Unit 3 - Finance
Savings:
It allows you to enjoy greater
security in your life. If you
have cash set aside for
emergencies, you have a
fallback should something
unexpected happen.
Types of Banking:
Commercial/ Retail: Making or
intend to make a profit.
Investment: the action or
process of investing money for
profit or material result.
Credit Unions
Credit Union:

A credit union is a member-owned financial cooperative, controlled by its members and

operated on the principle of people helping people, providing its members credit at
competitive rates as well as other financial services

Why do we need to invest our money?

In order to build your wealth, you will want to invest your money. Investing allows you to put
your money in vehicles that have the potential to earn strong rates of return.

Difference between simple and compound interest?

Simple interest is calculated on the principal, or original, amount of a loan. Compound interest
is calculated on the principal amount and also on the accumulated interest of previous
periods, and can thus be regarded as "interest on interest."
Understanding the Rule of 72:
The Rule of 72 is a calculator that uses a formula that estimates the number of
years it takes to double your money at a specified rate of return. For example, your
account earns 4 percent, divide 72 by 4 to get the number of years it will take for
your money to double.

Formula:

72/Rate of Return = Time for investment to double.

Division of money:
It is important to divide money and savings in a justified matter to live a secure
life, a good template to look at:

35% - Rent.

30% - Grocery and other living expenses.

15% - Utilities and Insurance.

10% - Pay debt or extra cash.

10% - Pay yourself !!