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Personal Finance Guide PDF

18 Pages·2017·3.93 MB·English
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Educators Credit Union Personal Finance Guide Earner. Planner. Saver. Member. Learn the basics and begin to secure your future. For the teacher in you. 262.886.5900 | ecu.com Table of contents What’s personal fnance? | 1 Types of fnancials | 2 Depositing into your accounts | 3 Account management | 4 Planning to save | 5 Goal setting | 5 Types of accounts | 6 Budgeting | 6 Checking accounts | 7 What is a checking account? | 7 Types of checks | 9 Credit | 10 What is a credit score? | 10 Protecting your credit score | 11 Credit cards | 11 Investng | 12 401(k)/403(b) | 12 IRAs | 13 Stocks | 13 Bonds | 13 Mutual funds | 13 What’s personal fnance? Personal fnance is about how we use our money. This includes spending it at the store, putng it away in a savings account, investng in a 401(k) and more. Understanding where your money goes is the key to successfully managing your personal fnances. The money we spend today doesn’t just impact what we have available tomorrow but what’s available next week, next month, next year and even 60 years down the road. Because of this, it’s important that you are tracking how and why you are spending your money. Planning to put some money aside for bills, some aside for saving and some aside for retrement will help make sure you have the money you need throughout your life. This guide will discuss how we use money and the diferent ways you can manage it. 1 | Types of fnancials A fnancial insttuton is an organizaton that makes fnancial transactons, such as loans, deposits or investments. The three most common types of fnancials are credit unions, banks and check cashing businesses. Each type of organizaton has key diferences in how they operate. Credit unions decisions based on what will generate the most proft for the bank’s stockholders. A credit union is a not-for-proft fnancial cooperatve where every member is an equal Banks generally include minimum balance owner. Credit unions are run by volunteer requirements and a variety of fees. boards that make decisions based on the Check cashing fnancial needs of its members. The board Check cashing businesses ofer two types of returns profts to its members as rewards. services: check cashing and payday loans. The Credit unions have limited to no minimum business will charge a fee to cash someone’s balance requirements or fees. check. A payday loan is a loan obtained by Banks a customer when they post-date a check in exchange for cash. Payday loans ofen come Banks are for-proft insttutons with with large interest rates, some well over 100%. stockholders as owners. A paid board makes | 2 Depositng into your accounts In-person deposits In order to deposit money into your account, most fnancials require you to fll out a deposit form. A deposit form details your account number with the fnancial, the amount you are depositng, which share (e.g. savings, checking, etc.) the funds are going into and if you will be receiving any money. Please see the example below. TRANSACTION TICKET Account Number Name _____________________________________________________________________ Date _____________________________________ Signature _________________________________________________________________ Password ________________________________ (signature required for withdrawals or transfers) (optional) Checks or Cash from Member Withdrawal From Account # _____________________________ Cash $ ______________ Cash Back $ ______________  Savings   Checking   Other _________________________ Coin $ ______________ 1 Cash Back $ ____________________ 2 Total Checks $ ______________ Money Order (max. $1,000) $ ____________________ Grand Total $ ______________ Cashiers Check (no min.-no max.) $ ____________________ Check Payable to: ________________________________________ Deposit or Payment to: CSahveicnkgins g # ___________________ Amount $ __________3____ FATrmroamonu sAnftc ectort. tr#a n_s_f_e_r _$_ _____________ _to_ A cct. # ____________4_____ Loan # ___________________ $ ______________ From Acct. # __________________ to Acct. # _________________ Other # ___________________ $ ______________ Amount to transfer $ _______________ Internal Use Only DL - State ID - Known - Other ID#_____________________________________ Exp______________ Deposits may not be available for immediate withdrawal. All items accepted are subject to our rules and regulations applicable to this account. Rev. 06/15 5 Source of funds — Cash, coin or checks Transfer — Amount of a transfer is 1 4 for deposit are entered here along entered here along with the share it is with the grand total and any cash back withdrawn from and the share it will be amounts. deposited to. Withdrawal — Amount being withdrawn Checks — Additonal felds where other 2 5 and the share it will be taken from. checks to be deposited can be listed. Deposit/Payments — Amount being 3 deposited and the share it should go to. 3 | CHECKS DOLLARS CENTS Must FTBreOo nETtn ASteiLdre d On Mobile banking Direct deposits Instead of moving paper checks between A direct deposit is an electronic payment fnancial insttutons, the government allows transferred from the account of the payer for checks to be processed electronically. The directly to the