CHAPTER

4
FIN 212
REPORTERS :
VERANO, CRYSTAL JANE S.

TEOPIZ, KIMBERLY V.

SIRVADO, AILEEN

TABASA, ASHLEY

VILLASENCIO, ELSIE

SUAREZ, HANNAH MAE

MONETARY ASSET MANAGEMENT
The task of maximizing interest earnings and
minimizing fees on all of your funds kept
readily available for day-to-day living
expenses, emergencies, and savings and
investment opportunities.
LIQUIDITY
Ease with which an asset can be converted to
cash.
SAFETY
Your funds are free from financial risk.
FINANCIAL SERVICES INDUSTRY
Companies that provide monetary
asset management and other services.
DEPOSITORY INSTITUTIONS
Financial institutions in the United
States that are legally allowed to offer
checking and savings accounts to
individuals and businesses as well as
provide loans.
•COMMERCIAL BANKS
A type of bank that accepts deposits in
checking and savings accounts and provides
transactional services such as accepting
deposits, making business loans, and offering
basic investment products.
•COMMUNITY BANKS
A type of commercial banks that focuses on
providing traditional banking services in their
local communities, where they obtain most of
their core deposits locally and make any of
their loans to local businesses.
•MUTUAL SAVINGS BANKS
A type of thrift institutions that also
accept deposits and make housing and
consumer loans.
•ONLINE BANKS
Banks that are regulated just like any
other bank, even those they operate
entirely over the internet, yet because
they avoid the “bricks and mortar”
costs of conventional institutions they
often pay higher interest rates than
other institutions.
•SAVINGS AND LOAN ASSOCIATIONS
(SAND Ls)

Thrift institutions that focus primarily on

accepting savings and providing mortgage and
consumer loans.

CREDIT UNION

Not-for –profit institutions that accept deposit

and make loans, and the members/owners all
share some common bond, such as having the
same employer, working for or attending the
same school, or living in the same community.
FEDERAL DEPOSIT INSURANCE
•STOCK BROKERAGE FIRMS
CORPORATION OR FDIC
Are licensed financial institutions that
Deposits in depository institutions are insured
specialize in selling and buying
against loss of both the amount on deposit and
stocks, bonds, and other investments
the accrued interest by various insurance funds.
and providing advise to investors.
OTHER FINANCIAL SERVICES WITHOUT
•INSURANCE COMPANIES
FDIC/PDIC:
Provide property, liability, health, life,
•MUTUAL FUNDS
and other insurance products.
Are investment companies that raise money by
selling shares to the public and then invest that
money in a diversified portfolio of investment.
CHECKING ACCOUNT\

A deposit account held at a financial

institution that performs transactions that
allow for withdrawals and deposits.
 AVOIDING OVERDRAFT FEES
Overdraft- An overdraft, or bounced check, occurs any time one writes a check or uses a
debit card when there are insufficient funds in the account

3 ways to avoid overdraft fees:

Automatic funds transfer agreement-

The amount necessary to cover an overdraft will be transmitted from your saving account
to your checking account, as long as you keep sufficient funds in your saving account. This
is the least expensive alternative.

Automatic overdraft agreement-

The needed funds will be automatically loaned to you by your bank if you have an
overdraft line of credit or will be charged as a cash advance to your Visa or MasterCard
credit card.
Opt-in overdraft/bounce protection-

The bank will honor overdraft up to a certain limit by loaning the money to the account
holder. In return the customer mast pay a fee for each overdraft. Opting means that the
bank will not alert or stop you when you use your debit card or write a check when
there are insufficient fund.

BANK ACCOUNTS
Student Checking Account-

A checking account offered by credit unions and bank that is better for student than
other type of bank accounts, usually because they offer excellent benefits, including a
low minimum balance, minimized fees, and free online bill pay.
Non-sufficient funds (NSF)-

Used in banking industry to signify that there is not enough money in an account in order
to honor a check drawn on that account. This is also as “bounced check” or “bad check”.

Lifeline Banking Account-

Designed for low income customer that has low balance requirements, no monthly fees,
and is offered by large financial institutions as a way to offer basic banking services to the
broad public.

Super Now Accounts-

Also available banks. Pay higher interest rates than the regular checking account but place
a limit on the number of checks than can be written each month.
 Checking account balance
requirements

Minimum-Balance-

The minimum dollar amount that a customer must have in an

account to receive some service benefit, such as keeping the
account open or receiving interest.

Average-Balance-

The minimum amount your account must have on average at

any point in the month
 Three special purpose checks:
.

Certified check
A personal drawn on your checking account on which your
financial institution imprints the word certified, signifying
that the account has sufficient funds to cover its payment.

Cashier’s check
A check drawn on the account of the financial institutions
itself and thus, backed by the institution’s finances.

