Personal Finance By Alan J. Carper Bob Jones University Press. 2010 “ECONOMICS”

Personal Finance

By Alan J. CarperBob Jones University Press. 2010

“ECONOMICS”

“Opening & Maintaining A Transaction Account”

Objectives:

Name the four common kinds of transaction accounts

Describe the proper way to write a check

Biblical Integration:

We need to constantly remember our treasure is not in this world, but in heaven. We can not find satisfaction in earthly wealth. (Matt.6:19-21; Mk 10:21-25)

Opening A Transaction Account

Must be of legal age (18 yrs.) Fill out a signature card Have the minimum amount to deposit

* Joint Account – shared by two or more individuals a. right of survivorship – death of the one

becomes the property of the other

b. tenants in common – without right of survivorship

(Carper 204)

Opening A Transaction Account

Writing Checks 1. Date:

a. postdated – bears a future date b. staledated – bears a date more than six months old

201

Mar. 3 20XX _____

(Carper, ) (Carper 204)

Writing Checks

Payee - the one receiving the payment

(DO NOT LEAVE THE PAYEE BLANK)

(Carper 204)

201

Mar. 3 20XX _____

Calvary Murrieta Christian School

Writing Checks (cont’d.)

Amount: – Write out the numeral amt. (Ex. $50.00) on payee line. – Write out the amount in words (Ex. “Fifty and 00/100”) – then

make a line all the way to the words “dollars.”

(Carper, ) (Carper 204)

201

Mar. 3 20XX _____

Calvary Murrieta Christian School50.00

Fifty & 00/100----------------------------------------------------------------

Writing Checks

Signature – sign your name the way you signed your signature card. (If you signed using “Joe” don’t sign it “Joseph” – it’s okay to leave out words, but don’t add words.)

(Carper 204)

201

Mar. 3 20XX _____

Calvary Murrieta Christian School50.00

Fifty & 00/100----------------------------------------------------------------

Jane Cash

Making Deposits

Cash or Coins – enter the correct amount in the correct area on the deposit slip.

$50.00

Date Mar. 3 20XX____

(Carper 204)

Checks

List each check on the deposit slip with the routing number (ABA

No.) enables bank to locate check if lost in transit (processing).

$50.00

$75 00

25 00 16-4

Date Mar 3 20XX

Endorsements

Acknowledges receipt of amt. written on the check.

Endorse above line

John CashFor deposit only

111-1111111

(Carper 208)

Endorsements

Four Ways:a. Blank Endorsement:

- Signature of name listed “EXACTLY” as it is on the face of the check (including initials). If the check lists “Joe and Jane Cash” then both Joe and Jane have to sign the backside of the check.

Do Not Endorse Below Line

John Cash

Jane Cash

Dangerous – if lost with signature anyone can sign there name under endorsement giving them the rights to the check.

Endorsements

Special endorsement

– used to sign check over to another (Ex. “Pay to the

order of ___”) this gives them the right to the check.

This is referred to as a Third party check – not very many financial institutions will except unless they can verify the original party to the check.

Pay to the order of

xxxxxxxxxxxxxxxx

Endorsements

Restrictive Endorsement - “FOR DEPOSIT ONLY to the account of___“ or

“FOR DEPOSIT ONLY” – followed by your account number.

For deposit only

111-1111111

For deposit only to the account of John Cash

111-1111111

(Carper, )

Endorsements

Conditional endorsement – Stipulates the conditions under which the check may

only be cashed. (Ex. “Pay to the order of Joe Cash only upon completion of garage construction”) followed by your signature. NOT ADVISED.

Pay to the order of Joe Cash only upon completion of garage construction

Stop Payment

Stop Payment Order

– placed on a certain check asking the financial institution to not pay the funds. Most institutions charge a fee for this service – unless it is a free service attached to your account. (Financial Institutions do not guarantee 100% that the check(s) will not be cashed.)

(Carper 207)

Reconciling

Biggest responsibility

Bank of America Account Statement

John Cash Statement Period: Jane Cash March 23 through April 21, 20XX 23 Check Avenue Statement Town, CA Acct. No. 111-1111111 ______________________________________________________________________________

Beginning Balance on 3/23/04: $50.00 Deposits:

Total Deposits +75.00 4/01 $75.00

Total Checks -25.25 Total Deposits $75.00

Service Charge 5.00 Checks Paid:

Ending Balance $94.75 1223 4/07 $25.25(Carper 208)

Guaranteed Checks

A check that is affirmed by a bank or other reputable backer in order to be cashed by the payee.

Four types: 1. Certified Check 2. Cashier’s Check 3. Money Order 4. Traveler’s Checks

(Carper 205)

Saving

Generating Money to Save– Finding enough money to save is the key complaint.

Two Phases to Saving:

1. Reduction of Expenditures = BUDGET

2. Setting Aside a Certain Amount = BUDGET

Savings Information

1. Floating-Rate Accounts

Most popular:

1. NOW

2. Super NOW

3. Share Draft Accounts

4. Money Market Deposit Accounts (MMDA’s)

5. Money Market Mutual Fund Accounts (MMMF’s)

(Carper 306)

Savings Information

Time Deposits

1. fixed interest rates

2. may require certain dollar amt.

3. may carry a certain mature date

(Carper 306)

Certificates of Deposits (CDs)

i. Certain amt. required

ii. Mature date

iii. Fixed interest

iv. Penalty for early withdrawal

(Carper 306)

Savings Information

Government SecuritiesMost Popular:

1. U. S. Savings Bonds a. Series EE Bonds

1. Purchased in denominations of $50 to $10,000 (Purchaser only pays half the face value)

b. Series HH Bonds - similar to EE Bonds differ in three ways:

i. Purchased for full face value ii. Not bought with cash – ONLY by rolling over

EE Bonds iii. Interest paid via treasury checks to bondholder

(Carper 307)

Works Cited

Carper, Alan. Economics. Greenville: Bob Jones University Press, 2010.