MANAGING YOUR
MONEY
CHECKING, SAVINGS, AND INVESTING
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.