© Family Economics & Financial Education – Revised April 2008– Saving Unit – Managing Your Cash Funded 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

G1 © Family Economics & Financial Education – April 2008 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona $ How do small amounts of money saved and invested easily grow into larger sums??  INTEREST!! Money invested earns interest  The profit made on money invested. Did You Know?

G1 © Family Economics & Financial Education – April 2008 – Saving Unit – Managing Your Cash Funded 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

G1 © Family Economics & Financial Education – April 2008 – Saving Unit – Managing Your Cash Funded 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

G1 © Family Economics & Financial Education – April 2008 – Saving Unit – Managing Your Cash Funded 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 $ A financial account used to assist with daily cash management 1) Checking Account 2) Savings Account 3) Certificate of Deposit Three types of cash management tools

G1 © Family Economics & Financial Education – April 2008 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona $ Use: Tool used to transfer funds deposited into an account to make a cash purchases, write checks, and make ATM withdrawals $ Interest: Most checking accounts do not pay interest $ Accessibility: Money can be withdrawn at any time Checking Account

G1 © Family Economics & Financial Education – April 2008 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Savings Account $ Use: Tool used to hold or store money for emergencies or large purchases $ Interest: Does earn interest $ Accessibility: Money can withdrawn at any time

G1 © Family Economics & Financial Education – April 2008 – Saving Unit – Managing Your Cash Funded 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) $ Use: Tool used to invest money on a short- term basis. A CD has a set term (1-5 years) $ Interest: Does earn interest! But rates vary. The longer the length of the term, the higher the interest rate $ Accessibility: Restricted access to the funds, must keep money in CD for the full term or pay penalties ):

G1 © Family Economics & Financial Education – April 2008 – Saving Unit – Managing Your Cash Funded 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 Checking AccountZero! Savings Account.06%-1% Certificate of Deposit 1.5%-3%, depending on the length of deposit

G1 © Family Economics & Financial Education – April 2008 – Saving Unit – Managing Your Cash Funded 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  Liquid assets are important for emergencies when cash must be quickly accessed Liquidity

G1 © Family Economics & Financial Education – April 2008 – Saving Unit – Managing Your Cash Funded 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 Savings Account Certificate of Deposit Most Liquid Least Liquid

G1 © Family Economics & Financial Education – April 2008 – Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona THINK $ What are the apparent pros and cons of checking, savings, and CD accounts?

G1 © Family Economics & Financial Education – April 2008 – Saving Unit – Managing Your Cash Funded 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 three cash management tools are LOW RISK:  Funds in these type of accounts are insured by the Federal Deposit Insurance Corporation (up to $250,000)  However, they have lower interest rates which c auses low earnings