1. Manage your cash and understand why you need liquid
2. Automate your savings.
3. Choose from among the different types of financial
institutions that provide cash management services.
4. Compare the various cash management alternatives.
4. Compare rates on the different liquid investment
5. Establish and use a checking account.
6. Transfer funds electronically and understand how
electronic funds transfers (EFTs) work.
• Liquid assets are a necessity of personal financial
• Without liquid funds, you might have to compromise your
long-term investments to cover unexpected expenses.
• You could ruin your financial plan if you don’t manage
liquid funds effectively.
• Cash management- the management of cash and near
cash (liquid) assets.
• Making choices from among alternatives, maintaining and
managing the results of those choices.
• Liquid assets- cash and investments that can easily be
converted into cash.
• Low risk and low return but the more cash your have, the
more you’re tempted to spend.
PAY YOURSELF FIRST
• Have savings automatically deducted from your paycheck-
pay yourself first.
• Automatic savings are not in liquid reservoir therefore less
likely to spend that money.
• The earlier you start to save, the easier it is to achieve your
goals- time value of money.
• “Banks” or Deposit-type financial institutions- Financial
institutions that provide traditional checking and savings
• Commercial banks, credit unions, savings banks, etc.
• Nondeposit-type financial institutions-mutual fund
companies, brokerage firms, insurance companies offer
similar services as those offered by banks.
• Access to your accounts to:
• check balances,
• transfer funds,
• paying bills, and
• view your financial information
• through the internet, a mobile phone, or other electronic
• Allows you to choose an internet-only bank.
WHAT TO LOOK FOR IN A
• Which financial institution offers the kind of services you
want and need?
• Is your investment safe? Is your investment insured? Is the
financial institution sound?
• What are all the costs and returns associated with the
services you want? Are there minimum deposit
requirements or hidden fees?
Money Market Deposit Account (MMDA) - alternative to
savings account, variable interest rates, check and ATM
• Safe, Earns interest, Check writing privileges
• High minimum balances/penalties, interest rates below
Certificates of Deposit (CD)- pays a fixed rate of interest while
funds are on deposit for a period of time (30 days to years).
• Safe, fixed interest rate, convenient.
• Early withdrawal penalty, fixed interest rate, minimum deposit
Money Market Mutual Funds (MMMF’s)- investors receive
interest on a pool of investments less an administrative
(usually less than 1% of total investment)
• High interest rates, check writing, limited risk, convenient.
• Administrative fees, minimum initial investment, not insured,
Asset Management Account- a comprehensive financial
services package (checking account, credit card, MMFs, etc.)
offered by a brokerage firm.
• Monthly statements, coordination of money management,
checks, high return, convenient.
• Costly, minimum initial investment, not insured.
U.S. Treasury bills, or T-bills- short-term debt issued by the
federal government with maturities from 3-12 months.
• Risk-free, exempt from state and local taxes, federal tax vary
with current rates.
• Low rate of return
U.S. Savings Bonds- Series EE and I bonds are safe, low risk
savings products issued by the Treasury with low
• Safe, affordable, no taxes, convenient, redeem at any bank,
no commissions or fees.
• Low liquidity, long maturity, semi-annual compounding.
• Comparable Interest Rates- use the annual percentage
yield (APY) to easily compare.
• Tax Considerations- taxes affect the real rate of return on
• Safety—some deposits are federally insured
• FDIC deposits at commercial banks
• NCUA deposits at credit unions
• MMMF- not insured but diversified
USING A CHECKING
• Choosing a financial institution, consider:
• Balancing your checking account:
• Keep track of every transaction
• Compare monthly statement with register, then reconcile
register balance with bank balance.
OTHER TYPES OF CHECKS
• Cashier’s Check
• Certified Check
• Money Order
• Traveler’s Checks
• Any financial transaction that takes place electronically.
• Transactions take place immediately.
• Don’t have to carry cash or write a check.
• Pay all kinds of bills
• ATM transactions
• Debit card transactions
• Smart cards
• Stored Value Cards
• Provide cash instantly and accessed through a credit or
• Convenient but can be costly.
• Banks charge access fee. Using ATM not owned by your
bank can cost $5 per transaction.
• Attract crime.
• Allow you access to money in your accounts electronically.
• Looks like a credit card but acts like a checking account.
• ATM card is type of debit card but with access to savings
• Check card blocking policies.
• Funds are transferred into cards which are used like debit
cards, but withdraw from an account that’s actually stored
magnetically on the card.
• Perform the same services as a debit or credit card.
• Allocated funds can run out.
• Some have issuer-limited usage.
PREPAID DEBIT OR GIFT
• Two main types:
• Single purpose or “closed-loop” cards which can be used at
only one store.
• Multi-purpose or “open-loop” cards which can be used just
like a credit card and can be reloaded.
• Many have activation fees, maintenance fees, and ATM
FIXING MISTAKES- THEIRS,
• Human and computer errors.
• Avoid human errors such as those involved with deposits at
• Report immediately. Call or write the bank.
• By law, write within 60 days of receiving your statement.
• Cash management is balancing the risk of not having
enough in liquid assets with the potential for greater return
on other investments.
• Automatically save some of your income and learn to live
on take-home income.
• Choose cash management alternatives from among
deposit-type and nondeposit-type institutions.
• Compare various cash management alternatives.
• Compare their rates, return, and safety.
• With checking accounts look into cost, convenience,
consideration, and safety.
• Electronic funds transfer transactions occur immediately
and avoid use of cash or check.
Parece que tem um bloqueador de anúncios ativo. Ao listar o SlideShare no seu bloqueador de anúncios, está a apoiar a nossa comunidade de criadores de conteúdo.
Atualizámos a nossa política de privacidade.
Atualizámos a nossa política de privacidade de modo a estarmos em conformidade com os regulamentos de privacidade em constante mutação a nível mundial e para lhe fornecer uma visão sobre as formas limitadas de utilização dos seus dados.
Pode ler os detalhes abaixo. Ao aceitar, está a concordar com a política de privacidade atualizada.