FINANCIAL AWARENESS Checking & Savings Accounts Lesson 3: Managing a Checking Account – Part 1 Instructor PowerPoint Copyright © 2009, Thinking Media, a division of SAI Interactive, Inc. All rights reserved. The Career Ready 101 logo is a registered trademark and Career Ready 101 is a trademark of SAI Interactive, Inc.

2 Managing a Checking Account Having a checking account is important to the day to day management of your money. A checking account enables you to: make deposits, pay expenses and make purchases without the use of cash.

3 Managing a Checking Account You need to practice good checking account management so you always maintain a positive balance in your account to cover your transactions. You need to update your Transaction Register regularly and balance your checkbook on a daily basis.

4 Managing a Checking Account In this lesson, we will discuss how to manage a checking account to include: Paying bills and making purchases are a big part of everyday life; it is important that you learn to manage your money and make wise decisions. Endorsing a check Making a deposit Maintaining a Transaction Register Reading and balancing a bank statement

5 Endorsing a Check A check endorsement tells the bank what to do with a check. When making a deposit into your account, you need to be sure you endorse the back of the check properly. To endorse a check is when you sign your name on the back of the check to either get cash or deposit the check into your account.

6 Endorsing a Check Most checks have an endorsement line on the back of the check indicating where to write your signature. A check must be endorsed before you or someone else can cash or deposit it into an account. Most banks will not cash a personal check written from another bank; however, the check can be deposited into your account. If you want cash, you must go to the bank where the account is held and show a picture ID that matches the endorsement in order to get cash.

7 Endorsing a Check The name on the check must also match the name on the account you want to deposit the check to. For example, if the payee name is John Smith, then the account name must match. If the payee name is Smith Construction, the check would have to be deposited into the Smith Construction account and not John Smith’s account even though John Smith owns the company.

8 Endorsing a Check Here are some different types of endorsements: Blank Endorsement A blank endorsement is when you want a check cashed or deposited into your account. Sign your name and include your checking or savings account number on the back of the check where indicated.

9 Endorsing a Check Special Endorsement A special endorsement is when you allow a third party to cash or deposit the check. Where indicated, write the name of the person you are allowing to cash or deposit the check along with your signature and account number. Some banks still might not accept this type of endorsement without the endorser’s actual in-person approval of the transaction.

10 Endorsing a Check Restrictive Endorsement A restrictive endorsement is when you specifically say what to do with the check. The most common restrictive endorsement is, “For deposit only into account #...” along with the payee’s signature. This tells the bank that this check can only be deposited into this account and cannot be cashed.

11 Endorsing a Check Be sure to read and follow any endorsement instructions that are printed on the back of the check. If you do not follow the instructions, you may accidentally void the check.

12 Distribute Exercise #1: Managing a Checking Account. You will use this handout throughout Managing a Checking Account – Part 1 to mark your responses to questions. Exercise #1: Managing a Checking Account

13 Directions: Circle the best answer to the question. Question 1 What is the purpose of endorsing a check? Exercise #1: Managing a Checking Account Question 1 A. To determine who owns the check B. To instruct the teller what to do with the check C. To determine who wrote the check D. To ensure it is not stolen

14 Direct Deposit Direct deposit is when you have your paycheck automatically deposited into your account. To have your paychecks direct deposited, your employer must offer this benefit to employees.

15 Direct Deposit Cont. The benefits of direct deposit are: There is no printed check to be lost or stolen. Your deposit hits your account the day the check is issued. You do not have to make a special trip to the bank or ATM to deposit your check every payday.

16 Direct Deposit Cont. Direct deposit can help you avoid bouncing checks especially if you juggle paycheck to paycheck because the deposit goes directly into your account and is always on time. If the regular payday falls on a holiday, your deposit usually goes in your account on the last business day before the holiday.

17 Setting-Up Direct Deposit You need to go through your employer to setup direct deposit of your paycheck. Your employer will need your Social Security number and a voided check for your checking account that contains the bank routing number and your account number.

18 Setting-Up Direct Deposit Remember the routing number is the first set of numbers on the bottom left-hand side of your check. The routing number is followed by your account number and the check number. It may take one or more pay cycles before your direct deposit is confirmed.

19 Setting-Up Direct Deposit Once your direct deposit is in place, you will no longer receive a printed paycheck. Instead, you will receive a voided check or voucher stating the amount deposited into your account. You should also still receive a check stub showing the deductions that were made such as taxes, insurance, vacation days, etc.

20 Directions: Circle the best answer to the question. Question 2 Which of the following is a benefit of direct deposit? Exercise #1: Managing a Checking Account Question 2 A. No printed check to be lost or stolen B. Deposit is credited to your account immediately C. Do not have to make a trip to the bank every payday D. All of the above

21 Making a Deposit After endorsing all checks to be deposited, most banks require a Deposit Slip. Deposit Slips are usually located behind your printed checks to include your personal information and account number.

22 Making a Deposit If you do not have a personalized Deposit Slip, you can complete a blank Deposit Slip available at most bank locations. If you use a blank Deposit Slip, you will need to write your personal information and account number where indicated.

23 Completing a Deposit Slip Here are the steps for completing a Deposit Slip: Date Line Write the date you are making the deposit on this line. Some Deposit Slips may state, “Deposits may not be available for immediate withdrawal.” This means, depending on the type(s) of check(s) you are depositing and the actual time the deposit is made, you may not be able to withdraw cash from this deposit.

