Objectives:

1.Explain the purpose and use of a checking account.

2.Prepare checks and maintain a checkbook register.

Warm Up:

Grab a packet on the center table and answer the following question:

Why do people put money in a checking or savings account?

Agenda:

1.Warm Up2.Vocab.3.Intro to banking P.P.4.Follow along notes5.Balancing a check book activity

Daily Information 4/24

Financial Planning

Three main influences when considering financial planning:

• Life Situation

• Personal Values

• Economic Factors

Why Save and Invest Money?

• Allow your money to grow

• Keep up with inflation

• Earn interest on interest

• Make your money work for you

Through:– Compounding interest– Investment growth

Slide 3

Time Value of Money

A dollar you receive in the future will be worth less than a dollar you receive today

Cash Management

The daily routine of handling money to take care of individual or family needs

• Effective cash management includes having money available for:– Living expenses– Emergencies– Savings– Investing

Slide 5

Cash Management Tools

A financial account used to assist with daily cash management

Tool Interest Special Features

Checking Account (demand deposit)

1.5% •Checks used in place of cash•Easy access

Saving Account 2.3% •Temporary holding place•Easy access

Money Market Account

2.6% •Minimum balance•Tiered interest rates•Limited withdrawals

Certificate of Deposit 4 – 5.4% •Penalty for early withdrawal•Not easy to access funds

Savings Bond 4 – 5.4% •Tax advantages•Not easy to access funds

Why Have Checking Account?

• Checking Account – A demand deposit account on which checks are drawn

•Check - a written order to a bank to pay a person or business.

Checking Accounts

Why open a checking account?– Safe place to keep money (Insured by the FDIC)– Easy to pay bills by mail (writing a check)– Easy access to money to make cash purchases

• Withdrawal money• Write checks against the account• Debit cards• Internet banking

Checking Account Features

• May be interest earning

• Minimum balance requirements

• Charge transaction fees

• Limited number of checks written monthly

• Overdraft Protection (NSF)

**Reduces the need to carry large amount of cash

Opening a Checking Account

• What will I need?– Money! ($50 or $100)– Personal information– Identification – Provide an official signature

• What will I be given?– Checkbook– Checkbook register

Checkbook Register

A way to track your account transactions

Withdrawals and Deposits

• A withdrawal involves taking money from your account.o Writing checks o Using debit cards

• A deposit of money can be made to your account.o Endorsing checkso Direct deposit

**Banks will not hold postdated checks and process them at a future date.

Endorsing A Check

Signature on the back of the check approving it for deposit. Checks must be endorsed to be deposited

Three Types• Blank• Restrictive• Special

Safest way to endorse the check is to wait until going to the bank to deposit

Blank Endorsement

• Receiver of the check signs his/her name

• Anyone can cash or deposit the check after it has been signed

Endorse Here

X Sally Smith_________

DO NOT WRITE, STAMP OR SIGN BELOW THIS LINE. RESERVED FOR FINANCIAL INSTITUTION USE________________________________

Restrictive Endorsement

• More secure than blank endorsement

• Receiver writes “for deposit only” above his/her signature– Allows the check

only to be deposited

Endorse Here

For Deposit Only – Acct. 654986

X Sally Smith_________

DO NOT WRITE, STAMP OR SIGN BELOW THIS LINE. RESERVED FOR FINANCIAL INSTITUTION USE_______________________________

Special Endorsement

• Receiver signs and writes “pay to the order of (fill in person’s name)

• Allows the check to be transferred to another person– Also known as a

third-party check

Endorse Here

Pay to the order of Mike Smith

X Sally Smith_________

DO NOT WRITE, STAMP OR SIGN BELOW THIS LINE. RESERVED FOR FINANCIAL INSTITUTION USE_______________________________

Check 21

• Check clearing for the 21st Century Act (check 21)– Current trend that changes how money is

withdrawn and deposited into accounts

How Check 21 Works

• Prior to Check 21– Paper checks physically moved from place

to place

• After Check 21– Paper checks scanned to computer to

create a “substitute check” (truncated)– Substitute check is transferred

electronically from place to place

Writing a Check

Sally Smith500 Great StreetYourtown, NJ 55555

93-456-954045086244786

503

Date: 9/6/2006

Pay to the

Order Of The Pizza Place $ 9.50

_Nine dollars_------------------------------------------------50/100_ DollarsGuardian Angel Banking423 South 15th

Yourtown, NJ 55555

Memo __Pizza_ ___ Sally Smith____0123456789 : 1234567890 : 503

Objectives:

1.Prepare a bank reconciliation

2.Explain how you can grow your savings with interest

Warm Up:

Explain the difference between the three different types of endorsement.

Agenda:

1.Warm Up2.Bank reconciliation P.P.3.Follow along notes4.Chapter 5 activity packet

Daily Information 4/28

Monthly Statement

• Comes from your bank

• Lists information about each transaction during the period

• Lists the current balance during the period

Reconcile a Bank Statement

Bank reconciliation - the process of adjusting the checkbook register and bank statement so they agree

• Consider the following:o deposits in transito outstanding checkso transposition errors

What Is the Purpose of Savings?

