Chapter 5 managing your cash
Download
1 / 24

Chapter 5: Managing Your Cash - PowerPoint PPT Presentation


  • 139 Views
  • Uploaded on

Chapter 5: Managing Your Cash. Explain the importance of effective cash management and list the four tools of cash management. Compare and contrast the primary providers of cash management opportunities in today’s financial services industry.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Chapter 5: Managing Your Cash' - cwen


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Chapter 5 managing your cash
Chapter 5: Managing Your Cash


Objectives

Explain the importance of effective cash management and list the four tools of cash management.

Compare and contrast the primary providers of cash management opportunities in today’s financial services industry.

Understand the uses of electronic funds transfer and the legal protections available for it.

Understand the criteria for choosing and using various types of checking accounts and the importance of having an interest-earning checking account.

Objectives


Objectives1

Identify the potential benefits of opening a savings account as well as key factors to consider when comparing savings account.

Explain the importance of placing excess funds in a money market account.

List the potential benefits of putting money into low-risk, longer-term savings instruments.

Objectives


What is cash management

Maximizing interest earnings as well as key factors to consider when comparing savings account.

Minimizing fees on all funds kept readily available for living expenses, recurring household expenses, emergencies, and saving and investment opportunities

What is Cash Management?

  • THE TASK OF:


What is cash management1
What is Cash Management? as well as key factors to consider when comparing savings account.

  • Cash equivalents

  • Liquidity

  • Safety


Who provides financial services
Who Provides Financial Services? as well as key factors to consider when comparing savings account.

  • Banks and depository institutions

  • Mutual funds

  • Stock brokerage firms

  • Financial services companies


Electronic funds transfer
Electronic Funds Transfer as well as key factors to consider when comparing savings account.

  • Debit cards

  • ATMs

  • Point-of-sale terminals

  • Smart card and stored-value cards

  • Pre-authorized deposits and payments

  • Electronic benefits transfer


Eft regulations
EFT Regulations as well as key factors to consider when comparing savings account.

  • Electronic Funds Transfer Act - 1978

  • Regulation E - Federal Reserve Board

  • Disclosure statement

  • Periodic statement

  • Liability for unauthorized use


Cash management tools
Cash Management Tools as well as key factors to consider when comparing savings account.

  • Interest-earning checking accounts

  • Savings accounts

  • Money market accounts

  • Low-risk, long-term savings instruments


Checking accounts
Checking Accounts as well as key factors to consider when comparing savings account.

  • Allows transfer of deposited funds to merchants and service providers, as well as to accounts at other financial institutions.


Types of checking accounts
Types of Checking Accounts as well as key factors to consider when comparing savings account.

  • Demand deposits (traditional)

  • Special checking

  • Regular checking

  • Lifeline banking

  • Interest-earning checking

  • Share draft


Checking accounts1

Service fees as well as key factors to consider when comparing savings account.

Per-check charges

Transaction charges

Account exception fees

Checking Accounts

  • CHARGES, FEES, AND PENALTIES:


Ownership rights

Individual account as well as key factors to consider when comparing savings account.

Joint tenancy

Tenancy in common

Tenancy by the entirety

Minor’s account

Community property

Trust

Ownership Rights


Savings

Current income that is not spent on consumption; provides source of emergency funds and/or temporary place for funds in excess of daily living expenses.

Savings

  • PAY YOURSELF FIRST!


Savings accounts

Statement savings account (passbook) source of emergency funds and/or temporary place for funds in excess of daily living expenses.

Time deposits

Fixed-time deposits

Interest savings account

Savings Accounts


Money market accounts

Any of a variety of interest-earning accounts that pay relatively high interest rates and offer some limited check-writing privileges.

Money Market Accounts


Money market accounts1
Money Market Accounts relatively high interest rates and offer some limited check-writing privileges.

  • Super NOW Accounts

  • Money Market Deposit Accounts (MMDA)

  • Money Market Mutual Funds

  • Asset Management Accounts (AMA)


Low risk long term savings instruments
Low-Risk, Long-Term Savings Instruments relatively high interest rates and offer some limited check-writing privileges.

  • Allow even higher returns in exchange for less liquidity (accumulate and transfer from MMA).


Low risk long term savings instruments1
Low-Risk, Long-Term Savings Instruments relatively high interest rates and offer some limited check-writing privileges.

  • Certificates of Deposit (CDs)

  • U.S. Government Savings Bonds

    • EE (Patriot Bonds)I Bonds

  • College Savings Trust Funds


Ee and patriot bonds see savingsbonds com
EE and Patriot Bonds relatively high interest rates and offer some limited check-writing privileges.(see SavingsBonds.com)

  • 10 Things You Should Know About the "Patriot Bond"


I bonds see savingsbonds com
I Bonds relatively high interest rates and offer some limited check-writing privileges.(see SavingsBonds.com)

  • Current Rate for May 2015 was 1.94%

  • Series I Savings Bonds Rates 2010 – 2014: Nov. 2010 = 0.74%; May 2011 = 4.60%; Nov. 2011 = 3.06%; May 2012 = 2.20%; Nov. 2012 = 1.76%; May 2013 = 1.18%; Nov. 2013 = 1.38%.

  • Denominations Available:  $50 , $75 , $100 , $200 , $500 , $1,000 , $5,000  and $10,000. Series I bonds are issued only in registered form and are not transferable. The bonds may be either in book-entry or definitive form.You can purchase up to $5,000 worth of I Bonds annually (each calendar year). NOTE: You can purchase up to $5,000 in EE Bonds as well, totaling $10,000 max annually in paper bonds as of January 1, 2008. An individual may also purchase $5,000 in ELECTRONIC EE Bonds as well as an additional $5,000 in ELECTRONIC I bonds; for a grand total of $20,000 in savings bonds per calendar year. This number is down from the limit of $60,000, prior to January 1, 2008. I Bonds are an accural type security interest is added to the bond monthly, and paid when a bond is redeemed (cashed). Can be purchased at most local financial institutions, or payroll savings plans. (ie: banks, credit unions and the internet.

  • You cannot exchange I Bonds for HH Bonds.You cannot exchange EE Bonds for I Bonds. (You CAN cash in your EE bonds and use the money to purchase I Bonds, however, the interest earned on the EE Bonds must be reported on your Federal Income Tax return in the year you cash the bonds.)There is a 3 month penalty for cashing in an I Bond before it is five years old.


You can bank from home
You Can Bank relatively high interest rates and offer some limited check-writing privileges.From Home

  • Bank-based programs

  • Bill-paying programs

  • Computer based programs


Checks for special needs
Checks for relatively high interest rates and offer some limited check-writing privileges.Special Needs

  • Traveler’s Check

  • Money Orders

  • Certified Checks

  • Cashier’s Checks


Overdraft protection
Overdraft relatively high interest rates and offer some limited check-writing privileges.Protection

  • Good faith agreement

  • Insufficient funds

  • Automatic funds transfer

  • Automatic overdraft loan

  • 5 - 26


ad