PFIN 4 Managing Your Cash and Savings 4 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a.

Slides:



Advertisements
Similar presentations
Part 6—Managing Your Income
Advertisements

Chapter 5: Managing Your Cash. Objectives Explain the importance of effective cash management and list the four tools of cash management. Compare and.
Chapter 5: Managing Your Cash. Objectives Explain the importance of effective cash management and list the four tools of cash management. Compare and.
 How to Manage Your Cash › Daily Cash Needs  Lunch, movies, gas, or paying for other activities  Carry cash  Go to an ATM  Credit Card  Know pros.
Checking Accounts & Banking Services
$$$$$$$ Know your Money! Financial Institutions and Services.
Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE1 CHAPTER Banks and Other Financial Institutions Financial Services.
CHAPTER 4: MANAGING YOUR CASH AND SAVINGS
Cash or Liquid Asset Management
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE Banks and Other Financial Institutions 17-2.
Managing Your Cash. Objectives Explain the importance of effective cash management and list the four tools of cash management. Compare and contrast the.
Chapter 4 Money Management Managing Checking and Savings Accounts –Checking and savings accounts are the foundation of financial asset management –Cash.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill C HAPTER 5 Banking Services: Savings Plans and Payment Accounts 6e Personal.
Banking and Financial Services
4 - 1 COPYRIGHT © 2008 by Nelson, a division of Thomson Canada Ltd Chapter 4 – Managing Your Cash and Savings.
BANKING/CHECKING ACCOUNTS. Banking/Checking Accounts How Banks Work Using a checking account Balancing your checking account Electronic banking Other.
© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill C HAPTER 5 Banking Services: Savings Plans and Payment Accounts 7e Personal.
Chapter 5 Financial Services: Savings Plans and Payment Accounts
Chapter © 2010 South-Western, Cengage Learning Checking Accounts and Banking Services Checking Accounts Banking Services and Fees 9.
Prentice-Hall, Inc.1 Chapter 5 Cash or Liquid Asset Management.
Chapter 5 The Banking System
PART 2: MANAGING YOUR MONEY Chapter 5 Cash or Liquid Asset Management.
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE Banks and Other Financial Institutions 17-2.
Glencoe Business and Personal FinanceCopyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Cash or Liquid Asset Management. 5-2 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Learning Objectives 1. Manage your cash and.
Copyright ©2004 Pearson Education, Inc. All rights reserved. Chapter 5 Banking and Interest Rates.
4-1. McGraw-Hill/Irwin Focus on Personal Finance, 2e Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. 4 Savings and Payment Services.
Banking Services: Savings Plans and Payment Accounts
Chapter 5: Managing Your Cash. Objectives Explain the importance of effective cash management and list the four tools of cash management. Compare and.
Banking Chapter 5. Section 5.1 Objectives Identify types of financial services Identify types of financial services Describe the various types of financial.
Chapter 6 Managing Your Money. Copyright ©2014 Pearson Education, Inc. All rights reserved.6-2 Chapter Objectives Provide a background on money management.
Foundations of Personal Finance Ch. 8
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Management of Monetary Assets
© 2008 Thomson South-Western CHAPTER 4 MANAGING YOUR CASH AND SAVINGS.
© 2008 Thomson South-Western Lecture 3 MANAGING YOUR CASH AND SAVINGS.
Introduction to Business © Thomson South-Western ChapterChapter Banking and Financial Services Banks and Other Financial Institutions Financial.
Financial Planning Three main influences when considering financial planning: Life Situation Personal Values Economic Factors.
Introduction to Saving. Saving Basics Savings is the portion of current income not spent on consumption. Recommended to have a minimum of 3-6 months salary.
© Family Economics & Financial Education – Revised April 2008– Saving Unit – Managing Your Cash Funded by a grant from Take Charge America, Inc. to the.
Objective 4.02 Understand the banking system Classification of financial institutions.
 2004 McGraw-Hill Ryerson Ltd. Kapoor Dlabay Hughes Ahmad Prepared by Cyndi Hornby, Fanshawe College Chapter 4 The Banking Services of Financial Institutions.
Checking Accounts Banking Services and Fees CHECKING ACCOUNTS AND BANKING SERVICES.
Chapter 10 Banking.
Chapter 9 Checking Accounts.
FINANCIAL SERVICES AND INSTITUTIONS. Financial Services  Services offered by banks and other financial institutions 1. Savings and Investment 2. Payment.
© 2013 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
4-1 Copyright  2002 by Harcourt, Inc. All rights reserved. CHAPTER 4: MANAGING YOUR CASH AND SAVINGS Clip Art  2001 Microsoft Corporation. All rights.
Chapter © 2010 South-Western, Cengage Learning Checking Accounts and Banking Services Checking Accounts Banking Services and Fees 9.
Chapter © 2010 South-Western, Cengage Learning Checking Accounts and Banking Services Checking Accounts Banking Services and Fees 9.
Fri. 4/15. Ch. 10 Money and Banking 10.3 Notes “Banking Today”
Banking Procedures and Services
Using Bank Services Chapter 33. Checking Accounts A customer deposits money in an account and receives a book of checks. May deposit or withdraw money.
Chapter 5. Financial Services Borrowing Short Term Regular Savings Money Market Accounts Long Term Certificates of Deposit U.S. Savings Bonds Investment.
Chapter 14. Banking  Do Now  What do you think banks will be like in 15 years?
PFIN 4 4 Managing Your Cash and Savings GITMAN/ JOEHNK/ BILLINGSLEY
Lesson 5.2 Banking Services and Fees
Cash or Liquid Asset Management
Take Charge of Your Finances Family Economics & Financial Education
Banking Chapter 7 What types of financial services might help you to better manage your cash flows?
PFIN 4 5 Managing Your Cash and Savings GITMAN/ JOEHNK/ BILLINGSLEY
Banking Chapter 14 What types of financial services might help you to better manage your cash flows?
CHAPTER 5 The Banking System
Savings BA250 - Personal Finance Week 3.
Longwood University 201 High Street Farmville, VA 23901
Managing Your Cash and Savings
Chapter 5: Managing Your Cash
Chapter 5: Managing Your Cash
Lesson 4.2 Banking Services and Fees
Presentation transcript:

PFIN 4 Managing Your Cash and Savings 4 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. GITMAN/ JOEHNK/ BILLINGSLEY

2 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1Understand the role of cash management in the personal financial planning process 2Describe today’s financial services marketplace, both depository and nondepository financial institutions 3Select the checking, savings, electronic banking, and other bank services that meet your needs LEARNING OUTCOMES PFIN4 | CH4

3 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4Open and use a checking account 5Calculate the interest earned on your money using compound interest and future value techniques 6Develop a savings strategy that incorporates a variety of savings plans LEARNING OUTCOMES (continued) PFIN4 | CH4

Cash Management (Liquid Assets) 4 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Routine administration of cash and near- cash resources Establishes savings program that is an important part of personal financial planning PFIN4 | CH4

Exhibit Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Representative Rates of Return PFIN4 | CH4

Low Interest Rates 6 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Have implications for personal finances by creating economic distortions Discourage savings and the reduction of debt levels Encourage investors to search for investments that pay income PFIN4 | CH4

Financial products Checking and savings accounts Credit cards Loans and mortgages Insurance Mutual funds Financial services Financial planning Securities brokerage Tax filing and planning Estate planning Trusts Retirement Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7 PFIN4 | CH4 Financial Products and Services

Types of Financial Institutions 8 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Depository financial institutions Commercial banks, savings and loan associations (S&Ls), savings banks, and credit unions Accept deposits Nondepository financial institutions Other types of financial institutions that offer banking services Do not accept deposits PFIN4 | CH4

Exhibit Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Federal Deposit Insurance Programs PFIN4 | CH4

Checking and Savings Accounts 10 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH4 Account from which funds can be withdrawn on demand by the account holder Demand deposit Savings deposit that remains deposit for a longer time than a demand deposit Time deposits Checking account on which the financial institution pays interest Have no legal minimum balance Negotiable order of withdrawal (NOW) accounts

