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Financial Literacy: Personal Finance Basics U D Directions: E Fill in the Blanks S T Financial Literacy: Personal Finance Basics U D Directions: E Fill in the blanks. N T Creating a Spending Plan W O 1. Your goal in developing a spending plan is to be able to pay all of your expenses R each month and put money into a savings or investment account and having a K good spending plan in place will help you achieve this goal. S H 2. A spending plan, some might call that a budget, is important no matter what your E income level, no matter how large or how small your assets are. E T 3. The first section of a spending plan is income. A N 4. The first thing you want to consider is the different types of expenses, which we S covered in the vocabulary in the beginning. W E R 5. If someone comes in with a spending plan, it shows they have maturity, they have thought out, they have a little discipline in their financial life. K E Y Identifying Ways to Set Goals 6. When you handle your money in an organized and well planned way, it is easier for you to set aside money for the different goals that you have because you are not carelessly using your money making compulsive purchases. 7. A short-term is goal is one you want to achieve in less than 12 months time. 8. An intermediate goal is one you want to achieve in more than 12 months, but less than five years. 9. A long-term goal is one you want to achieve in more than five years and possibly up to 30 to 35 years. Accompanies: Financial Literacy: Personal Finance Basics 1 S T Financial Literacy: Personal Finance Basics U D 10. The better you can identify your goals, the better you can incorporate E them into your spending plan. N T 11. Once you have your goals prioritized, it’s time to create a plan to help you achieve these goals. W O R 12. To be able to create an action plan for your goals, you need to know how K much each goal will cost, how long you will have to save the money you S need to pay for this goal and how much money you will be able to save H toward all of your goals. E E T 13. Deciding what is important to you helps you not to do impulsive or compulsive purchases, which means you spend your money in a way A which is going to enrich your life without bringing a lot of debt. N S Choosing a Bank W E R 14. When you choose a bank, you should keep three main points in mind: convenience, service and cost. K E 15. A commercial bank is one of the most widely recognized of the banking Y institutions because they have been so well known throughout the years. 16. While commercial banks operate for a profit, credit unions are owned by its members who are also its customers and operate as a non-profit organization. 17. As well, the members get a payout each year of any profit the credit union made during the year. 18. While you may be able to open a checking or money market account with a brokerage firm, the minimum deposit is sometimes higher and access to loans is usually limited to how much money you have invested with a brokerage firm. 19. Virtual banks do not have physical locations you are able to walk into and do your banking. Accompanies: Financial Literacy: Personal Finance Basics 2 S T Financial Literacy: Personal Finance Basics U D 20. Instead of getting a printed check from your employer or other types of E institutions, you can, in most cases, elect to have your money deposited N directly into your account from the employer’s or other type of institution’s T account. W O 21. Each time you use a debit card, the money is taken from your account almost R immediately. K S 22. If you use your credit card for a cash withdrawal, there is a much higher H fee charged for this cash. Unlike debit cards, the money is not taken out of E your account. Instead, a statement of your purchases is sent to you by mail E T or e-mail at the end of each billing cycle and you make a payment to your credit card company at that time. A N 23. Some banks offer an overdraft privilege, which means if you make a payment S out of your account by writing a check or using your debit card, the bank promises to W cover the purchase amount. E R 24. When you have more than one account, such as a checking and savings K account, you are able to make transfers between these accounts and E usually at no cost. Y 25. Online banking allows you to securely access your account information through your bank’s website. 26. Banks make their money by charging fees for the services they offer, by charging interest on loans that they make and by charging commissions on investments they sell. 27. Ask the customer service representative to explain the fees to you if you do not understand them and make sure there are no hidden fees. 28. Other fees may apply if you do not carry a minimum balance in your account or other requirements set by individual banks. 29. Decide what conveniences are most important to you and then see which bank matches these priorities when you are doing your research. Accompanies: Financial Literacy: Personal Finance Basics 3 S T Financial Literacy: Personal Finance Basics U D Opening a New Account E N 30. Examples of acceptable forms are driver’s license or passport. T 31. An example of an acceptable form is a Social Security card. W O R 32. It is best to bring both your photo ID and your Social Security card with you K because the bank will need a copy of each for their files. S H 33. Examples of acceptable forms of your initial deposit are cash, check from E another account, cashier’s check or money order. E T 34. Although much of the banking we do is electronic – for example, debit or A ATM cards – your signature needs to be on file with the bank for many N other reasons than simply writing checks. S W 35. Remember, the better prepared you are when you go into the bank to open E R your account, the easier the process will be for you and your banker. K Reconciling Your Accounts E Y 36. Bank statements are provided to give a customer a snapshot of what their account activity has been during a specific time period. 37. It is important for you to keep your own register so you have an accurate idea of what is available for you to spend. 38. This statement of your account shows the opening balance, the total of deposits made during the month, the total of the withdrawals made during the month and the closing balance. 39. Step one: Pull together all of your deposit and withdrawal receipts you have acquired since your last statement. 40. Step two: Open your financial software program and click the “reconcile” or “Balance this Account” button, or take the last page of your statement and turn it over so you can write in the form provided to you on the back of the statement. Accompanies: Financial Literacy: Personal Finance Basics 4 S T Financial Literacy: Personal Finance Basics U D 41. Step three: In your financial software program, type in the date your E statement was printed. N T 42. Make a note of this date on your paper form so you will know what date the bank stopped processing deposits and withdrawals for this statement W O period. R K 43. Step four: In your financial software program, type in the opening balance S as provided on your statement. H E 44. Step five: In your financial software program, type in the closing or ending E T balance as provided in your statement. On the paper form, this number goes on the top line where the instructions tell you to enter the ending A balance. N S 45. Step six: In your financial software program, type in any interest the bank W paid you, then, still in your financial software program, type in the amount E R of service fee your bank charged you, just like you entered for the interest. K 46. Step seven: In your financial software program, once the information is E properly entered in the pop-up box for step six, you will be taken to a new Y screen where all of your deposits and withdrawals will be listed separately. 47. It is suggested, however, you go ahead and review each deposit and withdrawal against your receipts to make sure all of it matches up. 48. For the paper form, go through your actual statement and check off each item which is printed on the statement as you match them to your deposit or withdrawal receipts. 49. Step eight: On the paper form, subtract the outstanding checks and withdrawals on line two in step seven from the ending balance you entered on line one in step five and enter the difference on line three as shown on your screen. 50. Step nine: On your paper form, now add up all of your outstanding deposits. Put this total on line four.
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