1. Take Charge of Your Finances Family Economics & Financial Education
Managing Your Cash
Take Charge of Your Finances
Family Economics & Financial Education

2. Did You Know?
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!

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.
Five types of cash management tools:
Checking Account;
Savings Account;
Money Market Deposit Account;
Certificate of Deposit;
Savings Bond.

6. Checking Account Checking Account
Tool used to transfer funds deposited into an account to make a cash purchase.
Checking accounts may be non-interest or interest earning.

7. Checking Account continued
Funds are easily accessed by:
Checks;
Automated teller machines (ATMs);
Debit cards;
Telephone;
Internet.
Features may include:
Minimum balance requirements;
Charge transaction fees;
Limited number of checks written monthly.
Reduces the need to carry large amounts of cash.

8. Savings Account Savings Account
Account to hold money not spent on consumption.
Interest bearing.
Have a lower interest rate than other cash management tools
Money may be accessed or transferred between accounts through:
Automated teller machines;
Telephones;
Internet.

9. 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.

10. 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, will earn a higher interest rate than a balance of $2,500.

11. Money Market Deposit Account continued
Accessibility is usually limited to three to six transactions each month;
Features of may include:
Minimum amount required to open the account, often $1,000;
If the average monthly balance falls below a specified amount, the entire account will earn a lower interest rate.

12. 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.
Interest rates vary depending upon specified time length.
The longer the length, the higher the interest rate.

13. Certificate of Deposit continued
Features 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;

14. Savings Bond Savings Bond
Discount bond purchased for 50% of the face value from the U.S. Government.
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.

15. Savings Bond continued
Access to funds is restricted
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.

16. Average Interest Earned
Cash Management Tools
Tool
Average Interest Earned
Purchase Place
Special Features
Checking Account 0%
Commercial Banks, Savings & Loan Associations, Credit Union
Can be used in place of cash, funds can be easily accessed
Savings Account
.5%
Easily accessed, temporary holding place for funds
Money Market Account
1.5%
Minimum balance, limited transactions, tiered interest rates
Certificate of Deposit
.27% - 2.8%, 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
.10% - 5.4%, depending on the length of bond
Commercial Banks, Credit Unions, employer payroll deduction plans
Tax advantages, a loan to the federal government

17. Liquidity
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.
Cash management tools are protected by the U.S. Government against loss.

18. Liquidity Checking Account Most Liquid Savings Account
Money Market Deposit Account
Certificate of Deposit
Savings Bond
Least Liquid

19. Low Risk These five cash management tools are low risk:
Insures the funds so the consumer does not lose money on the investment.
However, they have lower interest rates.
Causes low returns

20. Investment Risk Pyramid
Speculation
Increasing safety of principal
Increasing potential for higher returns
Growing risk of loss of purchase power
Growing risk to investor’s capital
Growth
Safety and Income
Financial Security (Cash Management Tools)

21. Summary
Cash management is a daily routine of handling money to have enough funds for:
Living expenses;
Emergencies;
Savings;
Investing.

22. Summary Five types of cash management tools: Checking account;
Savings account;
Money market deposit account;
Certificate of deposit;
Savings bond.

23. The End