Savings Basics
The amount of money you earn from keeping money in a savings account.
interest
The percentage of income the 50/30/20 rule suggests saving or using to pay off debt.
20%
The recommended amount to have in an emergency fund?
3-6 months of expenses
Tom deposits $2350 for 6 years at a rate of 2.77%. Find the simple Interest
$390.57
The savings balance equation for someone starting with $100 and saving $50/month.
y = 50x + 100
A key benefit of using a savings account
security and earning interest
The first step in “paying yourself first.”
setting aside money for savings before spending
common reason why many Americans struggle financially.
lack of emergency savings
What is the interest rate needed for $9500 to earn $900 in interest in 18 months? Round to nearest hundredth of a percent
6.32%
The number of months it takes to save $3000 with a monthly savings of $500.
6 months
The interest that accrues only on the principal?
Simple Interest
This common type of expense should be prioritized in your budget.
Needs
Nick brings home $1200 each week after taxes. Following the 50/30/20 rule, how much should he put towards emergency fund?
Pierre deposits $9000 into a CD that pays 1.4% interest, compounded semi-annually. How much interest does the account earn after 12 months?
$126.44
A financial benefit of using systems of equations.
comparing different savings plans
This financial term describes when someone spends their entire paycheck without saving.
Living paycheck-to-paycheck
The type of savings used for unexpected expenses.
Emergency Fund
One financial emergency that could require using your fund.
Medical bill or car repair
Janine opens up an account with a deposit of $720. The account pays 3.5% interest, compounded daily. What is the balance after 1 year?
$745.64
Sarah and Michael are college friends saving for a post-graduation trip to Europe. Sarah tutors, earning $15 per hour and works 10 hours a week. She saves 20% of her weekly earnings. Michael works at a restaurant, earning $12 per hour and works 15 hours a week. He also averages $50 in tips each week. He saves a flat $75 per week. Additionally, Michael received a $100 gift from his grandmother that he immediately put into his savings. How much money will each friend have saved after 12 weeks?
Sarah- $360
Michael- $1000
The budgeting rule that helps you allocate your income into needs, wants, and savings
50/30/20 rule
A reason why budgeting is essential.
financial stability and goal achievement
Maria is a recent college graduate who just started her first full-time job. Her monthly net income (after taxes and deductions) is $3,800. She wants to use the 50/30/20 rule to manage her finances effectively. Maria has $1,500 in credit card debt. How many months will it take her to pay off the debt if she allocates her entire "savings and debt repayment" budget to it?
Mike and Julia receive $20,000 in gifts for their wedding. They are deciding where to put their money. Account 1 has a 3% simple interest rate. Account 2 has a 3% interest rate compounded weekly. If they want to keep their money in the account for 4 years, how much more money would Account 2 have than Account 1?
$145.26
Two friends, Joe and Steve, are saving for a down payment on a shared apartment. Alex has an intial savings of $500 and plans to save $150 per week. Ben has $200 initally saved and plans to save $200 per week. How much more money will Ben have than Alex after 20 weeks?
$700