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Checking Savings Investments

Banking. Checking Savings Investments. Checking Account. 90% of transactions involving money are made with checks. What is a check?.

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Checking Savings Investments

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  1. Banking Checking Savings Investments

  2. Checking Account • 90% of transactions involving money are made with checks.

  3. 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.

  4. 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?

  5. 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

  6. Deposit slips • What 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.

  7. Writing a check • Write today’s date • Pay to the order…(name of person, company you are paying) • Amount of check in numerical numbers • Amount of check in written words • Signature • Memo / for …what is the check for? Or the purpose of the check

  8. Cashing a check • What happens if you don’t 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?

  9. Check Register • What is a check register? • Why is it important to keep track of checks you write and deposits you make?

  10. How to fill out a check register • Give 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.

  11. Bank Statement • What is a bank statement • Why is it important to reconcile your bank statement total with your total in your check register?

  12. If you had $10,000 where would you save it until you needed it? A. Bank – savings account B. Mutual funds C. Tin Can in your basement or under your bed

  13. Why should you save money 1. We can reach our financial goals 2. Cover emergencies 3. Make major purchases 4. Provide for retirement.

  14. 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' income • Be aware of why you are saving • Security of the principal • Return • Liquidity • Convenience • Tax status

  15. INVESTMENTS FOR INCOME AND GROWTH • Share Account • Personalized Savings accounts • CD • Money-market deposit accounts • IRA – traditional, Educational, Roth • Stock • Mutual Funds

  16. Stocks • Preferred stocks--Dividends 2. Common stocks--Common

  17. Other options • BONDS • MUTUAL FUNDS • COMMODITIES • GOLD, SILVER, COLLECTIBLES

  18. Rule of 72 • Divide 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

  19. Retirement Plans • Taxed: CD accounts, Mutual Funds, Stock • Taxed deferred: 401 K, 403 B, IRA, Pension • Tax free: Roth IRA and Variable Life Insurance

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

  21. Loans • Personal • Auto • RV • Mortgage • Home Equity Credit • Student

  22. PERSONAL LOAN: • 1. SecuredYou use your savings account or certificate of deposit as collateral. You can borrow against the amount you have on deposit. Low interest rates. • 2. UnsecuredAn 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

  23. What determines if a financial institution with loan you money? • Debt to Income Ratio • Credit Report • FICO Score • BK Score • Proof of line of credit

  24. Debt to Income Ratio How to determine your loan Monthly Income (after taxes) Current Monthly Payment obligations rent credit card other loans total obligation Income divided by obligations: should be lower than 40% Maximum loan payment

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