1. Objectives: 1.Explain the purpose and use of a checking account. 2.Prepare checks and maintain a checkbook register. Warm Up: Grab a packet on the center table and answer the following question: Why do people put money in a checking or savings account? Agenda: 1.Warm Up 2.Vocab. 3.Intro to banking P.P. 4.Follow along notes 5.Balancing a check book activity Daily Information 4/24

2. Financial Planning Three main influences when considering financial planning: Life Situation Personal Values Economic Factors

3. Why Save and Invest Money? Allow your money to grow Keep up with inflation Earn interest on interest Make your money work for you Through: –Compounding interest –Investment growth Slide 3

4. Time Value of Money A dollar you receive in the future will be worth less than a dollar you receive today

5. Cash Management The daily routine of handling money to take care of individual or family needs Effective cash management includes having money available for: –Living expenses –Emergencies –Savings –Investing Slide 5

6. Cash Management Tools A financial account used to assist with daily cash management ToolInterestSpecial Features Checking Account (demand deposit) 1.5%Checks used in place of cash Easy access Saving Account2.3%Temporary holding place Easy access Money Market Account 2.6%Minimum balance Tiered interest rates Limited withdrawals Certificate of Deposit4 – 5.4%Penalty for early withdrawal Not easy to access funds Savings Bond4 – 5.4%Tax advantages Not easy to access funds

7. Why Have Checking Account? Checking Account – A demand deposit account on which checks are drawn Check - a written order to a bank to pay a person or business.

8. Checking Accounts Why open a checking account? –Safe place to keep money (Insured by the FDIC) –Easy to pay bills by mail (writing a check) –Easy access to money to make cash purchases Withdrawal money Write checks against the account Debit cards Internet banking

9. Checking Account Features May be interest earning Minimum balance requirements Charge transaction fees Limited number of checks written monthly Overdraft Protection (NSF) **Reduces the need to carry large amount of cash

10. Opening a Checking Account What will I need? –Money! ($50 or $100) –Personal information –Identification –Provide an official signature What will I be given? –Checkbook –Checkbook register

11. Checkbook Register A way to track your account transactions

12. Withdrawals and Deposits A withdrawal involves taking money from your account. o Writing checks o Using debit cards A deposit of money can be made to your account. o Endorsing checks o Direct deposit **Banks will not hold postdated checks and process them at a future date.

13. Endorsing A Check Signature on the back of the check approving it for deposit. Checks must be endorsed to be deposited Three Types Blank Restrictive Special Safest way to endorse the check is to wait until going to the bank to deposit

14. Blank Endorsement Receiver of the check signs his/her name Anyone can cash or deposit the check after it has been signed Endorse Here X Sally Smith_________ DO NOT WRITE, STAMP OR SIGN BELOW THIS LINE. RESERVED FOR FINANCIAL INSTITUTION USE ________________________________

15. Restrictive Endorsement More secure than blank endorsement Receiver writes “for deposit only” above his/her signature –Allows the check only to be deposited Endorse Here For Deposit Only – Acct. 654986 X Sally Smith_________ DO NOT WRITE, STAMP OR SIGN BELOW THIS LINE. RESERVED FOR FINANCIAL INSTITUTION USE _______________________________

16. Special Endorsement Receiver signs and writes “pay to the order of (fill in person’s name) Allows the check to be transferred to another person –Also known as a third-party check Endorse Here Pay to the order of Mike Smith X Sally Smith_________ DO NOT WRITE, STAMP OR SIGN BELOW THIS LINE. RESERVED FOR FINANCIAL INSTITUTION USE _______________________________

17. Check 21 Check clearing for the 21 st Century Act (check 21) –Current trend that changes how money is withdrawn and deposited into accounts

18. How Check 21 Works Prior to Check 21 –Paper checks physically moved from place to place After Check 21 –Paper checks scanned to computer to create a “substitute check” (truncated) –Substitute check is transferred electronically from place to place

19. Writing a Check Sally Smith 500 Great Street Yourtown, NJ 55555 93-456-9540 45086244786 503 Date: 9/6/2006 Pay to the Order Of The Pizza Place $ 9.50 _Nine dollars_------------------------------------------------50/100 _ Dollars Guardian Angel Banking 423 South 15 th Yourtown, NJ 55555 Memo __ Pizza ____ Sally Smith____ 0123456789 : 1234567890 : 503

20. Objectives: 1.Prepare a bank reconciliation 2.Explain how you can grow your savings with interest Warm Up: Explain the difference between the three different types of endorsement. Agenda: 1.Warm Up 2.Bank reconciliation P.P. 3.Follow along notes 4.Chapter 5 activity packet Daily Information 4/28

