Major Purchases)
Long-Term Needs - Expenses that are costly and require years of planning and saving. These include things like Home Ownership and Education.
Scholarships - Cash allowances awarded to students to help pay education costs. Scholarships are awarded usually for scholastic achievement and athletic achievement. Scholarships usually require students to meet certain standards, such as maintaining a certain GPA.
Student Loans - Money borrowed for your education. Student Loans are available from the federal government or from other lenders, such as banks. Many students will acquire many loans throughout their years of study, and they consolidate them. Loan consolidation means that all their student loans are combined into one large loan, which results in one monthly payment, rather than many payments.
Grants - Forms of educational funding, usually funded by the government, that do not have to be repaid and usually do not require students to maintain certain standards.
How Money Grows
Principal - The amount of money you deposit into a savings account. This is the base on which your money will grow. For the use of your money, the financial institution pays you money called Interest. This is known as Compound Interest, or interest paid on the original principal plus accumulated interest.
Regular Savings Account
A regular savings account has a major advantage - high liquidity.
Liquidity - A measure of how quickly you can get your cash without loss of value. A regualar savings account is said to be very "liquid" because you can withdraw your money at any time without a penalty. The tradeoff for high liquidity is lower interest rate.
Money Market Account
A money market account is a type of savings account that offers a more competitive interest rate than a regular savings account.
There are two different kinds of money market accounts:
- Money market deposit accounts
- Similar to a regular savings account, but it offers a higher rate of interest in exchange for larger than normal deposits.
- Money market funds
- A type of mutual fund that invests in low-risk securities.
Direct Deposit - Your net pay is deposited electronically into your bank account automatically. This service helps you because your money is availiable in your account faster.
Automatic Deductions - Represent money you have authorized your bank or other organization to move from one account to another at regular intervals.
Payroll Savings Plan - You authorize your employer to make automatic deductions from your paycheck each pay period.
Here are a couple of links you might be intrested in checking out:
Bank of America
Capital One
The Wall Street Journal
A regular savings account has a major advantage - high liquidity.
Liquidity - A measure of how quickly you can get your cash without loss of value. A regualar savings account is said to be very "liquid" because you can withdraw your money at any time without a penalty. The tradeoff for high liquidity is lower interest rate.
Money Market Account
A money market account is a type of savings account that offers a more competitive interest rate than a regular savings account.
There are two different kinds of money market accounts:
- Money market deposit accounts
- Similar to a regular savings account, but it offers a higher rate of interest in exchange for larger than normal deposits.
- Money market funds
- A type of mutual fund that invests in low-risk securities.
Direct Deposit - Your net pay is deposited electronically into your bank account automatically. This service helps you because your money is availiable in your account faster.
Automatic Deductions - Represent money you have authorized your bank or other organization to move from one account to another at regular intervals.
Payroll Savings Plan - You authorize your employer to make automatic deductions from your paycheck each pay period.
Here are a couple of links you might be intrested in checking out:
Bank of America
Capital One
The Wall Street Journal