Savings

Front

What percentage of your pay do you need to save to buy a $1,200 laptop in 12 months if your monthly take-home pay is $500?

Back

20%.

Front

What is an effective strategy for personal saving?

Back

Save a certain percentage of each paycheck and deposit it directly into a savings account.

Front

If Stanley deposits $1,000 into a savings account with simple interest, what is the basis for year two's interest?

Back

The original deposit ($1,000) for simple interest; The year one account balance ($1,010) for compounding interest.

Front

When a bank states their savings account earns 1% interest, over what period of time is this typically calculated?

Back

Annually.

Front

What is the primary difference between saving and investing?

Back

Saving goes into an FDIC insured bank while investing typically goes into stock or bond markets.

Front

How much would you need to save each month to buy a $1,200 laptop in one year with a monthly income of $500?

Back

$100 per month.

Front

What is the formula to calculate the percentage of income to save for a specific goal?

Back

(Goal Amount / Total Income) x 100.

Front

What does FDIC stand for and why is it important for savings?

Back

Federal Deposit Insurance Corporation; it insures deposits in banks, protecting your savings.

Front

What is simple interest and how is it calculated?

Back

Simple interest is calculated on the principal amount only; Formula: I = PRT (Interest = Principal x Rate x Time).

Front

What is compounding interest?

Back

Interest calculated on the initial principal and also on the accumulated interest from previous periods.