checking account simulation understanding checking accounts
TRANSCRIPT
Checking Account Simulation
Understanding Checking Accounts
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account SimulationFunded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1What 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 SimulationFunded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
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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 SimulationFunded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
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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 SimulationFunded 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 SimulationFunded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
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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 SimulationFunded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1Other 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 SimulationFunded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
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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 SimulationFunded 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 SimulationFunded 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 SimulationFunded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
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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 SimulationFunded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
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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 SimulationFunded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
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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 SimulationFunded 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 SimulationFunded 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 SimulationFunded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
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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 SimulationFunded 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 SimulationFunded 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 SimulationFunded 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 SimulationFunded 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 SimulationFunded 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 SimulationFunded 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 SimulationFunded 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 SimulationFunded 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 SimulationFunded 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 SimulationFunded 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