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Zack explains how to save a Word document on your computer for better organization and backup. He starts with an unsaved document and demonstrates the process by accessing the file menu, selecting "Save As," or using the shortcut Ctrl + S. He navigates to the Documents folder, creates a new folder named "School 2014," and titles the document "Test Document" before saving it in that folder. After saving, Zack confirms that the document can be closed without losing any data. He finishes by showing that the "School 2014" folder can be found in the Explorer window under Documents.