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Managing Your Cash

Managing Your Cash. Did You Know?. How do small amounts of money saved and invested easily grow into larger sums?? INTEREST !! Money invested earns interest The profit made on money invested. Cash Management. Cash Management

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Managing Your Cash

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  1. Managing Your Cash

  2. Did You Know? • How do small amounts of money saved and invested easily grow into larger sums?? • INTEREST!! Money invested earns interest • The profit made on money invested.

  3. Cash Management Cash Management • The daily routine of handling money to take care of individual or family needs

  4. Cash Management Effective cash management includes having available money for: • Living expenses • Emergencies • Savings • Investing

  5. Cash Management Tool Cash Management Tool • A financial account used to assist with daily cash management

  6. Checking Account • Use: Tool used to transfer funds deposited into an account to make a cash purchases, write checks, and make ATM withdrawals • Interest: Most checking accounts do not pay interest • Accessibility: Money can be withdrawn at any time

  7. Savings Account • Use: Tool used to hold or store money for emergencies or large purchases • Interest: Does earn interest • Accessibility: Money can withdrawn at any time

  8. Certificate of Deposit (CD) • Use: Tool used to invest money on a short-term basis. A CD has a set term (1-5 years) • Interest: Does earn interest! But rates vary. The longer the length of the term, the higher the interest rate • Accessibility: Restricted access to the funds, must keep money in CD for the full term or pay penalties ):

  9. Cash Management Tools

  10. Liquidity Liquidity • How quickly and easily an asset can be converted into cash • Liquid assets are important for emergencies when cash must be quickly accessed

  11. Liquidity Most Liquid Least Liquid

  12. THINK • What are the apparent pros and cons of checking, savings, and CD accounts?

  13. Low Risk These three cash management tools are LOW RISK: • Funds in these type of accounts are insured by the Federal Deposit Insurance Corporation (up to $250,000) • However, they have lower interest rates which causes low earnings

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