Exploring Business Unit 3: Personal Finance Part 1: Introduction to Checking Account Objectives: • Describe the purpose of a checking account • Write checks & record in a register • Examine several endorsements • Compare account balances using a bank reconciliation • Analyze different types of loans and insurance
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Exploring Business Unit 3: Personal Finance Part 1: Introduction to Checking Account Objectives: Describe the purpose of a checking account Write checks.
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Exploring BusinessUnit 3: Personal Finance
Part 1: Introduction to Checking Account
Objectives:•Describe the purpose of a checking account•Write checks & record in a register •Examine several endorsements•Compare account balances using a bank reconciliation•Analyze different types of loans and insurance
College & Career Readiness Standards
Reading Identify a clear idea or purpose of any paragraph(s) in
uncomplicated passages Identify clear cause-effect relationships in
uncomplicated passages
English Identify the central idea or main topic of a
straightforward piece of writing
Math Solve routine one-step arithmetic problems (using whole
numbers)
Checking vs. Savings & CD’sChecking A transactional bank
account. Easily accessible
Savings & CD’s Not meant for
transactions Offer better interest
rates Encourages you to not
spend money with restrictions.
Not easily accessible during non-banking hours.
Advantages of a Checking Account
1. Convenience2. Safety3. Proof of Payment4. Record of Finances
Advantages of a Checking Account
1. Convenience Write checks at home Pay bills by mail Debit Card
• Online payments• Swipe card and money is taken directly out
of checking account• Need Cash? = ATM
Advantages of a Checking Account
2. Safety Money on hand involves risk of losing it
by fire, theft, or carelessness Less temptation to spend money Check can only be cashed by person or
business to whom it is payable
Advantages of a Checking Account
2. Safety FDIC & NCUA
• Most banks & credit unions are members• FDIC insures deposits up to $250,000
Advantages of a Checking Account
3. Proof of Payment Check is legal proof of your finances
• Payment to others• Confirm with bank• All checks are now electronically imaged
Advantages of a Checking Account
4. Record of Finances Check is legal proof of your finances How much are you spending Where your money is going How much you have remaining
Types of Checking Accounts - Overview Differ in what they offer to
customers Annual Fee Minimum Balance Fee for each check written (Service
Charge) Fee for ATM use (Service Charge) Interest earning accounts
Types of Checking Accounts Regular Checking Accounts
No service charges Low Minimum Account Balance Typically No Interest on Account
depositor keeps a record of deposits and withdrawals. EVERY check must be recorded in a
check register.
Enter into Register
Business News- Lebron- Dunkin
Endorsements – Back of Check
written evidence you received payment or that you transferred your right of receiving payment to someone else.
Allow recipient of the check to cash, deposit, or transfer it to someone else.
Legal evidence. Must be in ‘Float’ area.
Float = 1.5 inch space on left side of check, on back.
Types of Endorsements Blank: your name in exactly as it is
written on the face of check. Special: includes name of person
to whom check has been transferred.
Restrictive: limits the use of the check.
Forgery: writing another person’s signature on a check without his or her authority.
Types of Endorsements
1 2 3
1. Blank Endorsement2. Special Endorsement3. Restrictive Endorsement
What Happens If They Don’t Take Checks?
Use a Debit Card!
ClickVisa Debit Commerical
What is a Debit Card?
Enable customers to withdraw money directly from account. Linked to a specific account, typically
checking. When you make a purchase it
automatically deducts that amount from the account linked to card
You are using your own money!
Making Purchases with Debit Card Card will be ‘swiped’ Enter PIN Cashier gets approval code
Code shows you have enough money in account for purchase
Questions to Ask about Debit Cards Annual Fees? Account Link? ATM withdrawal fees?
These are separate from the machine fee!
What happens if card is lost? Electronic Fund Transactions Act
• You are responsible for up to $50 if reported in 2 days.
• You are responsible for up to $500 if reported in 3-60 days.
