Managing Your Cash

1. Managing Your Cash

2. Did You Know? • How do small amounts of money saved and invested easily grow into larger sums?? • INTEREST!! Money invested earns interest • The profit made on money invested.

3. Cash Management Cash Management • The daily routine of handling money to take care of individual or family needs

4. Cash Management Effective cash management includes having available money for: • Living expenses • Emergencies • Savings • Investing

5. Cash Management Tool Cash Management Tool • A financial account used to assist with daily cash management

6. Checking Account • Use: Tool used to transfer funds deposited into an account to make a cash purchases, write checks, and make ATM withdrawals • Interest: Most checking accounts do not pay interest • Accessibility: Money can be withdrawn at any time

7. Savings Account • Use: Tool used to hold or store money for emergencies or large purchases • Interest: Does earn interest • Accessibility: Money can withdrawn at any time

8. Certificate of Deposit (CD) • Use: Tool used to invest money on a short-term basis. A CD has a set term (1-5 years) • Interest: Does earn interest! But rates vary. The longer the length of the term, the higher the interest rate • Accessibility: Restricted access to the funds, must keep money in CD for the full term or pay penalties ):

9. Cash Management Tools

10. Liquidity Liquidity • How quickly and easily an asset can be converted into cash • Liquid assets are important for emergencies when cash must be quickly accessed

11. Liquidity Most Liquid Least Liquid

12. Low Risk These three cash management tools are LOW RISK: • Funds in these type of accounts are insured by the Federal Deposit Insurance Corporation (up to $250,000) • However, they have lower interest rates which causes low earnings

13. Checking Account Tools • Debit Card • Withdraw money from an Automated Teller Machine (ATM) • Plastic card that looks like a credit card • Electronically connected to a bank account • Money is automatically taken from the bank account when purchases are made • Requires a PIN (personal identification number) • Confirms the user is authorized to access the account

14. Checking Account Tools • Checks • Write checks to transfer large sums of money • Deposit checks when receiving large sums of money

15. Parts of a Check • Personal Information • Account holder’s name and address • Check Number • Numbers used to identify checks • Date • The date the check is written • Pay to the Order of • The name of the person or business to whom the check is being written • Amount of the Check in Numerals • The amount of the check written numerically in the box • Amount of the Check in Words • Start at the far left of the line, write the amount in words, followed by ‘and’, and the amount of cents over 100; draw a line from the end of the words to the word ‘dollars’ • Memo • Space used to identify the reason for writing a check; optional • Signature • The account holder’s signature agreeing to the transaction

16. Checking Account Tools • Checks are a DYING BREED • Direct deposit • Apps- ex. Venmo, Paypal, Square • https://www.youtube.com/watch?v=mbHQx3-pRI0 • http://www.slate.com/articles/technology/future_tense/2013/08/venmo_review_the_wallet_app_is_light_years_ahead_of_paypal.html • Google Wallet

17. THINK • What are the apparent pros and cons of checking, savings, and CD accounts?