1. © 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 Family Economics & Financial Education Take Charge of Your Finances

2. © 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 $ Lesson Objectives:  Explain the importance of cash management  Describe the five tools used for cash management  Categorize the characteristics of each cash management tool Managing Your Cash

3. 1.14.2.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 $ Small amounts saved and invested can easily grow into larger sums.  If a person saved a dollar each day by not having a candy bar or soda, they would save $365.00 per year!  If the $365.00 dollars was deposited into a certificate of deposit (CD) with 5.0% interest, the money could grow to nearly $400.00 in one year! Did You Know?

4. 1.14.2.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

5. 1.14.2.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.

6. 1.14.2.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. $ Five types of cash management tools:  Checking Account;  Savings Account;  Money Market Deposit Account;  Certificate of Deposit;  Savings Bond.

7. 1.14.2.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 Checking Account $ Tool used to transfer funds deposited into an account to make a cash purchase. $ Checking accounts may be non-interest or interest earning. Checking Account

8. 1.14.2.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 $ Funds are easily accessed by:  Checks;  Automated teller machines (ATMs);  Debit cards;  Telephone;  Internet. $ Features may include:  Minimum balance requirements;  Charge transaction fees;  Limited number of checks written monthly.  Reduces the need to carry large amounts of cash. Checking Account continued

9. 1.14.2.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 Checking Account continued

10. 1.14.2.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 Checking Account continued

11. 1.14.2.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 $ Account to hold money not spent on consumption. $ Interest bearing. $ Have a lower interest rate than other cash management tools $ Money may be accessed or transferred between accounts through:  Automated teller machines;  Telephones;  Internet.

12. 1.14.2.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 continued $ Features may include:  Allows for frequent deposits or withdrawals;  Easily accessible;  Money storage for emergencies or daily living;  Available at depository institutions;  May require a minimum balance or have a limited number of withdrawals.

13. 1.14.2.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 Money Market Deposit Account $ A government insured account offered at most depository institutions.  Have a minimum balance requirement with tiered interest rates. $ The amount of interest earned depends on the account balance. $ For example: a balance of $10,000 will earn a higher interest rate than a balance of $2,500.

14. 1.14.2.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 Money Market Deposit Account continued $ Accessibility is usually limited to three to six transactions each month; $ Features of may include:  Minimum amount required to open the account, often $1,000;  If the average monthly balance falls below a specified amount, the entire account will earn a lower interest rate.

15. 1.14.2.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) $ Certificate of Deposit (CD)  An insured, interest earning savings instrument with restricted access to the funds.  Found in depository institutions accepting deposits for a certain length of time.  Interest rates vary depending upon specified time length. $ The longer the length, the higher the interest rate.

16. 1.14.2.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 continued $ Features may include:  Range from seven days to eight years in length;  Minimum deposits range from $100-$100,000;  If funds are withdrawn before the expiration date, penalties are assessed;  Low risk and no fees;

17. 1.14.2.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 Bond $ Discount bond purchased for 50% of the face value from the U.S. Government. $ Interest earned on a bond is tax exempt until redeemed.  No taxes are due on interest earned.  It will be tax exempt when redeemed if used for college expenses.

18. 1.14.2.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 Bond continued $ Access to funds is restricted $ Features of may include:  Many different types available;  Can be purchased for $25.00 - $10,000.00; $ A $100.00 bond would be purchased for $50.00. When the bond matures to $100.00, it can be redeemed.

19. 1.14.2.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 Tool Average Interest Earned Purchase PlaceSpecial Features Checking Account 1.5% Commercial Banks, Savings & Loan Associations, Credit Union Can be used in place of cash, funds can be easily accessed Savings Account 2.3% Commercial Banks, Savings & Loan Associations, Credit Union Easily accessed, temporary holding place for funds Money Market Account 2.6% Commercial Banks, Savings & Loan Associations, Credit Union Minimum balance, limited transactions, tiered interest rates Certificate of Deposit 4.0% - 5.4%, depending on the length of deposit Commercial Banks, other institutions which accept deposits for a fixed period Penalties for early withdrawals, no deposits or withdrawals are made after initial investment Savings Bonds 4.0% - 5.4%, depending on the length of bond Commercial Banks, Credit Unions, employer payroll deduction plans Tax advantages, a loan to the federal government

20. 1.14.2.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. $ Investors should:  Invest in both liquid and non-liquid tools.  Liquid assets are important for emergencies when cash must be quickly accessed. $ Cash management tools are protected by the U.S. Government against loss. Liquidity

21. 1.14.2.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 AccountMost Liquid Savings Account Money Market Deposit Account Certificate of Deposit Savings BondLeast Liquid

22. 1.14.2.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 five cash management tools are low risk:  Insures the funds so the consumer does not lose money on the investment.  However, they have lower interest rates. $ Causes low returns

23. 1.14.2.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 Investment Risk Pyramid Increasing potential for higher returns Growing risk to investor’s capital Increasing safety of principal Growing risk of loss of purchase power Financial Security (Cash Management Tools) Safety and Income Growth Speculation

24. 1.14.2.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 Summary $ Cash management is a daily routine of handling money to have enough funds for:  Living expenses;  Emergencies;  Savings;  Investing.

25. 1.14.2.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 Summary $ Five types of cash management tools:  Checking account;  Savings account;  Money market deposit account;  Certificate of deposit;  Savings bond.

26. 1.14.2.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 $ Lesson Objectives – Review  Explain the importance of cash management  Describe the five tools used for cash management  Categorize the characteristics of each cash management tool Managing Your Cash

27. 1.14.2.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 $ Assignments:  Managing Your Cash 1.14.2.L1 Note-taking guide  Cash Management Tools worksheet 1.14.2.A1  Managing Your Cash worksheet 1.14.2.A2  Checking Account and Debit Card Simulation 2.7.3.B1 Managing Your Cash

28. © 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 The End