It’s just as exciting as you think! Banking! It’s just as exciting as you think!

Financial Institutions Usually referred to as banks Follow state and federal regulations Offer banking services and loans Serves both individuals and businesses Examples – commercial banks, savings & loan associations, and credit unions

Insurance for BANKS Federal Deposit Insurance Corporation (FDIC) Federal government agency which protects bank accounts Each depositor is insured up to $100,000 Savings Association Insurance Fund (SAIF) A branch of the FDIC Provide insurance for Savings & Loan Associations Same insurance level as the FDIC © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Financial Institutions most common: Commercial Bank Savings and Loan Association Credit Union Brokerage Firm © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Commercial Bank Full-service financial institutions Wide variety of services and products Operate under state and federal laws Usually the largest financial institutions FDIC insured Examples – Wells Fargo, US Bank, Bank of America © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Commercial Bank Services Checking Accounts They are the only financial institution allowed to offer non-interest paying checking accounts Savings Accounts Safe-Deposit Boxes Credit cards Certificate of Deposit (CDs) Financial Services Investments Loans Mortgages © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Credit Union Non-profit cooperative financial institution, member owned Members may have a common bond such as same employer, union, location, etc. Usually charge lower fees and loan rates and offer higher interest rates May offer free financial counseling NCUA insured Examples – Tennessee Credit Union, Navy Federal Credit Union © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

the services offered Checking Account Credit Card Paper checks or debit cards are used to withdraw money deposited into the account to pay for items May be interest or non-interest bearing Credit Card A plastic card used to make a purchase to be repaid later usually with interest to the CC company © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Services continued Savings Account Share Account Money is deposited into an account to earn interest (money the bank pays you for using their services) Funds are easily accessible and safe Share Account A savings account at a Credit Union Share Certificate Account A certificate of deposit at a Credit Union Share Draft Account A checking account at a Credit Union © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Services continued Financial Counseling Investment Loans Information and advice given to customers to help them make decisions about financial issues Investment A commitment of money to achieve long-term financial goals Many different types are available Loans Borrowed money consumers apply for at financial institutions Paid back at various interest rates in payments Investment examples – stocks, bonds, CDs, mutual funds, etcl Examples of loans – car loans, mortgages, personal loans, etc. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Services continued Mortgage Mutual Fund Real Estate Investment A long-term loan to purchase real estate such as a house Mutual Fund Groups of stocks, bonds, and other investments managed by an investment firm Real Estate Investment Purchasing real estate as an investment May buy a lower priced house, make improvements, and sell at a higher price © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Services continued Stock Ownership in corporation Represented by shares © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Introduction to Savings

Saving Basics Savings is the portion of current income not spent on consumption. Savings accounts provide an easily accessible place for people to store their money to meet daily living expenses and to have money for emergencies. Financial experts recommend individuals keep a minimum of three to six months of salary in a savings account. Most banks only allow so many withdrawals from a savings account each month For most institutions, your savings account earns interest (<money given to you for using their services)

Reasons People Should Save Emergencies – It is recommended individuals have a minimum of three to six months of salary in savings accounts for emergencies. Examples of emergencies can include illness, losing a job, or immediate need to replace a large item such as a washing machine. Expenses – Savings accounts can be used as a budgeting tool to manage monthly expenses. Future Purchases – Money can be used to meet future goals such as a college education, new car, down payment on a home, or a new stereo. Investing – After an individual has established a savings account, money should be invested monthly for future income.

70-20-10 Rule Spend 70% of money you earn Save 20% of money you earn Invest 10% of money you earn

Introduction to CHECKING ACCOUNTS

Checking Account Checking Account Tool used to transfer funds deposited into an account to make a cash purchase. Banks expect you to use this daily Funds are easily accessed by: Checks; Automated teller machines (ATMs); Debit cards; Telephone; Internet.

Checking Account continued 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. Normally, for debit cards, no limit. ATM Fees or Reimbursement