1. It’s just as exciting as you think!
Banking!
It’s just as exciting as you think!

2. Financial Institutions
Usually referred to as banks
Follow state and federal regulations
Offer banking services and loans
Serves both individuals and businesses
Examples – commercial banks, savings & loan associations, and credit unions

3. Insurance for BANKS Federal Deposit Insurance Corporation (FDIC)
Federal government agency which protects bank accounts
Each depositor is insured up to $100,000
Savings Association Insurance Fund (SAIF)
A branch of the FDIC
Provide insurance for Savings & Loan Associations
Same insurance level as the FDIC
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

4. Financial Institutions most common:
Commercial Bank
Savings and Loan Association
Credit Union
Brokerage Firm
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

5. Commercial Bank Full-service financial institutions
Wide variety of services and products
Operate under state and federal laws
Usually the largest financial institutions
FDIC insured
Examples – Wells Fargo, US Bank, Bank of America
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

6. Commercial Bank Services
Checking Accounts
They are the only financial institution allowed to offer non-interest paying checking accounts
Savings Accounts
Safe-Deposit Boxes
Credit cards
Certificate of Deposit (CDs)
Financial Services
Investments
Loans
Mortgages
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

7. Credit Union
Non-profit cooperative financial institution, member owned
Members may have a common bond such as same employer, union, location, etc.
Usually charge lower fees and loan rates and offer higher interest rates
May offer free financial counseling
NCUA insured
Examples – Tennessee Credit Union, Navy Federal Credit Union
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

8. the services offered Checking Account Credit Card
Paper checks or debit cards are used to withdraw money deposited into the account to pay for items
May be interest or non-interest bearing
Credit Card
A plastic card used to make a purchase to be repaid later usually with interest to the CC company
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

9. Services continued Savings Account Share Account
Money is deposited into an account to earn interest (money the bank pays you for using their services)
Funds are easily accessible and safe
Share Account
A savings account at a Credit Union
Share Certificate Account
A certificate of deposit at a Credit Union
Share Draft Account
A checking account at a Credit Union
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

10. Services continued Financial Counseling Investment Loans
Information and advice given to customers to help them make decisions about financial issues
Investment
A commitment of money to achieve long-term financial goals
Many different types are available
Loans
Borrowed money consumers apply for at financial institutions
Paid back at various interest rates in payments
Investment examples – stocks, bonds, CDs, mutual funds, etcl
Examples of loans – car loans, mortgages, personal loans, etc.
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

11. Services continued Mortgage Mutual Fund Real Estate Investment
A long-term loan to purchase real estate such as a house
Mutual Fund
Groups of stocks, bonds, and other investments managed by an investment firm
Real Estate Investment
Purchasing real estate as an investment
May buy a lower priced house, make improvements, and sell at a higher price
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

12. Services continued Stock Ownership in corporation
Represented by shares
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

13. Introduction to Savings

14. Saving Basics
Savings is the portion of current income not spent on consumption.
Savings accounts provide an easily accessible place for people to store their money to meet daily living expenses and to have money for emergencies.
Financial experts recommend individuals keep a minimum of three to six months of salary in a savings account.
Most banks only allow so many withdrawals from a savings account each month
For most institutions, your savings account earns interest (<money given to you for using their services)

15. Reasons People Should Save
Emergencies – It is recommended individuals have a minimum of three to six months of salary in savings accounts for emergencies. Examples of emergencies can include illness, losing a job, or immediate need to replace a large item such as a washing machine.
Expenses – Savings accounts can be used as a budgeting tool to manage monthly expenses.
Future Purchases – Money can be used to meet future goals such as a college education, new car, down payment on a home, or a new stereo.
Investing – After an individual has established a savings account, money should be invested monthly for future income.

16. 70-20-10 Rule Spend 70% of money you earn Save 20% of money you earn
Invest 10% of money you earn

17. Introduction to CHECKING ACCOUNTS

18. Checking Account Checking Account
Tool used to transfer funds deposited into an account to make a cash purchase.
Banks expect you to use this daily
Funds are easily accessed by:
Checks;
Automated teller machines (ATMs);
Debit cards;
Telephone;
Internet.

19. Checking Account continued
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.
Normally, for debit cards, no limit.
ATM Fees or Reimbursement