Money order
A checking instrument bought for a particular amount with
a fee assessed based on the amount of the order.
5.2b Money Market Accounts

Money Market Account (MMA)

Any of a variety of interest-earning accounts offered by depository
institutions that pays slightly high interest rates and offers some check-
writing privileges.

Money Market Mutual Funds (MMMF)

Money market accounts offered by a mutual fund investment company
(rather than at a depository institution)

Money Market fund (MMF)

Money market account in a mutual fund rather than at a depository
institution.
 5.2c Savings Account
Savings account (statement savings
account)
A deposit account held at a bank or other Money market deposit account
financial institution that provides principal
security and a modest interest rate. •A deposit account that requires a larger
initial deposit to open and it requires a
Time deposits minimum balance to be maintained.
Funds on deposit in a savings account (rather
than demand deposits), and technically these •Checks must be report for a minimum
require that account holders give 30 to 60 days amount, and it only allows a limited
notice for withdrawals. number of checking transactions per month.
The actual amount of interest Annual percentage yield (APY)
Return on total interest received on a
you will earn depends on four
$100 deposit for 365-day period given
variables. the institution’s simple annual interest
rate and compounding frequency.
1. Amount of money on deposit
2. Method of determining this balance
Grace period
3. Interest rate applied to the balance
the time in days during which deposits
4. Frequency of compounding (such as
or withdrawals can be made and still
annually, semiannually, quarterly,
earn interest from a given day of the
monthly or daily)
interest period.
 
 5.2d Certificates of deposit
Fixed-time deposit
a certificate of deposit that has a specific
time period that the savings must be left
on deposit, otherwise a penalty is assessed
for early withdrawal.
Certificate of deposit (CD)
An interest earning savings instrument
purchased for a fixed period of time, such
as 6 months or 1, 2 or even 5 years.
Variable-rate (adjustable-rate)
certificates of deposit
Certificates of deposit that pay an interest
rate that is adjusted (up or down)
periodically.
Interest-rate risk
The risks that an investment’s value will
change due to a change in the absolute
level of interest rates.
bump-up CD is a savings certificate
entitling the bearer to take advantage of
rising interest rates with a one-time option
to "bump up" the interest rate received.

Brokered certificates of deposit often pay
the highest yields and are available through
stockbrokerage firms. Brokered CDs are
bought by a brokerage firm in bulk for the
purpose of reselling to brokerage customers.
Investment certificates
An investment product offered by an
investment company or brokerage firm
designed to offer a competitive yield to an
investor.
ADVICE FROM A SEASONED PRO
“Never open an electronic communication from a bank.”
-Melinda Carlson
Asset Management Account (AMA)
One that includes checking services, credit cards,
debit cards, margin loans, the automatic sweep of
cash balances into a money market fund, as well as
brokerage services.
Also known as a central asset account, are offered
through depository institutions, stock brokerage
firms, financial services companies, and mutual
funds.
CD Laddering
A strategy in which an investor divides the
amount of money to be invested into equal
amounts to certificates of deposit (CDs) with
different maturity dates, it decreases both interest
rate and re-investment risks.
5.3 ESTABLISH OWNERSHIP OF ASSETS WISELY

Accounts can be own individually or jointly:

Individual account
has one owner who is solely responsible for the account and its activity.

Payable on death (POD)

•also known as Totten trust designation

•an arrangement between a bank or credit union whereby upon the death of
the client the assets are immediately transferred to the designated
beneficiaries.
Joint account
•Tenancy by the entirety- a type of shared
Has two or more owners, each of whom has ownership of property recognized in most
legal rights to the funds in the account. states, available only to married couples.

Three types of joint ownership: Electronic money management

•Joint tenancy with right of survivorship Occurs whenever transactions are

(joint tenancy)- most common form of conducted without using paper documents.
joint ownership, especially for husbands
and wives.

•Tenancy in common- a form of joint

ownership in which two or more parties
own the asset.
Cards Used to Access Your Money:
•ATM cards- allow you to make purchases and
withdraw money from automatic teller
machines (ATMs), which allow you to check
you balance, withdraw and deposit money, and
transfer money between your account.
•Debit cards (bank card or check card)- the
cards deduct money directly from a consumer’s
checking account to pay for a purchase.
•Prepaid cards- are easy to use and reloadable,
and they may be used almost anywhere to buy
online, make bill payments, get cash at ATMs,
get direct deposits, and make everyday
purchases.
•Store-value cards- a payment card
with a monetary value store on the card
itself, not in an external account
maintained by a financial institution.
•Credit cards- a plastic card with
imprinted numbers and a magnetic strip,
issued by a bank or business authorizing
the holder to use it as payment instead
of cash to buy goods or services on
credit.
•Key fobs and Smartcards
•Electronic Benefit Transfer (EBT)
cards
•Automatic billing (auto-renewal billing)

