NDSU Extension Service - Ramsey County


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Saving $$$ to Achieve Your Goals

Saving $$$ To Achieve Your Goals


          Savings are one of the cornerstones of building financial security. The reasons for saving vary and are influenced by your age, income, job, stage in the life cycle and number of children.

          A primary goal of any savings program is to establish a fund to cushion the impact of emergency expenses. Saving is important for reaching any short and long-term goals you may have.

          How much to save will depend on your reasons for saving. It will also depend on your special family circumstances and on how much is needed to reach your specific goals.

          Just thinking about the lump sum required to reach any one of the goals may be overwhelming. Change your approach! Break the lump sum down into smaller amounts that can realistically be saved each pay period.

          Saving and investing are not interchangeable terms, although many people use them that way. Savings instruments experience virtually no risk for either the principle (the dollar amount placed in the instrument) or the interest (amount earned on the principal of a loan). Typical savings instruments include passbook savings accounts, savings bonds, money market deposit accounts and certificates of deposit.

          Examples of investments include stocks, bonds, mutual funds or other securities. These types of investments guarantee neither return of the principal nor earnings. For these reasons, investing may be speculative and involve a high degree of risk. But, there is the possibility of a greater return on your money than with savings investments.

          The main purpose of both saving and investing is to increase your financial assets. Before beginning an investment program, you should have a sound financial base which includes risk protection (insurance) and an emergency savings fund of two to six months take home pay.

          The “Rule of 72” is an easy way to estimate how long it will take for your investment to double. To use it, divide the number 72 by the interest rate (APR). Assuming all interest will be reinvested (compounded), the result will be the number of years it will take for your money to double.

For example, 72 ÷ 5.00% = 14.40 years

          How much you can save will always be a battle between current wants and future needs.           Successful savers know that one of the keys to acquiring wealth is to make your money work for you. Setting aside a portion of your earnings on a regular basis and placing it in interest bearing accounts will help you reach those all-important goals!


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