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CHAPTER 5 MANAGING CHECKING AND SAVINGS ACCOUNTS

Dive into the world of checking and savings accounts, learning about tools for financial management, interest-earning options, electronic money management, and more. Understand how to protect your electronic accounts and the psychology behind money decisions. Take charge of your financial future with this comprehensive guide.

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CHAPTER 5 MANAGING CHECKING AND SAVINGS ACCOUNTS

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  1. CHAPTER 5MANAGING CHECKING AND SAVINGS ACCOUNTS FIN 235 FALL 2012

  2. MANAGING CHECKING AND SAVINGS ACCOUNTS • LEARNING OBJECTIVES • Identify the tools of monetary asset management and sources of such financial services. • Earning interest. • Benefits of savings accounts. • Placing excess funds in a money market account. • Electronic money management including your legal protections.

  3. MANAGING CHECKING AND SAVINGS ACCOUNTS • MONETARY ASSET MANAGEMENT • Three Areas (tools) for Monetary Asset Management • Checking Accounts: preference for interest paying and low costs • Savings Accounts: monthly or quarterly compounding at competitive rates • Money market accounts: typically daily compounding

  4. MANAGING CHECKING AND SAVINGS ACCOUNTS • Providers of Monetary Asset Management Services • Depository institutions (commercial banks, savings & loan, credit unions • Major benefit: balances insured up to $250,000 per account* • Mutual funds (investment companies like Vanguard and Fidelity) • Financial Services companies (American Express, A.G Edwards) • Insurance companies

  5. MANAGING CHECKING AND SAVINGS ACCOUNTS • Interest-Earning Checking Accounts; mainly at credit unions • Savings Banks: passbook savings accounts, Certificates of Deposit (CD) • Money Market Accounts: many offer check writing privileges

  6. MANAGING CHECKING AND SAVINGS ACCOUNTS • ELECTRONIC MONEY MANAGEMENT • Online Banking • Improves ability to track deposits, disbursements • Makes identifying ID theft quick and easy. • Many banks provide this service free of charge • Paying bills on line • Payment verification • Can be set up to be automatic (each month) • Aids in record keeping and budgeting

  7. MANAGING CHECKING AND SAVINGS ACCOUNTS • Protecting your electronic accounts • Do all banking from home computer • Be careful of free Wi-Fi sites. Passwords are easily stolen by hackers • Change passwords regularly (every 3-4 months). • Don’t use personal names or places. Mix letters, numbers and symbols.

  8. MANAGING CHECKING AND SAVINGS ACCOUNTS • THE PSYCHOLOGY OF MONEY • Desperate times frequent drive bad decisions: lack of money is #1 stress maker • Never reveal personal financial details to friends or casual acquaintances Dangers of social network sites • Do Opposites Attract? Savers vs. Spenders • Being careless with personal information: shred documents containing sensitive data • HOMEWORK • Do the Math: 1, 4, 5

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