A feature that allows a vendor to automatically

charge a customer’s credit (debit) card or bank
account on a regular basis through a recurring Managing money
profile set up on the account
Includes such tasks as handling
Bitcoin the checkbook, overseeing the
budget, doing the household
A peer-to-peer experimental digital cash currency shopping, and making
based on an open source cryptographic protocol investments.
that can be bought at an exchange and transferred
through a computer or Smartphone without an
intermediate financial institution.
PEOPLE CONNECT STRONG
EMOTIONS TO MANY
People often attach a number of emotions
to money, including freedom, trust, self-
esteem and self-worth. They bring with the
patterns, benefits and attitudes that were
prevalent in their family of origin.
Author Judith Viorst suggest that becoming
responsible and adapt at managing one’s
financial matters represents a true passage
into adulthood. Addressing question openly
and calmly helps keep emotions in check.
1. What is my biggest money worry
today?
2. What are we doing well financially?
3. Is there an issue in our finances that I
would like to understand better?
4. If we need to cut back our spending,
what three areas are off limits and
what are the three could be change?
5. What money issues do we avoid and
how can we bring into the open?
How to Talk About Financial Matters
Discussions about money matters are not always ,
and these conversations can be improved. Some
people who are entirely rational about other issues
are unpredictable or even care in money matters.
Adults needs to accept that honest differences may
exist among people and accept these differences,
and work with them.
Get to Know Yourself and Significant Other
Explain: The first step in learning to with others
about financial matters is to understand your own
approach to money.
How To Develop Money Sense in
Children
Parents can help children develop
money sense by providing them with
opportunities to manage their own
money while still young.
1. Give the opportunity to manage an
allowance.
-Even children as young as 5 years old
should have some money of their own.
Allowance are a means for teaching
money management. The child learn
not to spend all of the allowance each
week.
2. Encourage to work
-Once children reach their preteen years, there are many opportunities
to earn their own money. When see the effort it takes to make money,
it is easier for them to know the real cost of spending.

3. Set reasonable limits

-Children should be given age appropriate limits for spending in
various categories and should be required to save a portion of their
money.

4.Teach them to make good choices

- The dollar amounts and areas discretionary spending increase as the
child matures. A 7-year old might be allowed to spend portion of his
or her own money or toys, snack and gifts to charity. A 14-year old
might be allowed to buy meals and games as well.
5. Help them to learn patience
-Children should have autonomy over at least some of their own money. But the remainder,
perhaps have should be saved.

6. Talk about family finances with children

-Children need to see that the parents must work at managing the family finances. They should
know what it cost to raise a family and to make ends meet.

7. Practice what you preach, serve as role model

-Children learn more from what they see than what they are told. Save money yourself and tell
your children that savings means that you can’t always have something right away. Teach by
example, avoid impulse buying.

8. Focus on commonalities
- Successful communication about money requires that the effort is aimed toward agreeing on
common goals and reaching a consensus of opinion without substantially comprising the views
of others. The task is not to avoid arguments; rather is to work through them. Focusing on the
future helps.
Learn to manage Financial Disagreements

Give all family members time to express their views when discussing financial matters.
Each also needs to listen what others are saying and feeling. If talking proves too difficult,
have each person separately write down his/her concerns. By swapping notes, ideas and
concerns can be shared

Be Honest and Talk Regularly

Achieving consensus requires that each person be honest when talking about money matters.
If further demands that couples regularly talks about finances. Perhaps begin by deciding to
talk about money matters for only ten minutes at a time. When you make decisions together,
take action on them. Focus attention on current financial activities and issues as well as long
term financial planning. Use these discussion to forge overall long-term strategies for
dealing with your family finances.
Complication brought by Remarriage

Some remarried couples may have incomes bolstered by child-support payments from a
former spouse. Managing unequal asset, incomes, responsibility and debts responsibility can
become challenging. Special concern who assume financial responsibility for step children
and biological offspring.

Check Your Overall Financial Health Online

Financial websites aimed to provide you with a financial health score. They give you a score
1 to 100, to you how well you stack up against your peers, Many employers and banks offer
free score’s you can retake the quiz yearly or as often as you like
Let’s Talk about it

•Bank Account Fees

•Avoiding Overdraft Fees
•Forms of Account Ownership
•Opting in
•Earning Higher Interest on your savings
•Lost/Stolen Debit Cards
•Talking about money
•Questions about money
Be your own Personal Financial
Manager
1. Checking and Savings Account
2. Keep your Accounts Current
3. Protect your Privacy
Action Involvement Projects
4. Talk about Money 1. Checking Accounts where you live.
2. Account Monitoring
3. Debit and ATM Activity
On the net 4. Money Talk
5. Simple Savings
6. Checking Accounts
7. Certificated of Deposits
8. Safe Internet Banking