© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Managing Your Cash Family Economics & Financial Education

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman $ Small amounts saved and invested can easily grow into larger sums.  If a person saved a dollar each day by not having a candy bar or soda, they would save $ per year!  If the $ dollars was deposited into a certificate of deposit (CD) with 5.0% interest, the money could grow to nearly $ in one year! Did You Know?

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Cash Management $ The daily routine of handling money to take care of individual or family needs. Cash Management

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Cash Management Effective cash management includes having available money for: $ Living expenses; $ Emergencies; $ Savings; $ Investing.

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Cash Management Tool $ A financial account used to assist with daily cash management. $ Five types of cash management tools:  Checking Account;  Savings Account;  Money Market Deposit Account;  Certificate of Deposit;  Savings Bond.

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Checking Account $ Tool used to transfer funds deposited into an account to make a cash purchase.  Funds are easily accessed by: $ Checks; $ Automated teller machines (ATMs); $ Debit cards; $ Telephone; $ Internet. Checking Account

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman $ Reduces the need to carry large amounts of cash. $ Features may include:  Non-interest or interest earning;  Minimum balance requirements;  Charge transaction fees;  Limited number of checks can be written monthly. Checking Account continued

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Savings Account $ Account to hold money not spent on consumption.  Money may be accessed or transferred between accounts through: $ Automated teller machines; $ Telephones; $ Internet.

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Savings Account continued $ Features may include:  Allows for frequent deposits or withdrawals;  Easily accessible;  Money storage for emergencies or daily living;  Available at depository institutions;  May require a minimum balance or have a limited number of withdrawals.

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Money Market Deposit Account $ A government insured account offered at most depository institutions.  Have a minimum balance requirement with tiered interest rates. $ The amount of interest earned depends on the account balance. $ For example: a balance of $10,000 will earn a higher interest rate than a balance of $2,500.

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Money Market Deposit Account continued $ Features of may include:  Minimum amount required to open the account, often $1,000;  Usually limited to three to six transactions each month;  If the average monthly balance falls below a specified amount, the entire account will earn a lower interest rate.

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Certificate of Deposit (CD) $ Certificate of Deposit (CD)  An insured, interest earning savings instrument with restricted access to the funds.  Found in depository institutions accepting deposits for a certain length of time.

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Certificate of Deposit continued $ Features of may include:  Range from seven days to eight years in length;  Minimum deposits range from $100-$100,000;  If funds are withdrawn before the expiration date, penalties are assessed;  Low risk and no fees;  Interest rates vary depending upon specified time length. $ The longer the length, the higher the interest rate.

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Savings Bond $ Discount bond purchased for 50% of the face value from the U.S. Government.

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Savings Bond continued $ Features of may include:  Many different types available;  Can be purchased for $ $10,000.00; $ A $ bond would be purchased for $ When the bond matures to $100.00, it can be redeemed.  Interest earned on a bond is tax exempt until redeemed. $ No taxes are due on interest earned. $ It will be tax exempt when redeemed if used for college expenses.

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Cash Management Tools Tool Average Interest Earned Purchase PlaceSpecial Features Checking Account 1.5% Commercial Banks, Savings & Loan Associations, Credit Union Can be used in place of cash, funds can be easily accessed Savings Account 2.3% Commercial Banks, Savings & Loan Associations, Credit Union Easily accessed, temporary holding place for funds Money Market Account 2.6% Commercial Banks, Savings & Loan Associations, Credit Union Minimum balance, limited transactions, tiered interest rates Certificate of Deposit 4.0% - 5.4%, depending on the length of deposit Commercial Banks, other institutions which accept deposits for a fixed period Penalties for early withdrawals, no deposits or withdrawals are made after initial investment Savings Bonds 4.0% - 5.4%, depending on the length of bond Commercial Banks, Credit Unions, employer payroll deduction plans Tax advantages, a loan to the federal government

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Liquidity  How quickly and easily an asset can be converted into cash. $ Investors should:  Invest in both liquid and non-liquid tools.  Liquid assets are important for emergencies when cash must be quickly accessed. Liquidity

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Liquidity Checking AccountMost Liquid Savings Account Money Market Deposit Account Certificate of Deposit Savings BondLeast Liquid

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Low Risk These five cash management tools are low risk:  Protected by the U.S. Government against loss. $ Insures the funds so the consumer does not lose money on the investment.  However, they have lower interest rates. $ Causes low returns.

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Investment Risk Pyramid Increasing potential for higher returns Growing risk to investor’s capital Increasing safety of principal Growing risk of loss of purchase power Financial Security (Cash Management Tools) Safety and Income Growth Speculation

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Summary $ Cash management is a daily routine of handling money to have enough funds for:  Living expenses;  Emergencies;  Savings;  Investing.

14.2.G1 © Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman Summary $ Five types of cash management tools:  Checking account;  Savings account;  Money market deposit account;  Certificate of deposit;  Savings bond.

© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman The End