Pay Yourself First!

(Saving)

Why pay yourself first?  

Ho to do it..  

Key Takeaway  

Paid interest vs. Earned interest  

Accounts What is it? Benefits Costs

Savings      

Certificate
of Deposit      
(COD)

Money
     
Market
 Calculating Interest

Simple Interest  

Interest Earned = P x R x T
P = Principle (original amount)
Formula R = Rate (%)
T = Time
 

Compound Interest  

FV = PV × (1+r)n
where FV = Future Value
PV = Present Value
Formula
r = annual interest rate
n = number of periods
 

Help on calculating Compound interest

Simple interest calculator
Compounded Interest calculator

Independent practice

1. Create a fictional scenario for someone who should use a money market account for saving their money, much
like the scenarios we went over in the presentation.

2. Do the same as above for CED (certificate of deposit).

For the following problems, calculate the simple interest and provide the ENDING BALANCE. See below for
example.

$34,000 at 4% for 3 years

P is the principal amount, $34000.00.
r is the interest rate, 4% per year, or in decimal form, 4/100=0.04.
t is the time involved, 3....year(s) time periods.
So, t is 3....year time periods.
I=P x R x T BUT! You will add the principle amount back after finding the interest.
I = 4,080
$34,000 + 4,080 = $38,080
 1. $210 at 8% for  years

2. $4,000 at 3% for  years

3. $43,800 at 4.8% for  years

4. $7,400 at 10.5% for ¼ years

For the following, calculate total value of investment after the time given.. See below for example.

$7,300 at 7% compounded
semiannually for  years
A = $ 8,973.56

A = P + I where
P (principal) = $ 7,300.00
I (interest) = $ 1,673.56
P = I = Answer $7,300 + 1,673.56 = $8,973.56

1. $55,000 at 16% compounded semiannually for  years

2. $21,000 at 13.6% compounded quarterly for 4 years