© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Managing Your Cash

Family Economics & Financial Education

1.14.2.G1

© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

$ Small amounts saved and invested can easily grow into larger sums.

If a person saved a dollar each day by not having a candy bar or soda, they would save $365.00 per year!

If the $365.00 dollars was deposited into a certificate of deposit (CD) with 5.0% interest, the money could grow to nearly $400.00 in one year!

Did You Know?

1.14.2.G1

© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Cash Management$The daily routine of handling

money to take care of individual or family needs.

Cash Management

1.14.2.G1

© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Cash Management

Effective cash management includes having available money for:

$Living expenses;$Emergencies;$Savings;$Investing.

1.14.2.G1

© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Cash Management Tool

Cash Management Tool$ A financial account used to assist with

daily cash management. $ Five types of cash management tools:

Checking Account; Savings Account; Money Market Deposit Account; Certificate of Deposit; Savings Bond.

1.14.2.G1

© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Checking Account$ Tool used to transfer funds deposited

into an account to make a cash purchase. Funds are easily accessed by:

$ Checks;$ Automated teller machines (ATMs);$ Debit cards;$ Telephone;$ Internet.

Checking Account

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© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

$ 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.

Checking Account continued

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© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Savings Account

Savings Account$ Account to hold money not spent on

consumption. Money may be accessed or transferred

between accounts through:$ Automated teller machines;$ Telephones;$ Internet.

1.14.2.G1

© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Savings Account continued

$ Features may include: Allows for frequent deposits or

withdrawals; Easily accessible; Money storage for emergencies or daily

living; Available at depository institutions; May require a minimum balance or

have a limited number of withdrawals.

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© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Money Market Deposit Account

Money Market Deposit Account$ A government insured account offered at

most depository institutions. Have a minimum balance requirement with

tiered interest rates.$The amount of interest earned depends on

the account balance. $For example: a balance of $10,000

will earn a higher interest rate than a balance of $2,500.

1.14.2.G1

© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Money Market Deposit Account continued

$ Features of may include: Minimum amount required to open the

account, often $1,000; Usually limited to three to six

transactions each month; If the average monthly balance falls

below a specified amount, the entire account will earn a lower interest rate.

1.14.2.G1

© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Certificate of Deposit (CD)

$ Certificate of Deposit (CD) An insured, interest earning savings

instrument with restricted access to the funds.

Found in depository institutions accepting deposits for a certain length of time.

1.14.2.G1

© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Certificate of Deposit continued

$ Features of may include: Range from seven days to eight years in

length; Minimum deposits range from $100-

$100,000; If funds are withdrawn before the expiration

date, penalties are assessed; Low risk and no fees; Interest rates vary depending upon specified

time length.$The longer the length, the higher the interest rate.

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© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Savings Bond

Savings Bond$ Discount bond purchased for 50% of the

face value from the U.S. Government.

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© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Savings Bond continued$ Features of may include:

Many different types available; Can be purchased for $25.00 - $10,000.00;

$A $100.00 bond would be purchased for $50.00. When the bond matures to $100.00, it can be redeemed.

Interest earned on a bond is tax exempt until redeemed.$No taxes are due on interest earned.$ It will be tax exempt when redeemed if used

for college expenses.

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© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Cash Management Tools

ToolAverage Interest Earned

Purchase Place

Special Features

Checking Account

1.5% Commercial Banks, Savings & Loan Associations, Credit Union

Can be used in place of cash, funds can be easily accessed

Savings Account

2.3% Commercial Banks, Savings & Loan Associations, Credit Union

Easily accessed, temporary holding place for funds

Money Market Account

2.6% Commercial Banks, Savings & Loan Associations, Credit Union

Minimum balance, limited transactions, tiered interest rates

Certificate of Deposit

4.0% - 5.4%, depending on the length of deposit

Commercial Banks, other institutions which accept deposits for a fixed period

Penalties for early withdrawals, no deposits or withdrawals are made after initial investment

Savings Bonds 4.0% - 5.4%, depending on the length of bond

Commercial Banks, Credit Unions, employer payroll deduction plans

Tax advantages, a loan to the federal government

1.14.2.G1

© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Liquidity How quickly and easily an asset can be

converted into cash.

$ Investors should: Invest in both liquid and non-liquid tools. Liquid assets are important for

emergencies when cash must be quickly accessed.

Liquidity

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© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Liquidity

Checking Account Most Liquid

Savings Account

Money Market Deposit Account

Certificate of Deposit

Savings Bond Least Liquid

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© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Low Risk

These five cash management tools are low risk: Protected by the U.S. Government

against loss.$Insures the funds so the consumer does

not lose money on the investment. However, they have lower interest

rates.$Causes low returns.

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© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Investment Risk PyramidIn

crea

sing

pot

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for

high

er ret

urns

Gro

win

g risk

to

inve

stor

’s c

apital

Increasing safety of

principal

Grow

ing risk of loss of

purchase power

Financial Security (Cash Management Tools)

Safety and Income

Growth

Speculation

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© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Summary

$ Cash management is a daily routine of handling money to have enough funds for: Living expenses; Emergencies; Savings; Investing.

1.14.2.G1

© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

Summary

$ Five types of cash management tools: Checking account; Savings account; Money market deposit account; Certificate of deposit; Savings bond.

© Family Economics & Financial Education – Revised November 2004 – Saving Unit – Managing Your CashFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

The End