CREDIT AND BUDGETS

MONEY

• Each person makes unique decisions about money

• Most people have a mixture of different attitudes, values and beliefs about money.

• Statistics show that the average person earns $1.5 million.

• The question becomes, what do you do with the money you earn throughout your life?

MONEY

• Earning–Making money through investments,

employment, etc.

• Budgeting– Deciding how to save, use, and invest your

money.

• Time-value of money– Saving– Spending– Compound interest

SAVINGS

• In banking:– Banks offer savings accounts as a place

to safely store your money for future purchases.

–Why do this?– Banks offer interest on your savings

accounts in order to attract you to do business with them.

– Interest rates vary per account created.

SAVINGS

Bank of America & Wells Fargo Standard Savings Account

Minimum

Balance: $300 per day

Penalty for less

than $300:

$5

Interest Rate: 0.01%

INTEREST

• Money that is added to the principal.– Used as a means of making profit or incentive for

banks.

• Debt– Interest is used as a means to make profit on loaned

money.

• Bank Accounts– Interest is used as an incentive to keep your money

within the bank.

• Compound Interest– Interest that is added to the principal, so that the

interest also earns interest at any given timely interval.

COMPUND INTEREST

• Principal: $1000• Interest Rate: 15% compounded annually• Total after one year: $1150

One year passes…

• Principal: $1150• Interest Rate: 15% compounded annually• Total after one year: $1322.50

• Table on page 320.

CREDIT

• Money lent for any purchase.• Usually used for large purchases.• Balance due at end of next billing cycle.• Minimum payment required to avoid

penalty.• Credit Score: Shows your level of risk

when people lend you money.– Higher value means you are less likely to be

late or not make your payments.

• Loans & Credit Cards

CREDIT (WELLS FARGO STANDARD)

CREDIT (BANK OF AMERICA STANDARD)

CREDIT (BANK OF AMERICA STANDARD)