Chapter 2 Saving 2 1 Saving An Exercise

+ Chapter 2: Saving

+ 2. 1 Saving: An Exercise in Character

+ The Five Foundations 1. Save a $500 Emergency Fund 2. Get out of Debt 3. Pay Cash for Your Car 4. Pay Cash for College 5. Build Wealth and Give Next to each foundation, write down a way you could make this happen.

+ America’s Savings Rate

+ America’s Saving Rate We are reactionary!!!!

+ Saving for an Emergency Fund n The first foundation is $500 in an emergency fund n Your expenses are different than your parents… think broken cell phone or flat tire n 78% of people will experience a major negative event in a 10 year time period n An emergency fund is your money for surprise expenses which prevents you from going in to debt. n Debt never solves a problem.

+ Saving for an Emergency Fund n When you’re on your own, you’ll want to grow your fund to 3 -6 months of expenses. n Will your emergency fund always be the same? n This money should be kept in the bank only! n Could be in a separate savings account.

+ Saving for an Emergency Fund n Saving $500 quick – How can we do this? n Starting your own business Name Business Age Worth Sean Belnick Sells furniture online 14 $42 mill Fraser Doherty Super. Jam 14 $2 mill Cameron Johnson Greeting cards 9 $3. 2 mill Juliette Brindack “Miss O” books and website 10 $15 mill Farrah Gray Body lotion and food service 6/13 $20 mill

+ Journal Question n What has kept you from saving in the past? How might you change this?

Savings by Nation Household Saving Rates 20 Percent Saved 15, 8 15 12, 1 10, 6 13, 6 12 10 5 3 4, 5 5, 4 4 1, 9 Find the mean and median for this data. . S. U U . K. 0 C an ad a Fr an ce G er m an y Ita ly Ja pa Po n rtu ga l Sp Sw a itz in er la nd +

Savings by Nation Household Saving Rates 20 Percent Saved 15, 8 15 12, 1 10, 6 13, 6 12 10 5 3 4, 5 5, 4 4 1, 9 . S. U U . K. 0 C an ad a Fr an ce G er m an y Ita ly Ja pa Po n rtu ga l Sp Sw a itz in er la nd + With a take home pay of $40, 000 how much would a family in Japan save? France? The U. S?

+ 2. 2 Three Basic Reasons to Save

+ Three Basic Reasons 1. Emergency Fund 2. Make Purchases 3. Build Wealth

+ Emergency Fund and Purchases 1. Emergency Fund 2. Purchases n Emergencies are going to happen. Period. n Instead of borrowing, use a sinking fund. n Leave. It. Alone. n n Is saving just a few dollars a month worth it? Think of something that you need or want… n How much is it going to cost? n How long do you have to save for it? n Cost ÷ Months = $/month to save

+ 3. Wealth Building n You need discipline if you want to build wealth. n Wants vs. needs and compromise n Building wealth is a marathon, not a sprint n When should you start building wealth?

+ Journal Question n. Why do you think so many people borrow money for large purchases instead of using a sinking fund?