• Explain the importance of effective cash management and list the four tools of cash management.
• Compare and contrast the primary providers of cash management opportunities in today’s financial services industry.
• Understand the uses of electronic funds transfer and the legal protections available for it.
• Understand the criteria for choosing and using various types of checking accounts and the importance of having an interest-earning checking account.

• Identify the potential benefits of opening a savings account as well as key factors to consider when comparing savings account.
• Explain the importance of placing excess funds in a money market account.
• List the potential benefits of putting money into low-risk, longer-term savings instruments.

THE TASK OF:
• Maximizing interest earnings
• Minimizing fees on all funds kept readily available for living expenses, recurring household expenses, emergencies, and saving and investment opportunities

• Cash equivalents
• Liquidity
• Safety

• Banks and depository institutions
• Mutual funds
• Stock brokerage firms
• Financial services companies

• Debit cards
• ATMs
• Point-of-sale terminals
• Smart card and storedvalue cards
• Pre-authorized deposits and payments
• Electronic benefits transfer

• Electronic Funds Transfer Act - 1978
• Regulation E - Federal Reserve Board
• Disclosure statement
• Periodic statement
• Liability for unauthorized use

• Interest-earning checking accounts
• Savings accounts
• Money market accounts
• Low-risk, long-term savings instruments

Allows transfer of deposited funds to merchants and service providers, as well as to accounts at other financial institutions.

• Demand deposits (traditional)
• Special checking
• Regular checking
• Lifeline banking
• Interest-earning checking
• Share draft

CHARGES, FEES, AND PENALTIES:
• Service fees
• Per-check charges
• Transaction charges
• Account exception fees

• Individual account
• Joint tenancy
• Tenancy in common
• Tenancy by the entirety
• Minor’s account
• Community property
• Trust

PAY YOURSELF FIRST!
Current income that is not spent on consumption; provides source of emergency funds and/or temporary place for funds in excess of daily living expenses.

• Statement savings account (passbook)
• Time deposits
• Fixed-time deposits
• Interest savings account

Any of a variety of interest-earning accounts that pay relatively high interest rates and offer some limited check-writing privileges.

• Super NOW Accounts
• Money Market Deposit Accounts (MMDA)
• Money Market Mutual Funds
• Asset Management Accounts (AMA)

Low-Risk, Long-Term Savings Instruments
Allow even higher returns in exchange for less liquidity (accumulate and transfer from
MMA).

Low-Risk, Long-Term Savings Instruments
• Certificates of Deposit (CDs)
• U.S. Government Savings Bonds
• EE (Patriot Bonds)
I Bonds
• College Savings Trust Funds

(see SavingsBonds.com)
10 Things You Should Know About the "Patriot Bond"
5.
6.
7.
1.
2.
3.
4.
Purchased over-the-counter and via internet
Series EE bonds will be inscribed with "Patriot Bond" title - making them no different from actual EE bonds
Purchased for half its face value - Increase in value monthly and interest is compounded semi-annually
EE/E Bonds purchased between May 1997 and April 30, 2006, earn a variable market based rate of return. Series EE Bonds issue dated May 2005 and after will earn a fixed rate of interest. Current yield is 1.20
%
- effective until April 2010(same rate as EE bonds)
Available in denominations: $50, $75, $100, $200, $500, $1,000, $5,000 and $10,000
Maximum annual purchase limit is $15,000 ($30,000 face value) per person
Guaranteed to reach initial maturity (face value) in 17 years - however - there is a 3-month interest penalty if the bond is redeemed before 5 years
8.
9.
10.
Will reach final maturity (completely stop earning interest) in 30 years
There is no state or local income tax on the interest earned
Interest earned could be tax exempt if used for education purposes

(see SavingsBonds.com)
Current Rate for November 1, 2009 to April 2010 is 3.36% [.30% fixed rate + (2 x 1.53% semi-inflation rate) +
(.30% fixed rate x 1.53% semi-inflation rate)]
Savings bonds purchased BEFORE Nov 1st, 2007 are NOT earning the CURRENT RATE ABOVE!
Denominations Available: $50 , $75 , $100 , $200 , $500 , $1,000 , $5,000 and $10,000.
Series I bonds are issued only in registered form and are not transferable. The bonds may be either in book-entry or definitive form.
You can purchase up to $5,000 worth of I Bonds annually (each calendar year). NOTE: You can purchase up to $5,000 in EE Bonds as well, totaling $10,000 max annually in paper bonds as of January 1, 2008. An individual may also purchase $5,000 in ELECTRONIC EE Bonds as well as an additional $5,000 in ELECTRONIC I bonds; for a grand total of $20,000 in savings bonds per calendar year. This number is down from the limit of $60,000, prior to January
1, 2008. I Bonds are an accural type security interest is added to the bond monthly, and paid when a bond is redeemed (cashed).
Can be purchased at most local financial institutions, or payroll savings plans. (ie: banks, credit unions and the internet.
You cannot exchange I Bonds for HH Bonds.
You cannot exchange EE Bonds for I Bonds. (You CAN cash in your EE bonds and use the money to purchase I
Bonds, however, the interest earned on the EE Bonds must be reported on your Federal Income Tax return in the year you cash the bonds.)
There is a 3 month penalty for cashing in an I Bond before it is five years old.

• Bank-based programs
• Bill-paying programs
• Computer based programs

• Traveler’s Check
• Money Orders
• Certified Checks
• Cashier’s Checks

• Good faith agreement
• Insufficient funds
• Automatic funds transfer
• Automatic overdraft loan
5 - 26

1. Retrieve previous month’s statement.
2. Place checks in order by check number/date of issue.
3. Compare canceled checks with transaction register.
4. Subtract any charges from transaction register.
5. Compare with deposit slips.
6. List all outstanding checks.
7. Compare register and statement balances.

The Bank Statement
Balance on current bank statement
Step 1.
Add up outstanding checks
Subtract the total
Step 2.
Add up deposits in transit
Add the total
Adjusted bank balance
Reconciling Your Checking Account
Your Checkbook
$
Date
643.96
Amount
Current balance in your checkbook
Step 3.
$
$
10-4
10-6
10-7
70.00
130.00
111.62
Subtract total of fees or other charges listed on bank statement
Subtract ATM withdrawal
$ – 311.62
Date Amount Step 4.
10-2
10-5
60.00
90.00
Add interest earned
Add direct deposits
+ 150.00
482.34 Adjusted checkbook balance
$
$
$
$
$
$ 295.91
215.75
– 100.00
+ 2.18
+ 300.00
482.34