Savings Accounts

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What is a savings account?

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A savings account is a deposit account held at a financial institution that provides a modest interest rate. It is designed for individuals to save money while earning interest.

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What is simple interest?

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Simple interest is calculated on the principal amount of a loan or deposit, and it does not take into account the effect of compounding.

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How do you calculate simple interest?

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Simple Interest = Principal x Rate x Time. For example, if you deposit $300 at a 5% annual interest rate for 3 months, the interest earned is $300 x 0.05 x (3/12) = $3.75.

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What is the purpose of an emergency fund?

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An emergency fund is savings set aside to cover unexpected expenses or financial emergencies, typically recommended to be 3-6 months of living expenses.

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How do you prioritize saving money?

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The best way to prioritize saving money is to 'pay yourself first' by setting aside a portion of your income for savings before covering other expenses.

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What is the total deposit if you have checks for $295.50 and $6.25, and you want to withdraw $5.00 in cash?

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Total Deposit = $295.50 + $6.25 - $5.00 = $306.75.

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What is the formula to find the total amount deposited from multiple checks?

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Total Deposit = Sum of all checks deposited.

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What is the significance of the interest rate in a savings account?

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The interest rate determines how much money you earn on your savings over time. A higher interest rate means more earnings.

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What does it mean to 'pay yourself first'?

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'Pay yourself first' means to allocate a portion of your income to savings before spending on other expenses.

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What is the impact of making regular deposits into a savings account?

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Regular deposits increase the total balance in the savings account, leading to more interest earned over time.