24 Completing a Deposit Slip Cash If you are depositing cash, write the total dollar and coin amount you are depositing. Most banks will only accept coins if they are rolled in money wrappers. You can usually get money wrappers from the bank teller.

25 Completing a Deposit Slip Cash Cont. You can only deposit coins at the bank location; you cannot use an ATM or drive-thru banking. Most banks provide a deposit drop box for commercial customers only.

26 Completing a Deposit Slip Checks List checks individually by name and amount. There are usually three to four lines on the front of the Deposit Slip for you to list the checks you are depositing. If you are depositing more checks, you will need to list them on the back of the Deposit Slip.

27 Completing a Deposit Slip Checks Cont. Write the total from the reverse side (back) where indicated on the front of the Deposit Slip – “Total from reverse.” Write the name of the payer (company or who the check is from) on this line. This space is usually limited, so write the last name if it is an individual or the first name if it is a company.

28 Completing a Deposit Slip For example, An individual: John Smith, write “Smith” on the line. If more than one Smith, include the first initial of the first name. (i.e., J. Smith or Smith, J.) A company: Able Construction Company, write “Able” on the line. Write the check amount where indicated to the right of the name.

29 Completing a Deposit Slip Subtotal Add the cash and check(s) and write the total amount in the Subtotal section. Less Cash Received If you are withdrawing cash from this deposit, write the amount of the withdrawal in this section.

30 Completing a Deposit Slip Signature Line Sign your name on this line only if you are withdrawing cash from this deposit. Total Deposit or $ Amount Write the total amount of the deposit less any cash withdrawals. This is the total amount that will be deposited into the designated account on the Deposit Slip. Always double-check the information on the Deposit Slip before submitting it to the teller or ATM.

31 How Deposits are Posted to Your Account Before opening a checking account you need to find out what the bank’s policy is on holding deposits. Some banks place a temporary hold on check deposits until the check clears the payer’s bank.

32 How Deposits are Posted to Your Account The bank will usually credit your account to show the deposited funds as part of your balance but you will not see this amount available until the hold is lifted. This means, the money is not available for a cash withdrawal and checks written against these funds would bounce.

33 How Deposits are Posted to Your Account The hold period varies depending on the source of the check. Most local company paychecks will clear quicker than personal checks and out-of-state checks. A deposit hold could last several business days.

34 Directions: See if you can place the items in the correct fields on the Deposit Slip. Question 3 Complete the Deposit Slip. (A) (B) (C) (D) August 2, 2006 (E) Rebecca Hurgis Exercise #1: Managing a Checking Account Question 3

35 Directions: See if you can place the items in the correct fields on the Deposit Slip. Question 3 Complete the Deposit Slip. (A) (B) (C) (D) August 2, 2006 (E) Rebecca Hurgis Exercise #1: Managing a Checking Account Question 3 – Answer

36 Maintaining a Transaction Register You will receive a Transaction Register with each box of printed checks. You can also get additional Transaction Registers at your bank location. The Transaction Register is used for keeping track of the money in your checking account.

37 Maintaining a Transaction Register Use this Transaction Register to record all of your: written checks, ATM withdrawals, debit card purchases, deposits and any bank fees and/or interest. When writing a check, record the information in your Transaction Register first before you write the check so you do not forget who it was written to and for how much.

38 Maintaining a Transaction Register It is important to record all transactions in your Transaction Register so you always know your account balance. By maintaining your Transaction Register, you will ensure there is enough money in your account to cover your transactions.

39 Completing a Transaction Register Here are the steps for completing a Transaction Register: Number or Code If you are writing a check, write the check number in this field. You can also use this area to code each transaction. This will make it easier when balancing your monthly checking account statement.

40 Completing a Transaction Register You can create your own coding system or use these common codes: AD – Automatic Deposit (Direct Deposit) AP – Automatic Payment (recurring payment that is set-up to automatically be deducted on a particular date.) ATM – Cash Withdrawal

41 Completing a Transaction Register Number or Code Cont. DC – Debit Card Transaction TF – Transferred Funds (transfer money to a savings account or other account) SC – Service Charge TD – Tax Deductible (use information when completing your tax return)

42 Completing a Transaction Register Date Write the date the transaction occurred. Transaction Description Write who the check was written to, the name of the business for the purchase or a description of the transaction.

43 Completing a Transaction Register Payment, Fee or Withdrawal (-) Write the check amount or dollar amount of the transaction. These are transactions that are subtracted from your account.

44 Completing a Transaction Register Checkmark Column This column is for you to check-off items when balancing your checking account against your monthly statement. Always remember to insert a checkmark when deducting service charges or adding interest.

45 Deposit or Credit (+) Write the amount of all deposits and credits in this section. Remember to list all direct deposits and interest earned on your checking account. These are transactions that are added to your account.

46 Completing a Transaction Register Balance To keep a current record of your checking account balance, add or subtract the transaction amount from the balance of the above transaction line.

47 Completing a Transaction Register Most Transaction Registers include a section in the front or back for you to keep track of all direct deposits and automatic payments so you do not forget to add or deduct them when they are due. A Transaction Register usually includes a calendar on the back cover to reference when needed.

48 Question 4 What is the purpose of a Transaction Register? Exercise #1: Managing a Checking Account Question 4 A. To record all of your checks, ATM withdrawals and debit card purchases B. To record all of your deposits C. To record all of your bank fees and/or interest D. All of the above

Lesson 3: Managing a Checking Account – Part 1 END OF LESSON NEXT SECTION LESSON 3: MANAGING A CHECKING ACCOUNT– PART 2