C H E C K I N G , S AV I N G S , A N D I N V E S T I N G

MANAGING YOUR MONEY

MANAGING YOUR MONEY

• A budget is... A sum of money to be used for a particular purpose. It is a plan for earning, spending and saving money.• To make a budget, you need to know three (3) things:• Your Income• Your Expenses• How much to Save

INCOME

• Income is the money you earn. It can be from your job (paycheck) or other sources. (ie interest from investments, gifts, extra services)• Decoding your paycheck• Gross Pay- The entire amount of your income or

paycheck before any deductions like taxes or insurance payments are subtracted.

• Net Pay- The amount of your income or paycheck after any deductions like taxes or insurance payments are subtracted. This is your take-home pay.• Income Tax- Money that wage earners pay the government to

run the country. The amount of the tax depends upon how much you earn.

• Social Security- money you pay into a fund to receive at retirement or if you are injured and can no longer work.

EXPENSES

• Fixed Expenses- payments that must be made in a fixed time period -every week or month or year• Rent or Mortgage• Car payments• Insurance• Credit Card Payments

• Flexible Expenses- payments that vary in time and amount• Food• Entertainment-movies, music, books• Clothing

TYPES OF ACCOUNTS

• Banks basically offer two types of accounts: • A Savings Account is... A bank account where

money is stored and returns a low interest rate.

• A Checking Account is... A bank account where the depositor can write checks. It is for the money you use to pay everyday expenses.

CHECKING ACCOUNTS

• Debit Card is... Like a credit card, but it takes money directly from your bank account.

• Checks-issued by the bank. They represent a pledge to pay a certain amount of money to a person or business.• Cleared Check is a check that has been honored and

processed.• Bad Check  is a check that is dishonored because of

insufficient funds.• Overdraft occurs when withdrawals have gone over the

available amount.• Overdraft Fee is a fee for over spending.

How to Write a Check

TRACKING YOUR ACCOUNTS

• Check Register is a record book used to keep track of all transactions.

• When do you record a check (debit) in your check register?• When checks are written.• When Automated Teller Machine (ATM) withdrawals are made.

• When do you record a deposit (credit) in your check register?• When you receive a paycheck.• When you receive money from another source.

• Sample Register

• Statement is a document published by your bank that details all transactions for the month.

SAVINGS ACCOUNTS

• Interest-The amount paid by a borrower to a lender for the privilege of borrowing the money.

• Savings Accounts- Most common way to save money. Offered by most banks. Pays the lowest interest rate, but offers the most flexibility.

• Certificates of Deposit- You agree to deposit a specific amount of money for a fixed amount of time, usually 60, 90, or 120 days. Pays higher interest, but you can’t use your money until the time period is over.

• Money Market Account- Pays higher interest than a savings account but less than a CD, however you can withdraw money without penalty. Requires maintaining a high balance.

MAKE SAVINGS A FIXED EXPENSE

• Emergency Expense-unexpected or unplanned for expense. (i.e car repairs, illness, broken appliance)

• Savings Plan-Regular payments into an interest bearing account. Acts as a “shock absorber” when emergencies happen. Can also be used to pay for luxuries.• You should put 5% to 10% of your income into a

savings account.

CREDIT CARDS

• A credit card is…• A card that lets you buy goods and services based on a

promise to pay later.• A card that charges monthly interest if the balance is not

paid in full.• When you use a credit card to purchase things, you are

taking a loan from the bank for that amount of money! The bank will charge you interest for this loan.

• In this case interest is bad because you are paying the bank instead of the bank paying you!

DEVELOP THE SAVINGS HABIT

• Saving can sometimes seem hard to do. Many people live in the “now” they want what they want and they want it now! • Before you make a purchase, you should ask

yourself these questions. • Do I have enough money saved?• Is this a need or a want?• Need- Something you must have for survival • Want-Something that is nice, but not necessary

Remember- Money is a resource Use it Wisely!!!!

ASSIGNMENT

• Go to Google Classroom –Finance Assignment• Complete Sections on Writing a Check and

Practicing Filling out a Check Register.• Click on the blue writing to follow the links• Read then answer the questions by typing directly on the

document

• You will turn in completed questions through Google Classroom.