exploring business unit 3: personal finance part 1: introduction to checking account objectives:...

Exploring BusinessUnit 3: Personal Finance

Part 1: Introduction to Checking Account

Objectives:•Describe the purpose of a checking account•Write checks & record in a register •Examine several endorsements•Compare account balances using a bank reconciliation•Analyze different types of loans and insurance

College & Career Readiness Standards

Reading Identify a clear idea or purpose of any paragraph(s) in

uncomplicated passages Identify clear cause-effect relationships in

uncomplicated passages

English Identify the central idea or main topic of a

straightforward piece of writing

Math Solve routine one-step arithmetic problems (using whole

numbers)

Checking vs. Savings & CD’sChecking A transactional bank

account. Easily accessible

Savings & CD’s Not meant for

transactions Offer better interest

rates Encourages you to not

spend money with restrictions.

Not easily accessible during non-banking hours.

Advantages of a Checking Account

1. Convenience2. Safety3. Proof of Payment4. Record of Finances

Advantages of a Checking Account

1. Convenience Write checks at home Pay bills by mail Debit Card

• Online payments• Swipe card and money is taken directly out

of checking account• Need Cash? = ATM

Advantages of a Checking Account

2. Safety Money on hand involves risk of losing it

by fire, theft, or carelessness Less temptation to spend money Check can only be cashed by person or

business to whom it is payable

Advantages of a Checking Account

2. Safety FDIC & NCUA

• Most banks & credit unions are members• FDIC insures deposits up to $250,000

Advantages of a Checking Account

3. Proof of Payment Check is legal proof of your finances

• Payment to others• Confirm with bank• All checks are now electronically imaged

Advantages of a Checking Account

4. Record of Finances Check is legal proof of your finances How much are you spending Where your money is going How much you have remaining

Types of Checking Accounts - Overview Differ in what they offer to

customers Annual Fee Minimum Balance Fee for each check written (Service

Charge) Fee for ATM use (Service Charge) Interest earning accounts

Types of Checking Accounts Regular Checking Accounts

No service charges Low Minimum Account Balance Typically No Interest on Account

• Student Checking Accounts• Senior Checking Accounts

Types of Checking Accounts Interest Checking Accounts

Most require Minimum Monthly Balance• Most $500 or more

Service Charges/Fees• May require a specific # of checks written

or debit card transactions• May require direct deposit• Monthly Service Charge

Pays a Low Rate of Interest on Account

Tips for Good Check Writing

1. Write checks in ink.2. Only write checks if you have

money in account to cover them.3. Use the current date4. Always fill in the amount.5. Void checks on which you make

errors.6. Do Not write checks to “Cash”

Writing the Amount on a Check (In Words) pg 56

1. $39.45 __________________________________ Dollars

2. $89.00 __________________________________ Dollars

3. $110.00 _________________________________ Dollars

4. $1,522.16 ________________________________ Dollars

5. $2,671.95 ________________________________ Dollars

Deposit Slips

275979076 12345678

routingnumber

account number

Check Register A separate form on which a

depositor keeps a record of deposits and withdrawals. EVERY check must be recorded in a

check register.

Enter into Register

Business News- Lebron- Dunkin

Endorsements – Back of Check

written evidence you received payment or that you transferred your right of receiving payment to someone else.

Allow recipient of the check to cash, deposit, or transfer it to someone else.

Legal evidence. Must be in ‘Float’ area.

Float = 1.5 inch space on left side of check, on back.

Types of Endorsements Blank: your name in exactly as it is

written on the face of check. Special: includes name of person

to whom check has been transferred.

Restrictive: limits the use of the check.

Forgery: writing another person’s signature on a check without his or her authority.

Types of Endorsements

1 2 3

1. Blank Endorsement2. Special Endorsement3. Restrictive Endorsement

What Happens If They Don’t Take Checks?

Use a Debit Card!

ClickVisa Debit Commerical

What is a Debit Card?

Enable customers to withdraw money directly from account. Linked to a specific account, typically

checking. When you make a purchase it

automatically deducts that amount from the account linked to card

You are using your own money!

Making Purchases with Debit Card Card will be ‘swiped’ Enter PIN Cashier gets approval code

Code shows you have enough money in account for purchase

Questions to Ask about Debit Cards Annual Fees? Account Link? ATM withdrawal fees?

