1. What are the four keys to financial security and stability?

4 Keys to Financial Security/Stability 1. Debt Free 2. In control of your expenses (income > expenses) 3. increasing your savings/assets/net worth on a monthly basis 4. Not being forced to work at a job you dislike just to pay the bills

What Financial Security is NOT Financial security isn’t making or having a certain amount of money. There are many people who have made millions of dollars who are not financially secure. isn’t limited to being independently wealthy

2. What is the difference between a Passbook Savings account and a Money Market account?

A. Passbook savings accounts Traditional savings account – individual puts money into account; bank may provide interest payments on a 30 day cycle Information is tracked in the “passbook” – a register of deposits and withdrawals

B. Money-market accounts Deposit account (can access with ATM) offered by a bank, which invests in government and corporate securities/stocks and pays the depositor interest based on the current interest rate Typically: high rate of interest, but also high level of investment = risk,,,can lose value

3. What is the difference between a Passbook Savings account and a CD?

A. Passbook savings accounts Traditional savings account – individual puts money into account; bank may provide interest payments on a 30 day cycle Information is tracked in the “passbook” – a register of deposits and withdrawals

C. Time deposits (Certificate of Deposit = CD) Money deposit at a financial institution that cannot be withdrawn for a certain “term” – or period of time Typically: the longer the term, the higher the yield (interest payment)

4. What is the difference between a Money Market account and a CD?

Money-market accounts Deposit account (can access with ATM) offered by a bank, which invests in government and corporate securities/stocks and pays the depositor interest based on the current interest rate Typically: high level of investment = more risk….can lose value

Time deposits (Certificate of Deposit = CD) Money deposit at a financial institution that cannot be withdrawn for a certain “term” – or period of time Typically: the longer the term, the higher the yield Provide a guaranteed return on your investment

5. What is the benefit of a CD? Higher interest rate than most savings accounts Provide a guaranteed return on your investment

6. What is the drawback of a CD? Money is locked in for a period of time – can not access it in emergency – fined if take out early

7. Customers in credit union become…. As soon as you deposit funds into a credit union account, you become a partial owner and participate in the union's profitability.

8. Credit unions must have a defined….. Unlike banks that are open to anyone, laws require credit unions to have a defined field of membership

9. What is the basic difference between a savings account and checking account?

What’s the difference between a Savings account and a Checking (Debit) Account? Savings Accounts: Primary purpose is to ……? save money (for emergency, for future purchases, or to invest). Number of withdrawals per month is limited (6 or less). Typically pays a higher interest rate than an interest-bearing checking account. May require a minimum balance to avoid fees. May charge fees for too many withdrawals.

Checking / Debit Accounts: Primary purpose is for….. everyday money transactions such as paying bills and making purchases. Few or no restrictions on the number of withdrawals or checks per month (some checking accounts offer a limited number of “free” checks per month and then charge a fee if more checks are written).

10. Jimmy complained to his dad that his savings account simply was not convenient for him. Jimmy asked his dad if he could set up a checking account. His dad was worried that Jimmy’s lack of responsibility could get him in trouble with a checking account. Provide an argument to support Jimmy’s point of view. Provide an argument to support his dad’s point of view.

Jimmy complained to his dad that his savings account simply was not convenient for him. Defend : Must go to bank to get money Can not use Debit card/check Limited # of withdrawals

His dad was worried that Jimmy’s lack of responsibility could get him in trouble with a checking account. Defend: If not responsible: Can over draw on checking account Can “bounce” a check Can lead to other fees / fines Can hurt your credit Vs. Savings account – if the money is gone, it is gone….no other consequences

Who protects my accounts? FDIC Federal Deposit Insurance Corporation For most banks NCUA National Credit Union Adminsitration For Credit Unions