Savings Account - a demand deposit account for the accumulation of money

• It is a safe place to hold money to meet future needs and wants

• It pays interest at a low rate

Cash Management Tools

A financial account used to assist with daily cash management

Tool Interest Special Features

Checking Account 1.5% •Checks used in place of cash•Easy access

Saving Account 2.3% •Temporary holding place•Easy access

Money Market Account

2.6% •Minimum balance•Tiered interest rates•Limited withdrawals

Certificate of Deposit 4 – 5.4% •Penalty for early withdrawal•Not easy to access funds

Savings Bond 4 – 5.4% •Tax advantages•Not easy to access funds

Liquidity

How quickly and easily an asset can be converted into cash. Liquid assets are important for emergency situations

Investors should:– Invest in both liquid and non-liquid tools

Liquidity

Checking Account

Savings Account

Money Market Account

Certificate of Deposit

Savings Bond

Most Liquid

Least Liquid

Watch Your Money Grow!

How can you grow your savings?

Through…

• Principal

• Simple interest

• Compound interest

Computing Simple Interest

Simple Interest – interest computed on principal once during a certain time period

• P = amount of money invested

• R = interest rate

• T = time period that money will be set aside

Simple Interest

Interest (I) = Principal (P) × Rate (R) × Time (T)

= $1,000 × 6% annual rate × 6 months

= $1,000 × 0.06 × 6/12 = $30

Computing Compound Interest

Compound Interest – interest earned on both the principal and previously earned interest

Quarterly CompoundingAnnual Interest Rate 6%

Beginning Rate EndingYear Balance 6% Quarter Balance

1 2 3 4

1 $100.00 0.015 $1.50 $1.52 $1.55 $1.57 $106.14

2 $106.14 0.015 $1.59 $1.62 $1.64 $1.66 $112.65

3 $112.65 0.015 $1.69 $1.72 $1.74 $1.77 $119.57

Future Value of Money

Rule of 72

How long will it take to double my money?

• Divide annual interest rate into 72

Example: if you invest $50 at 6% interest, your money will grow to $100 in 12 years

( 72 ÷ 6 = 12 years)

Focus On . . .

The FDIC• Protects depositors of insured U.S. banks

against loss if the bank fails• Covers all types of deposits• Covers principal and accrued interest• Does not insure some items

o Examples: stocks, bonds, valuables• Insures deposits in different banks separately

Available Banking Services

• Safe deposit boxes

• Overdraft protection

• ATMs

• Cashier’s checks

• Financial advising

• Loans

• Internet banking

• Bank cards

Costs of Banking

• Monthly account fees

• Nonsufficient fund fees

• Special service feeso Examples: stop

payment, cashier’s check, money order

• ATM fees

• Inactive account fees

What Are Consumer Responsibilities?• Maintain your balance.

o Avoid writing bad checks.

• Monitor your account.o Reconcile your bank

account.• Know your rights.

o Be aware of consumer protection laws.

Summary

Depository institutions offer many benefits:

A safe place to store money

A way to manage cash

The opportunity to earn interest

Services/features offered and fees charged vary between and within every depository institution

Research different depository institutions and choose one that will help you reach your goals

Bank Statement

Objectives:

1.Define vocabulary related to a bank reconciliation.2.Explain how you can grow your savings with interest

Warm Up:

Explain the process of performing a bank reconciliation.

Quiz tomorrow!!

Agenda:

1.Warm Up2.Bank Rec. Review3.Paycheck Packet4.Ch5 Study Guide5.Bottom Line

Daily Information 4/29 (b,g)

Objectives:

1.Define vocabulary related to a bank reconciliation.2.Explain how you can grow your savings with interest.

Warm Up:

Take out the following:

•Study Guide•Resume w/Corrections•Paycheck Packet

Quiz Today!!

Agenda:

1.Warm Up2.Bank Rec. Review3.Chapter 5 Quiz4.Resume5.Paycheck6.Bottom Line

Daily Information 4/29 (a,e)

Objectives:

1.Define vocabulary related to a bank reconciliation.2.Explain how you can grow your savings with interest

Warm Up:

What is a savings bond?

Quiz Friday!!

Agenda:

1.Warm Up2.Paycheck Packet3.Ch5 Study Guide4.Bottom Line

Daily Information 4/30 (b)

Objectives:

1.Define vocabulary related to a bank reconciliation.2.Explain how you can grow your savings with interest.

Warm Up:

Take out the following:

•Study Guide•Resume w/Corrections•Paycheck Packet

Quiz Today!!

Agenda:

1.Warm Up2.72 & Simple Review3.Chapter 5 Quiz4.Resume5.Paycheck6.Bottom Line

Daily Information 5/2 (b)