2.  How to Manage Your Cash › Daily Cash Needs  Lunch, movies, gas, or paying for other activities  Carry cash  Go to an ATM  Credit Card  Know pros and cons  ATM Fees  Risk of overspending, avoid impulse buying, & overusing credit cards 5-1

3. › Sources of Quick Cash  For times when you need more than you have:  Savings or borrow money (loan)  Each one comes with a trade off  You may have immediate access to the funds you need but long term goals may be delayed  College, Car, or starting a new business 5-1

4.  Types of Financial Services › Savings  Safe Storage of funds for future use  Essential for any personal finance plan  Time Deposit – Money that is going to be left in a financial institution for months or years. › Payment Services  Transferring money from personal account to a business or individuals for payment  Checking Account – Most common used payment service  Demand Deposit – Money you place in a checking account. Because you can withdraw it at any time. 5-1

5.  Types of Financial Services › Borrowing (Credit)  Short Term – using a credit card or personal cash loan  Long Term – Apply for a mortgage or car loan › Other Financial Services  Insurance Protection  Stocks, Bonds, Mutual Funds  Income Tax Assistance  Financial Planning Services 5-1

6.  Electronic Banking Services › Direct Deposit  An automatic deposit of net pay to an employee’s designated bank account  Instead of paper check employees receive printed statement that lists deductions and information about their earnings.  Saves, time, money and effort › Automatic Payments  On line bill paying  Can pay each company through an online bill service  Set up bill pay through your bank online. 5-1

7.  Electronic Banking Services › ATM – Automated Teller Machine  A computer terminal that allows a withdrawal of cash from an account  Can also make deposits and transfer money  Where are ATM’s located?  To use you must apply for a debit card from your bank.  A cash card that allows you to withdrawal money or pay for purchases from checking or savings account.  ATM Fees –  Compare before opening an account  Use you banks ATM machines to avoid additional fees

8.  Plastic Payments › Point of Sale Transactions  Using debit card to make purchases at retail stores, restaurants or elsewhere › Store Value Cards  Prepaid cards that you use for:  Bus or Subway  School lunches  Long distance phone calls

9.  Types of Financial Institutions › Federal Deposit Insurance Corporation (FDIC): Protects deposits in banks  Insures each account in a federally chartered bank up to $250,000 per account. › Deposit Institutions  Commercial Banks : A for profit institution that offers a full range of financial services.  Checking, savings, and lending  Savings and Loans : Financial Institution that traditionally specializes in Savings accounts and Mortgages.  Mutual Savings Banks : Specializes in Savings accounts and mortgages  Usually lower interest rates, on mortgages, than commercial banks & Higher interest rates for savings accounts.  Credit Unions : Non profit financial institution that is owned by its members and organized for their benefit.  Labor unions, college alumni association.

10.  Non-Deposit Institutions › Life Insurance Companies › Investment Companies  Stocks, bonds, mutual funds › Finance Companies  Make high interest loans to consumers and small businesses that have below average credit ratings. › Mortgage Companies  Loans for home purchase.

11.  Regular Savings Account › Ideal for frequent deposits and withdrawals › Interest you earn is low compared with other savings plans  Certificates of Deposit (CD’s) › Savings alternative where money is left on deposit for a stated period of time to earn a specific rate of return.  Money Market Accounts › Savings account that requires a minimum balance and earns interest that varies from month to month › May pay a penalty if balance goes below stated amount ($1000)  U.S. Savings Bond › Purchase from the Federal Government › Not taxed on interest earned until you cash it.

12.  Evaluating Savings Plans › Rate of Return  The percentage of increase in the value of your savings from interest earned  Compounding – The process in which interest is earned on both the principal (original amount) and previously earned interest.  Truth in Savings – Financial institutions must inform you of the following:  Fees on deposit accounts  Interest Rates  Annual Percentage Yield (AYP) – amount of interest that a $100 deposit would earn, after compounding, for one year.  Terms and conditions of savings plan

13.  Evaluating Savings Plans › Inflation  Compare rate of interest with rate of inflation › Tax Considerations  Taxes reduce the interest earned on savings › Liquidity  Know what the penalties are for making withdrawals from your account early. › Restriction and Fees  Know all the restrictions and fees before opening an account

14.  Types of Checking Accounts › Regular Checking Accounts  Usually no minimum balance  If there is a minimum balance make sure not to drop below it or you will be charged a monthly service charge. › Interest Earning Checking Account  Pay interest if you maintain a minimum balance.

15.  Evaluating Checking Accounts › Restrictions  Know what they are, most common is keeping a minimum balance › Fees and Charges  Monthly service charge  Check printing, overdrafts, and stop payments › Interest  The way interest is calculates and frequency of compounding. › Special Services  Overdraft Protection – an automatic loan made to an account if the balance will not cover a check