Checking Savings Investments

Checking Account90% of transactions involving money are made with checks.

What is a check?When opening a checking account at a financial institution the customer enters into a contractual agreement that allows the customer to deposit money in the bank and to write checks on that account. The financial institution agrees to maintain the account, provide records, and honor checks. Checks are safe, convenient, and provide a receipt for proof of payment.

Why is writing checks important?

Why would you want to use a check instead of cash?

What do people buy or pay with checks?

If you pay with a check when do you actually pay the money?

TYPES OF CHECKING ACCOUNTS:MINIMUM BALANCE ACCOUNTS FAEE CHECKING ACCOUNTS COST-PEA-CHECK ACCOUNTS "NOW" (NEGOTIABLE ORDER OF WITHDRAWAL ACCOUNTS) MONEY MARKET DEPOSIT ACCOUNTS ("MMDAs") SHARE DRAFT ACCOUNTS

Deposit slipsWhat is a deposit slip?

Why do you use a deposit slip?

When you deposit money, where does your money actually go?

To fill out a deposit slip you would fill in the date and the amount of the deposit.

Writing a checkWrite todays datePay to the order(name of person, company you are paying)Amount of check in numerical numbersAmount of check in written wordsSignatureMemo / for what is the check for? Or the purpose of the check

Cashing a checkWhat happens if you dont have a checking account? Where can you go to cash your check?If you cash it at your bank can you always have your money immediately? What would prevent you from cashing your whole check instead of depositing it?

Check RegisterWhat is a check register?Why is it important to keep track of checks you write and deposits you make?

How to fill out a check registerGive students several expenses (place and total), or you can just have them right checks out to the place they would buy gas, favorite place to buy close, and favorite entertainment place (food or activity).Have students practice writing checks.Hand out sample paychecks.Have students fill out a deposit slip.Record transactions into their check registers and balance their register book.

Bank StatementWhat is a bank statementWhy is it important to reconcile your bank statement total with your total in your check register?

If you had $10,000 where would you save it until you needed it?A. Bank savings accountB. Mutual fundsC. Tin Can in your basement or under your bed

Why should you save money1. We can reach our financial goals2. Cover emergencies3. Make major purchases4. Provide for retirement.

When saving money:Pay yourself first (fixed expense)A good basic savings plan should include:1. A specific amount set aside regularly.2. An emergency fund equal to three to six months' incomeBe aware of why you are savingSecurity of the principal Return Liquidity Convenience Tax status

INVESTMENTS FOR INCOME AND GROWTHShare AccountPersonalized Savings accountsCDMoney-market deposit accountsIRA traditional, Educational, RothStockMutual Funds

StocksPreferred stocks--Dividends

2. Common stocks--Common

Other optionsBONDSMUTUAL FUNDSCOMMODITIESGOLD, SILVER, COLLECTIBLES

Rule of 72Divide 72 by the interest rate to estimate the number of years it takes for your money to double.

For example:At 6% your money will double in 12 years

Retirement PlansTaxed: CD accounts, Mutual Funds, StockTaxed deferred: 401 K, 403 B, IRA, PensionTax free: Roth IRA and Variable Life Insurance

Savings vs. BorrowingShould I borrow?Amount borrowed$4,000.00Finance Rate 9.5%Term 24 monthsMonthly Payments $183.66 x 24$4,407.84 Finance charge $407.84 Or should I save?Amount needed$4,000.00Rate 4%Monthly payments to savings account $183.66 Time to accrue $4,000.00 ($4,001.47) 21 monthsor $4,596.26 24 months

LoansPersonalAuto RVMortgageHome Equity CreditStudent

PERSONAL LOAN:

1. Secured You use your savings account or certificate of deposit as collateral. You can borrow against the amount you have on deposit. Low interest rates.2. Unsecured An unsecured loan allows you to borrow without collateral. Your loan amount will be based on your income and ability to repay. Interest rates will be higher

What determines if a financial institution with loan you money?Debt to Income Ratio

Credit ReportFICO ScoreBK ScoreProof of line of credit

Debt to Income RatioHow to determine your loanMonthly Income (after taxes)Current Monthly Payment obligationsrentcredit cardother loanstotal obligation Income divided by obligations: should be lower than 40%Maximum loan payment