TEEN MONEY MANAGEMENTPresented by Glendale Public Library

Instructor: Annette Fisher

INTRODUCTIONS

Name and what you hope to get out of the class.

WHY MONEY MANAGEMENT?

If you Google “money” – 1,280,000,000 references online

57% of divorces claim money issues as the reason why

As of Feb., 2009 – current consumer credit in US - $2.56 trillion

U.S. Bankruptcy filings up 31% in 2008 (includes both business and consumers)

2,350 versus in the Bible on how to handle money and possessions.

WHAT WE WILL COVER

Goals Budgeting – car, insurance, etc Net worth – assets, liabilities Saving - Checking/Savings accounts Borrowing – credit cards, loans, etc Investing - basics

GOAL SHEET

In groups of two or three, fill out your goal sheet

HOW MUCH DO WE NEED TO SAVE TO MEET THAT GOAL

http://www.finra.org/Investors/index.htm

BANK PRODUCTS

Two Main products

Checking Accounts – also called transaction accounts, which allow you to transfer money by check or electronic payment to a person or organization

Savings Accounts – also known as savings accounts, which pay interest on your money in those accounts

OTHER SERVICES

Cashier’s checks Notary service Online banking and bill pay Lines of Credit Loans Investment accounts

SAFETY IN BANKING:

Commercial Banks are insured against loss by the Bank Insurance Fund (BIF) of the FDIC – Federal Deposit Insurance Company

Savings and loans are insured through the Savings Association Insurance Fund (SAIF) of the FDIC

SAFETY IN BANKING:

Credit Unions are insured through the National Credit Union Share Insurance Fund (NCUSIF) which is administered through the National Credit Union Administration.

FDIC INDICATOR AT A BANK

look for the official FDIC sign where deposits are received. Beginning in 2007, insured banks will display this new official FDIC sign:

FDIC COVERS:

the balance of each depositor's account, dollar-for-dollar, up to the insurance limit, including principal and any accrued interest through the date of the insured bank's closing.

FDIC DOESN’T COVER:

money invested in stocks, mutual funds, life insurance policies, annuities, or municipal securities, even if these investments were bought from an insured bank.

U.S. Treasury bills, bonds, or notes. These are backed by the full faith and credit of the United States government.

CHECKING ACCOUNTS

Write checks Online Bill Pay Transfer Funds Debit Card ATM withdraws

TYPES OF CHECKING ACCOUNTS

Basic Lifeline Free Checking Interest Bearing NOW – Super Now Express No-Frills Credit Union Share Drafts Relationship Accounts

BASIC CHECKING

Basic checking accounts let you deposit and withdraw money and write checks to pay bills and daily expenses. They are perfect if you don't plan to keep a high account balance.

The details of basic checking accounts are different for each financial institution

LIFELINE CHECKING

Bare bones, low-cost for qualifying low-income customers

This type of checking accounts waive many of the fees banks may charge, such as monthly service fees for low balances and surcharges for ATM usage.

LIFELINE CHECKING

Lifeline checking accounts are meant for low-income bank customers. Lifeline accounts have low:

Minimum deposit and balance requirements. Monthly fees, ranging from zero to $3

depending on the bank. Limits on the number of checks per month

that you can write.

Certain states have laws requiring banks to offer lifeline accounts. Currently, those states are: Illinois, Massachusetts, Minnesota, New Jersey, New York, Rhode Island and Vermont.

“FREE CHECKING”

A way to reduce fees

Typically require you to maintain a minimum balance in your account

Fees for ATM and check fees are eliminated

INTEREST-BEARING ACCOUNTS

Earn Interest on your account

Usually require more money to open A high minimum balance or you will be

charged fees Interest paid monthly

Be aware, the fees for falling below the minimum balance may be more than the interest you earn

NOW ACCOUNTS

A NOW account (Negotiable Order of Withdrawal) is a "Free Checking" and an interest-bearing account offered by a savings and loan or "thrift" institution.

Super Now has a higher interest rate and a higher minimum balance.

EXPRESS CHECKING

Express checking accounts are designed for people who are on the move and who don't go inside the bank often. These people prefer to bank by ATM, telephone or computer.

EXPRESS CHECKING

Usually offer: Unlimited check writing Low minimum balance requirements Low or no monthly fees

Note: There is a catch. When you do visit a bank branch, you can expect to pay a fee to talk to a teller on either a per visit or a monthly basis.

“NO-FRILLS” CHECKING

Many banks offer special checking deals if you are age 55 or over or if you are a student.