Online Banking Faster, Easier, Secure
http://www.uwcu.org/OnlineBanking/Default.aspx
Creating a Debit Card
Future of Debit Cards
Bank Reconciliation
http://www.spotthedifference.com/
http://www.spotthedifference.com/SteamTrain
Bank Reconciliation a statement showing how your
check register balance and a bank statement balance are brought into agreement.
Why do a reconciliation? Mistakes Happen!
Checking Accounts - Terms
Service Charge: the fee a bank charges for using a service.
Overdrawing: writing a check for more than you have in your checking account.
Bank Statement: A monthly report sent to you from the bank that shows the condition of your checking account.
Checking Accounts - Terms
Outstanding Check: A check that has not been paid, or cashed.
Cancelled Check: A check that has been paid (cashed by person who received the check).
Deposit in-transit: A deposit made to but has not yet been posted to your account.
Steps to Complete a Bank Reconciliation
Step 1: Identify any outstanding checks Step 2: Identify any deposits in transit Step 3: Analyze bank statement for
transactions not recorded in the check register. Example: Automatic Payments (PayPal)
Step 4: Look for recording and math errors Step 5: Compare adjusted balance to bank
statement balance
Activity 1.4 Reconciling a Bank Statement
Balance From Bank Ad Deposits not showing Subtract outstanding checks
Reconciliation
21,481.90 $22,387.85
3514.00 0
3514.000
804 2588 805 33 12.95
2621 12.95
22374.90 22374.90
Practice Time Complete Checkbook Reconciliation Pg 27 Show Mr. Fassl Then you can work on your DEBIT
CARD (if not done..finish for HW) (Guest speaker Wed)
Check Point –
Loans Mortgage: a legal document that allows a
bank to lay claim against your property. Home/Property Loan Payments may include Taxes and Insurance
Installment Loan: where regular payments are made in specific amounts over a period of time. Car loan is example. Some banks will hold the title until loan is paid
off
Examples
Interest
= Principal * Rate * Time
Principal: amount of loan. Rate: interest rate for loan. Time: length of loan.
1 = 1 Year
Maturity Date: the date at which the loan is paid off or comes due.
Rate Sheet
Interest= Principal * Rate * Time
Example: $500, 7% interest, 1 Year
Interest = 500 * 7%*1Interest = $35
Act #3 pg 47A. $ X .09 (9%) =$_______ Balance of Principal Int. for 1 year
B. July’s Interest= $_________ / 12 = $_________ int. for 1 yearC. Amt. Applied to Principal$ 1079.67 - $ ___________ = $_____________ Monthly Payment int. for 1 month Amt. to principal.
D. Balance Left$117,947.81 - $____________ = $_____________Bal. June 10 amt. to principal bal. July 10
Checkpoint pg (49)216
117,947.81 10,615.30
884.6110,615.30
884.61 195.06
195.06 117,752.75
Your Turn….HWK pg 56
Next Slide We’ll do Note #1 Together
Activity 6-2 Page 56
Part #1 Principal X Rate X Time = Interest#1 _______ ____ __/___ = _______
Part #2 Principal + Interest=Amount Paid at Maturity
#1 ________ + ______ = ____________
Part #3 Maturity DatesSee page 44 in your packet
#1 3 Months from May 16 = _____________
May 16 to May 31 = 15 Days Jun 1 to Jun 30 = 30 Days July 1 to July 31 = 31 Days Aug 1 to Aug 14= 14 Days
Aug 14
2,000 14% 3 12 70
2,000 70 2,070
Insurance Helps you share the risk of financial
loss. Premium: the amount of money
you pay for an insurance policy. Monthly, Semi-Annually, Annually
Claim: a request for the insurance company to pay you.
Deductible: the amount of money you are liable for on an insurance claim.
Types of Insurance Vehicle
Liability, Comprehensive, Collision Property
Renter’s Business Health Life
Term, Universal, Variable, Whole Life Farm and Ranch