These are separate from the machine fee!

What happens if card is lost? Electronic Fund Transactions Act

• You are responsible for up to $50 if reported in 2 days.

• You are responsible for up to $500 if reported in 3-60 days.

Online Banking Faster, Easier, Secure

http://www.uwcu.org/OnlineBanking/Default.aspx

Creating a Debit Card

Future of Debit Cards

Bank Reconciliation

http://www.spotthedifference.com/

http://www.spotthedifference.com/SteamTrain

Bank Reconciliation a statement showing how your

check register balance and a bank statement balance are brought into agreement.

Why do a reconciliation? Mistakes Happen!

Checking Accounts - Terms

Service Charge: the fee a bank charges for using a service.

Overdrawing: writing a check for more than you have in your checking account.

Bank Statement: A monthly report sent to you from the bank that shows the condition of your checking account.

Checking Accounts - Terms

Outstanding Check: A check that has not been paid, or cashed.

Cancelled Check: A check that has been paid (cashed by person who received the check).

Deposit in-transit: A deposit made to but has not yet been posted to your account.

Steps to Complete a Bank Reconciliation

Step 1: Identify any outstanding checks Step 2: Identify any deposits in transit Step 3: Analyze bank statement for

transactions not recorded in the check register. Example: Automatic Payments (PayPal)

Step 4: Look for recording and math errors Step 5: Compare adjusted balance to bank

statement balance

Activity 1.4 Reconciling a Bank Statement

Balance From Bank Ad Deposits not showing Subtract outstanding checks

Reconciliation

21,481.90 $22,387.85

3514.00 0

3514.000

804 2588 805 33 12.95

2621 12.95

22374.90 22374.90

Practice Time Complete Checkbook Reconciliation Pg 27 Show Mr. Fassl Then you can work on your DEBIT

CARD (if not done..finish for HW) (Guest speaker Wed)

Check Point –

Loans Mortgage: a legal document that allows a

bank to lay claim against your property. Home/Property Loan Payments may include Taxes and Insurance

Installment Loan: where regular payments are made in specific amounts over a period of time. Car loan is example. Some banks will hold the title until loan is paid

off

Examples

Interest

= Principal * Rate * Time

Principal: amount of loan. Rate: interest rate for loan. Time: length of loan.

1 = 1 Year

Maturity Date: the date at which the loan is paid off or comes due.

Rate Sheet

Interest= Principal * Rate * Time

Example: $500, 7% interest, 1 Year

Interest = 500 * 7%*1Interest = $35

Act #3 pg 47A. $ X .09 (9%) =$_______ Balance of Principal Int. for 1 year

B. July’s Interest= $_________ / 12 = $_________ int. for 1 yearC. Amt. Applied to Principal$ 1079.67 - $ ___________ = $_____________ Monthly Payment int. for 1 month Amt. to principal.

D. Balance Left$117,947.81 - $____________ = $_____________Bal. June 10 amt. to principal bal. July 10

Checkpoint pg (49)216

117,947.81 10,615.30

884.6110,615.30

884.61 195.06

195.06 117,752.75

Your Turn….HWK pg 56

Next Slide We’ll do Note #1 Together

Activity 6-2 Page 56

Part #1 Principal X Rate X Time = Interest#1 _______ ____ __/___ = _______

Part #2 Principal + Interest=Amount Paid at Maturity

#1 ________ + ______ = ____________

Part #3 Maturity DatesSee page 44 in your packet

#1 3 Months from May 16 = _____________

May 16 to May 31 = 15 Days Jun 1 to Jun 30 = 30 Days July 1 to July 31 = 31 Days Aug 1 to Aug 14= 14 Days

Aug 14

2,000 14% 3 12 70

2,000 70 2,070

Insurance Helps you share the risk of financial

loss. Premium: the amount of money

you pay for an insurance policy. Monthly, Semi-Annually, Annually

Claim: a request for the insurance company to pay you.

Deductible: the amount of money you are liable for on an insurance claim.

Types of Insurance Vehicle

Liability, Comprehensive, Collision Property

Renter’s Business Health Life

Term, Universal, Variable, Whole Life Farm and Ranch