1. Checking Account Simulation Understanding Checking Accounts

2. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 What is a Checking Account?  Tool used to transfer funds deposited into the account to make a cash purchase

3. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Benefits  Can help to manage money  Written record of expenses Check register  Makes bill paying more convenient  Reduces the need to carry large amounts of cash  Most liquid of cash management tools Considered cash

4. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 How Do They Work?  Money is deposited into the account with a deposit slip  Pay the transaction by: Writing a check Using an ATM and/or debit card Using electronic banking

5. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 What is a Check?  Piece of paper pre-printed with the account holder’s: Name Address Financial institution Identification numbers  Used at the time of purchase as the form of payment

6. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Bouncing a Check  Check written for an amount over the current balance held in the account ‘Bounces’ due to insufficient funds  Assessed fee  Can cause harm to credit report

7. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Other Checking Components  Register Place to immediately record all monetary transactions for a checking account  Written checks, ATM withdrawals, debit card purchases, deposits, fees, etc.  Checkbook Contains the checks and the register to track monetary transactions

8. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Endorsing a Check  Endorsement Signature on the back of the check from receiving person approving it for deposit A check must be endorsed to be deposited  Three types Blank Restrictive Special  Safest way to endorse the check is to wait until going to the financial institution to deposit or cash the check

9. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Blank Endorsement  Receiver of the check signs his/her name  Anyone can cash or deposit the check after has been signed

10. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Restrictive Endorsement  More secure than blank endorsement  Receiver writes “for deposit only” above his/her signature Allows the check to only be deposited

11. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Special Endorsement  Receiver signs and writes “pay to the order of (fill in person’s name)”  Allows the check to be transferred to a second party Also known as a two-party check

12. Hand out check books

13. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Making a Deposit  Deposit slip Contains the account holder’s account number and allows money to be deposited into the correct account  Checks must be endorsed to deposit  Record deposit in the check register

14. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Deposit slips  At back of check book  Rip out a deposit slip and follow along with simulation  Write Date  You have five checks to deposit- write them on deposit slip You will have to use the back of the deposit slip and transfer total to the front  Check #365- $50.00  Check #101- $23.00  Check # 231- $47.00  Check # 598- $30.00  Check # 432- $15.00 Continue on next slide

15. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Deposit slips continued  You would like to receive $25.00 cash back from deposit. Write in less cash received  Subtract from subtotal to get net deposit  Sign Deposit slip for cash back

16. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Writing a Check  A check is given as a form of payment Funds taken out of checking account

17. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Writing a check  Rip out a check and follow along You want to buy a hoodie from the school store they cost $30.00. Write a check to the Silver Dollar for the hoodie. Step one- Fill in Date Step two- Payee- Silver Dollar Step three- Amount of check in numbers Step four- Amount of check in words Step five- Memo- Hoodie Step six- Sign check

18. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Check Register  Place to immediately record all monetary transactions for a checking account  Written checks, ATM withdrawals, debit card purchases, deposits, fees, etc.  Used to keep a running balance of the account  Remember - Record every transaction!

19. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Check Register  Date The date the check was written or transaction was made

20. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Check Register  Number The number of the written check; if a debit card or ATM was used, write DC or ATM

21. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Check Register  Description of Transaction The person/business the check was written to or where the debit card was used Gray line can be used to write the memo

22. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Check Register  Payment/Debit(-) Amount of the transaction Deducted from the balance

23. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Check Register  Deposit/Credit(+) Amount of the transaction Added to the balance

24. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Check Register  √ T A box used to track whether the check has cleared on the monthly bank statement when reconciling at the end of each month

25. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Check Register  Fee (if any) Any extra fees charged to the account Listed on the bank statement

26. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Check Register  Balance The running total of the checking account Calculated by adding or subtracting each transaction Keep this updated

27. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman 1.7.1.G1 Checkbook Simulation  Date The date the check was written or transaction was made