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Checking Account

Simulation

Understanding Checking Accounts

© 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

© 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

© 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

© 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

© 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

© 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

© 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

© 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

© 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

© 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

Hand out check books

© 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

© 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

© 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

© 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

© 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

© 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!

© 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

© 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

© 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

© 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

© 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

© 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

© 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

© 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

© 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