“NO-FRILLS” CHECKING

The benefits may include: Free personal checks Free cashiers or traveler's checks Wider ATM use Better rates on loans and credit cards Discounts on a variety of items including

travel or prescriptions

CREDIT UNION SHARE DRAFTS

Most Credit Unions offer checking accounts, called Share Drafts, often with no service charges or reduced fees.

RELATIONSHIP ACCOUNTS

These accounts link all the accounts you have with the bank. They typically offer free checking and ATM withdrawals along with other banks services if your combined balance is high enough.

QUESTIONS TO ASK:

Does the financial institution: Pay interest on a basic checking

account?Note: Most basic checking accounts do not pay interest.

Require direct deposit or a minimum balance?

Charge a monthly fee for services? Charge a fee for each check you write

over a certain limit?

QUESTIONS TO ASK:

Does the financial institution: Charge fee for online bill pay? Charge fee for ATM at other banks? Charge fee to download transactions? Is there a charge for using your debit

card to pay for a purchase? Is overdraft protection available?

CHECKING DO’S AND DON’TS

The Golden Rule of Checking Accounts: Only write checks for money you have in your account. If you remember nothing else, following this rule will help you the most in keeping your account in good standing.

TIPS TO BE A SMART BANK CUSTOMER Regularly balance your checkbook. Use the telephone, Internet, or ATM to get

the most current information about your account.

Ask your bank about their fees so that you are not surprised when you get your statements

Don't get caught "floating". Use overdraft protection.

COMMON MISTAKES TO AVOID

You forgot to stop automatic payments from being taken out before you closed your account.

You close your checking account by letting it go to a zero balance.

A check you deposit in your account does not clear or bounces, causing the account to go into overdraft.

You forgot about your recent ATM (or other) withdrawals.

You co-signed on an account that was abused the other party.

COMMON MISTAKES TO AVOID

You gave your PIN (Personal Identification Number) to someone else and they took funds from your account.

You post-dated a check and it was cashed too early.

Your checks get lost or stolen. You're not receiving statements or

correspondence from your financial institution.

Account or handling error by the financial institution.

OVERDRAFT PROTECTION

Checking linked to savings account Line of credit Credit card charge

Banks may cover amounts and still charge a fee. They usually pay the clear the largest check first and then you get charged a fee for the smaller ones.

DEPOSIT ACCOUNTS

Savings Money Market Accounts Money Market Mutual Funds Certificates of Deposit

SAVINGS ACCOUNTS

Usually low minimum balance to maintain. Usually no fees Allows frequent deposits and withdrawals May impose limits on transfers Earn compound interest (APY)

MONEY MARKET ACCOUNTS

Minimum Balance Tiered Interest Rates based on size of the

account Write limited number of checks – usually

three Can withdraw in person FDIC Insured

MONEY MARKET MUTUAL FUNDS

Similar to money market accounts Pay interest at about the same rate May offer check writing privileges Usually no limit on number of checks – but may

need to be a minimum amount $500

Not FDIC Insured and could lose some principal

CERTIFICATES OF DEPOSIT

Fixed Term Can rollover at maturity Less liquid than savings accounts Penalty if cash early Pay higher interest rates FDIC Insured Consider laddering

PICKING A CD

Think about your Financial Goals Find out when the CD matures Investigate any call features Confirm the interest rate you’ll receive and

how you’ll be paid Ask whether interest rate ever changes Research any Penalties for Early withdrawal

CHECK OUT BANK RATES

http://bankrate.com

BALANCE SHEET – NET WORTH

AssetsLiabilitiesNet Worth

BALANCE SHEET – NET WORTH

Assets – what you own

CashCarHouseInvestments

BALANCE SHEET – NET WORTH

Liabilities – what you oweCredit CardsCar LoanMortageSchool Loans

BALANCE SHEET – NET WORTH

Net WorthAssets minus

Liabilities

BUDGET

What do we spend our money on?

SPENDING INFORMATION

Governmenthttp://www.bls.gov/cex/

http://www.nytimes.com/interactive/2008/05/03/business/20080403_SPENDING_GRAPHIC.html

http://www.prx.org/pieces/36912-teen-spending-way-down

http://www.crown.org/Library/ViewArticle.aspx?ArticleId=263

BUDGETING TOOLS

Sheet in Book Excel Software Quicken Money

CONCLUSION

What we learned today:GoalsInterest/SavingsBank AccountsNet WorthBudgeting

What to expect tomorrow:Review Budget SheetAuto PurchaseCollegeHousing