Account Management & Your Trusted Team Choosing Where To Bank Selecting A Financial Institution Cashing Your Paycheck • Non-financial institution check cashing services: • 1% – 5% fee • Payday Lender: • 10% fee • Financial Institution: • 0% fee Benefits Of Checking And Savings Accounts • • • • • Safety Interest earnings Direct deposit Organizing your finances Future relationships Information You Need To Open An Account Social Security Number Valid governmental ID Date of birth Current address (possibly past addresses) • Phone number • Email address • • • • Trouble Opening An Account? • Obtain ChexSystems report • If you owe balances on previous accounts, pay them off • Dispute negative account claims with ChexSystems • Find a second-chance financial institution Activity: Selecting a Financial Institution This activity guides you to review the options and features available through a given financial institution, to help you define what’s important to you in selecting the institution with which you want to bank. Even if you already have accounts at a financial institution, you can use this activity to learn the ins and outs of your current accounts. For example, do you know all the potential fees associated with your account(s)? What about the available savings account options your institution offers? Banking Essentials & Management Purposes Of Your Banking Accounts Checking Account • • • • • Where most transactions take place Handles most of your financial “ins and outs” Where your paycheck is cashed From which you pay your bills From which you transfer money to savings and investment accounts Savings Account • Where you deposit your emergency fund • Short-term savings fund • Long-term savings fund • Withdraw money from savings only for the purpose for which that fund was intended • Typically pay interest daily based on your balance Automating Your Personal Finances Six Steps In Account Automation • Open Accounts • Comparison shop for financial institutions • Open checking and savings accounts (minimum) • Set Up Direct Deposit • Complete form from your employer or the financial institution • Saves time and money Six Steps In Account Automation • Bill Pay • Financial institution → business • Online bill pay center → business • Business → your account • Savings • • • • Automatic transfers Six-month emergency fund Short-term savings Long-term savings Six Steps In Account Automation • Investments • Educate yourself • Automatic transfers to investment accounts • Business → your account • Filing and Records System • File system for hard documents • Computer storage folder for electronic documents Lets Take a Break 15MIN Debit Cards Vs. Credit Cards Flow Of Transactions Using Debit Cards Vs. Credit Cards Debit Cards • • • • • • Work like a check Money withdrawn from your account at the time of purchase You cannot spend more than you have in your account Can be used to get cash back with purchase Can be used to withdraw money from ATMs You may be subject to unlimited liability if stolen Credit Cards • Basically the same as a loan • You pay back the lender plus interest for each purchase • Avoid interest by paying balance in full each month • Can be used for cash advances, but for a large fee • May offer rewards like cash back, discounts, travel miles • Offer greater protection if stolen Secured Credit Card • • • • • • Convenience of a credit card Good for those who need to build credit history You deposit cash as collateral Credit limit equals the amount of your cash deposit You cannot touch the cash unless you close the card Use the card like any credit card, up to the limit Advantages Of Debit Cards Vs. Credit Cards Advantages Of Debit Cards Vs. Credit Cards Building A Trusted Team Financial Advisement Team Members Financial Foundation Team Members Contact at Financial Institution Financial Mentor Help you navigate your accounts Keep you informed of updates Someone who successfully manages his/her money Do your own research as backup Tax Planner Financial Foundation Team Members • Prepare your tax returns • Advise you to maximize your deductions Insurance Agent • Help you select appropriate coverage • Knows the business inside and out Specialized & Advanced Team Members • College Planner • Help calculate ROI of education • Guide student through all phases of application • Negotiate funding • Attorney • Review contracts and legal documents • Prepaid legal companies are inexpensive option Specialized & Advanced Team Members • Realtor & Mortgage Broker • Help calculate mortgage you can afford • Aid to obtain financing • Locate the perfect property • Financial Advisor • Furthers your education • Consults about investments TRUST BUT VERIFY • Select advisors who are professional, qualified, experienced • Choose advisors who will act in your best interests • Consequences of choosing the wrong advisor: • Not fully understanding contract terms • Goldman Sachs shorting the market • Forbes and CBS on “biggest frauds”