21. Monthly Statement Comes from your bank Lists information about each transaction during the period Lists the current balance during the period

22. Reconcile a Bank Statement Bank reconciliation - the process of adjusting the checkbook register and bank statement so they agree Consider the following: o deposits in transit o outstanding checks o transposition errors

23. What Is the Purpose of Savings? Savings Account - a demand deposit account for the accumulation of money It is a safe place to hold money to meet future needs and wants It pays interest at a low rate

24. Cash Management Tools A financial account used to assist with daily cash management ToolInterestSpecial Features Checking Account1.5%Checks used in place of cash Easy access Saving Account2.3%Temporary holding place Easy access Money Market Account 2.6%Minimum balance Tiered interest rates Limited withdrawals Certificate of Deposit4 – 5.4%Penalty for early withdrawal Not easy to access funds Savings Bond4 – 5.4%Tax advantages Not easy to access funds

25. Liquidity How quickly and easily an asset can be converted into cash. Liquid assets are important for emergency situations Investors should: –Invest in both liquid and non-liquid tools

26. Liquidity Checking Account Savings Account Money Market Account Certificate of Deposit Savings Bond Most Liquid Least Liquid

27. Watch Your Money Grow! How can you grow your savings? Through… Principal Simple interest Compound interest

28. Computing Simple Interest Simple Interest – interest computed on principal once during a certain time period P = amount of money invested R = interest rate T = time period that money will be set aside Simple Interest Interest (I) = Principal (P) × Rate (R) × Time (T) = $1,000 × 6% annual rate × 6 months = $1,000 × 0.06 × 6/12 = $30

29. Computing Compound Interest Compound Interest – interest earned on both the principal and previously earned interest Quarterly Compounding Annual Interest Rate 6% Beginning Rate Ending YearBalance 6% QuarterBalance 1 2 3 4 1$100.000.015$1.50$1.52$1.55$1.57$106.14 2$106.140.015$1.59$1.62$1.64$1.66$112.65 3$112.650.015$1.69$1.72$1.74$1.77$119.57 Future Value of Money

30. Rule of 72 How long will it take to double my money? Divide annual interest rate into 72 Example: if you invest $50 at 6% interest, your money will grow to $100 in 12 years ( 72 ÷ 6 = 12 years)

31. Focus On... The FDIC Protects depositors of insured U.S. banks against loss if the bank fails Covers all types of deposits Covers principal and accrued interest Does not insure some items o Examples: stocks, bonds, valuables Insures deposits in different banks separately

32. Available Banking Services Safe deposit boxes Overdraft protection ATMs Cashier’s checks Financial advising Loans Internet banking Bank cards

33. Costs of Banking Monthly account fees Nonsufficient fund fees Special service fees o Examples: stop payment, cashier’s check, money order ATM fees Inactive account fees

34. What Are Consumer Responsibilities? Maintain your balance. o Avoid writing bad checks. Monitor your account. o Reconcile your bank account. Know your rights. o Be aware of consumer protection laws.

35. Summary Depository institutions offer many benefits: A safe place to store money A way to manage cash The opportunity to earn interest Services/features offered and fees charged vary between and within every depository institution Research different depository institutions and choose one that will help you reach your goals

36. Bank Statement

37. Objectives: 1.Define vocabulary related to a bank reconciliation. 2.Explain how you can grow your savings with interest Warm Up: Explain the process of performing a bank reconciliation. Quiz tomorrow!! Agenda: 1.Warm Up 2.Bank Rec. Review 3.Paycheck Packet 4.Ch5 Study Guide 5.Bottom Line Daily Information 4/29 (b,g)

38. Objectives: 1.Define vocabulary related to a bank reconciliation. 2.Explain how you can grow your savings with interest. Warm Up: Take out the following: Study Guide Resume w/Corrections Paycheck Packet Quiz Today!! Agenda: 1.Warm Up 2.Bank Rec. Review 3.Chapter 5 Quiz 4.Resume 5.Paycheck 6.Bottom Line Daily Information 4/29 (a,e)

39. Objectives: 1.Define vocabulary related to a bank reconciliation. 2.Explain how you can grow your savings with interest Warm Up: What is a savings bond? Quiz Friday!! Agenda: 1.Warm Up 2.Paycheck Packet 3.Ch5 Study Guide 4.Bottom Line Daily Information 4/30 (b)

40. Objectives: 1.Define vocabulary related to a bank reconciliation. 2.Explain how you can grow your savings with interest. Warm Up: Take out the following: Study Guide Resume w/Corrections Paycheck Packet Quiz Today!! Agenda: 1.Warm Up 2.72 & Simple Review 3.Chapter 5 Quiz 4.Resume 5.Paycheck 6.Bottom Line Daily Information 5/2 (b)