recipient’s account. This is most electronic deposit requires a picture of the commonly used for paychecks. Employers will front and back of the check. You can do these ask an employee for their account informaton deposits with smart phones or tablets linked to and make payment directly to their account the internet. It may need to be done through come payday. the fnancial insttuton’s website. Account management There are many ways to manage the funds in your account. You can use deposit forms to transfer funds from share to share. You can move money online or through a mobile app. These tools allow you to constantly monitor and manage the funds in your account. | 4 Planning to save Goal setng Looking to repay debt, save for a new car or make a down payment on a house? Setng goals is an important step to help you prepare for that next purchase in your life. There are generally three types of goals: Short-term — These goals normally include items such as a new computer, Œa vacaton or clothes. Since you are normally saving to purchase these items quickly, a basic or Prime Share Savings account is normally an ideal account to hold this money. Mid-term — The goals are large purchases that are in the not-too-distant future. Items can include paying for a new vehicle or a down payment on a house. These savings goals normally stretch from two to fve years. Long-term — These are the goals that take much longer to save for, such as Žretrement or a child’s higher educaton. Generally these savings will go into special high interest accounts to help accumulate more money over tme. 5 | Types of accounts Savings setng aside money as an “emergency fund” or mid-term savings goals. However, they likely A savings account is an account where you can won’t build interest as quickly as an Individual store your money for use at a later date. While Retrement Account (see page 13), or other your money sits, most savings accounts make accounts for long-term savings. money by earning interest. Share Certfcates Interest is money paid to your account at a partcular rate over a certain period of tme. Share Certfcates, or Certfcates of Deposits, If you have $1,000 in your account and your are great for short-term savings goals. This account has an interest rate of 1%, your account account ofers high interest or dividend rates in will earn $10. Interest rates change based on exchange for a commitment to leave the money the type of account. in the account for a set period of tme. Money Markets At Educators, we require a minimum balance of $500 and ofer a variety of term lengths. You Money Markets earn more interest than basic could face a penalty for an early withdrawal. savings accounts. These accounts are great for Budgetng Budgetng is an important part of reaching your savings goals. Document where your money goes so you understand how you spend your money and where you could potentally save. The graph below shows how fnancial experts recommend you spend your money: rent, mortgage, utltes, 35% Housing insurance, taxes 10% Savings personal savings account car payment, auto insurance, 15% Transportaton gas, parking student loans, credit cards, personal 15% Debt 6 loans, tax and medical debt food, clothing, entertainment, 25% Other child care, vacatons Of course, these goals can be diferent from person to person and household to household. | 6 Checking accounts What is a checking account? A checking account allows you access to your money through checks or a debit card. Checking accounts sometmes come with a minimum required balance, fees and litle-to-no interest. Personal checking be used to support the needs of the business it is used for. A personal checking account is a checking account used for personal reasons. This could A personal checking account generally ofers be paying your monthly bills, groceries, etc. two types of payment: checks or debit cards. This is diferent from a service like a business checking account, where the funds could only 7 | Checks A check is a paper document statng that you agree to transfer funds to another person. In the diagram below, you can see the anatomy of a check and how to properly fll it out. 1 Robert A. Williams 3 Mary J. Williams 101 Park Place Yourtown, State 12345 2 4 6 5 7 12 8 9 10 11 1 Check Number — Helps you keep Writen Amount — Amount of the 1 6 track of who you paid. You can use this check in numbers. number in your register to keep track of any checks you write. Padlock — Indicates a checks security 7 features (they are listed on the back). Date — Month, day and year the check 2 is being writen. Memo — Space to write a note on what 8 the check is for. Account Owner — Person, authorized 3 signer or business that is writng the Signature — Signature of the authorized 9 check and their address. signer of the check. Pay to the Order of (Payee) — Name of Routng Number — Nine digits that 4 10 the person(s) or company the payment identfy the check writer’s fnancial is going to. insttuton. Legal Amount — Amount of the check Account Number — Account number 5 in words and fractons of dollars. Fill in 11 from which the check is being drawn. any lefover space to the right with a line to prevent tampering and fraud. Financial Insttuton — Name and 12 address of the fnancial insttuton the check will be drawn from. | 8

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