Saving Worksheet

1. It is a good idea to save a portion of your money each month in case of

emergencies like a car repair or medical bills.
2. Category Example
Everyday Expenses household goods
Short-term Emergencies! car repair
"ong-term College! tuition# books# fees
"onger-term $etirement! travel# living expenses
%. Interest is the extra amount you have to pay back to the lender
bank&credit card company! for borro'ing money.
(. )utting money in the bank is al'ays a better idea because it is
federally insured and you 'ill earn interest on the balance. *he more
money you have in your account# the more interest you 'ill earn+
,ctivity
1. Compound interest is the interest paid on both the principal and on
the accrued interest.
2. ,. -1#... /. -2..#...
0. 1.1 interest E. -12.#...
C. (. years
$etirement Short ,ns'er!
, $oth I$, is a tax-free# interest-earning# retirement savings account. It
is a smart idea to open one as soon as possible because your money earns
interest as you contribute. *he longer you have the $oth I$,# the more you
'ill earn. 3ou don4t even have to pay taxes on it 'hen you 'ithdra' funds or
cash out unless you 'ithdra' on the earned interest not personal
contributions! before you are 56 7 year old. *he bene8ts of a $oth I$, are
that it is more 9exible than other retirement savings plans# including (.1:s#
and you can invest 'henever you 'ant in 'hatever you 'ant. 3our money
gro's over time because the more you invest the more interest you 'ill
earn.
;o'ever# there are some limitations on the $oth I$,. *he government
limits ho' much you are allo'ed to contribute each year. ,s of 2.1(# the
maximum allo'able contribution 'as -5#5.. annually. In addition to this# you
can only make contributions from earned income. *his means that if you
inherit or have money left over from a student loan# it is not an eligible
contribution. ,lso# you cannot save more than you earned< so if you only
earned -(#...# you cannot contribute more than -(#.... =inally# you must
earn no more than -11(#... annually if you are single or -1>1#... annually
if you are married.
,ctivity? ,t age 25 your account balance 'ill be -1#.21#2.%. 3ou4ll then be
able to 'ithdra' -25#@(2 annually for %. years.