Types of Accounts and Funds 11 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Federally insured savings account, offered by banks and other depository institutions Money market deposit accounts (MMDAs) Pools the funds of small investors and purchases high- return, short-term marketable securities Money market mutual fund (MMMF) Comprehensive deposit account offered by brokerage houses and mutual funds Asset management account (AMA) PFIN4 | CH4

Electronic Funds Transfer Systems (EFTSs) 12 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Uses latest telecommunications and computer technology to electronically transfer funds into and out of customers’ accounts PFIN4 | CH4

Debit Cards and Automated Teller Machines (ATMs) 13 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Coded plastic cards used to transfer funds from a customer’s bank account to the recipient’s account to pay for goods or services Debit cards Remote computer terminal that customers of depository institutions can use to make basic transactions 24 hours a day, 7 days a week ATMs PFIN4 | CH4

Services Offered by a Bank 14 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Preauthorized deposits and payments Bank-by-phone accounts Online banking and bill payment Safe-deposit boxes Trust services PFIN4 | CH4

Electronic Funds Transfer Act of Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Federal act that describes the rights and responsibilities of an EFTS user Under the law, one cannot stop payment on a defective or questionable purchase PFIN4 | CH4

Maintaining a Checking Account 16 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Convenience, services, and cost influence the choice of where to maintain a checking account Checking account can be an individual or a joint account Overdraft: Result of writing a check for an amount greater than the current account balance Overdraft protection: Depository institution automatically pays a check that overdraws the account PFIN4 | CH4

Monthly Statements 17 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Itemized listing of all transactions in one’s checking account Account reconciliation Verifying the accuracy of one’s checking account balance in relation to the bank’s records as reflected in the bank statement PFIN4 | CH4

Types of Checks 18 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Payable to a third party that is drawn by a bank on itself in exchange for the amount specified and a service fee Cashier’s check Sold by financial institutions that can be used for making purchases and exchanged for local currencies Traveller's check Personal check guaranteed by the bank on which it is drawn Certified check PFIN4 | CH4

Establishing Savings Program 19 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Vital element of personal financial planning Develop specific saving plan to accumulate funds Consider risk preferences, period to retain money in deposits, level of interest rates PFIN4 | CH4

Types of Interests 20 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Earned in each subsequent period is determined by applying the nominal rate of interest to the sum of the initial deposit and the interest earned in each prior period Compound interest Paid on the initial amount of the deposit Simple interest PFIN4 | CH4

Types of Interests 21 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Promised rate of interest paid on a savings deposit or charged on a loan Nominal (stated) rate of interest Annual rate of return that is actually earned during the period the funds are held Effective rate of interest PFIN4 | CH4

Exhibit Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Magic of Compounding PFIN4 | CH4

Ways to Save 23 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Certificates of deposit (CD) Issued by financial institutions in exchange for a deposit U.S. Treasury bill (T-bill) Issued at a discount by the U.S. Treasury in its ongoing process of funding the national debt PFIN4 | CH4

Ways to Save 24 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Series EE bonds Issued in denominations by the U.S. Treasury I savings bonds Issued at face value by the U.S. Treasury, whose fixed rates provide some inflation protection PFIN4 | CH4

25 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Cash management Internet banks Share draft accounts Deposit insurance Demand deposit Time deposits Negotiable order of withdrawal (NOW) accounts Money market deposit accounts KEY TERMS Money market mutual fund Asset management account Electronic funds transfer systems Automated teller machines Checkbook ledger Overdraft Overdraft protection PFIN4 | CH4

26 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Stop payment Account reconciliation Cashier’s check Traveler’s checks Certified check Time deposits Compound interest Nominal (stated) rate of interest Effective rate of interest KEY TERMS Certificate of deposit U.S. Treasury bill Series EE bonds I savings bonds PFIN4 | CH4

27 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. SUMMARY Cash management involves managing liquid assets which can be either held in cash or can be readily converted into cash with little or no loss in value Financial services industry is evolving due to technological advancement and changing regulations Menu of cash management products helps in comparing different cash products and services offered by various financial institutions PFIN4 | CH4