LEARNING TASKS. These tasks match pages 3-21 in Student Guide 5.

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Darrell Wilkerson
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1 STUDENT LEARNING PLAN Lesson 5-1: Checking Accounts OVERVIEW Nothing beats the feel of a crisp new $20 bill in your hand. But as you move toward the real world after high school, you ll run into situations where handing someone cash isn t the best option if it s an option at all. And credit cards aren t always the best choice either. Especially since the interest can mushroom into a mountain of debt fast. Luckily, there are plenty more ways to spend and receive money. In this lesson you will learn about how to use a checking account. LEARNING OUTCOMES In this lesson you will use a checking account to handle business transactions. Along the way you will: Discuss reasons to use check payments. Demonstrate how to use a checking account. Explain how to reconcile a checking account. Demonstrate what you learned by using a checking account LEARNING TASKS These tasks match pages 3-21 in Student Guide 5. There s a new song you want quick! Brainstorm as many different ways you can shop for and/or pay for this item. Brianna knows how to handle gift cards and cash but has never had to use other ways to pay for items. Have you? Find out how checking accounts are used for payments. Learn how to use a checking account to give and receive money. Complete Activity 5.2: Check Writing 101 and Activity 5.3: Make the Deposit for practice. Jason paid out a lot of money in fees because he wasn t tracking his spending. Can you do any better? Complete Activity 5.4: Keeping Track and the Balance Zoe s Bucks task to practice keeping track of payments and deposits from a checking account. Demonstrate how to track checking account payments and deposits. Complete Challenge 5-A: Use a Checking Account. Reconcile the account at the end of each month to verify your calculations. TAKING IT HOME Ask an older family member if s/he has ever used a check cashing service. If so, ask about the pros and cons to using check cashing services and ask if there was a fee charged for using the service. FURTHER PRACTICE Complete a Check Writing tutorial on the Goodwill Community Foundation education website, Additional tutorials are available on this site for additional practice. FURTHER STUDY A written check is a contractual agreement used to transfer money from one person to another. When you open a bank account, you sign papers that are also considered a contract. Research the rights and responsibilities of using various payment methods, including check, debit card, money order, or gift cards National Endowment for Financial Education Lesson 5-1: Checking Accounts

2 Activity 5.1: Proof of Payment NAME: DATE: Directions: Give two instances in your life when a check is a good option to use as proof of payment rather than paying with cash National Endowment for Financial Education Activity 5.1: Proof of Payment

3 Activity 5.2: Check Writing 101 NAME: DATE: Directions: Practice writing checks for the following purchases. Always use permanent ink to write a check, and be sure your handwriting is legible. In a real situation, you want to be sure that the bank can clearly read the check to deduct the correct amount from your account. Don t erase or cross out errors. If you make a mistake, print void across the check, and then write out another check. You will find an example of a written check on page 8 in the Student Guide. Use your own name, your school name, and today s date to write checks for these transactions: Buy a pair of tickets for an upcoming school event with a check payable to your school, $42.50 Pay rent to Mayfair Apartments, $750 Contribute to a disaster fund with a check payable to the American Red Cross, $5 Tips for writing numerals on checks: The check amount is written twice on a check to verify the amounts. The bank will question the validity of the check if both amounts don t match. Write the amount in figures in the box on the right side of the check, and write the same amount in words on the line below beginning as close to the left of the check as possible. After all, you don t want anyone to make adjustments to the numbers after your write the check! When writing out dollar amounts in words, write the amount as you say it out loud. For example, $7,450 is written as seven thousand four hundred fifty. The word dollar is already on the check to the right, so you don t have to repeat the word. When spelling out large numbers, use a hyphen to connect a word ending in y to another word. Examples: twenty-one or ninety-nine. You don t need to use the word and after thousand or hundred. Just write the amount. Only write the dollar amount in words on the text line, not the cents amount. Any amount less than a dollar is shown as a fraction. Example: is written as fifty-two and 31/100. To discourage anyone from modifying your written amount, fill in the line completely. Add a wavy line to the right of the amount if necessary. Do the same after the payee s name so no other name can be added to the check National Endowment for Financial Education Activity 5.2: Check Writing 101

4 Activity 5.2: Check Writing National Endowment for Financial Education Activity 5.2: Check Writing 101

5 Activity 5.3: Make the Deposit NAME: DATE: Directions: Brianna received money for her birthday. To stay on track for her saving goals, she wants to deposit all of the money in her savings account, except $20 for spending. Fill out a slip to deposit a $35 check and a $50 bill into her savings account # About the Endorsement Regardless of how you deposit a check, you need to endorse it first by signing your name on the backside, behind the pay to the order phrase. This completes the transaction to transfer money from the check writer to the person receiving the check. Brianna Richie Here s an example of Brianna s endorsement: 2014 National Endowment for Financial Education Activity 5.3 Make the Deposit

6 Activity 5.4: Keeping Track NAME: DATE: Directions: Record the following seven transactions in Jason s checkbook register. Use actual dates for this week. Write the check number in the Number/Code column. For other transactions, create your own coding system. Example: D is a deposit. Monday: Opened checking account with cash deposit, $200 Automatic withdrawal to pay for personalized checks, $20 Wednesday: Wrote Check #100 at Fine Foods to buy groceries, $23.11 Wrote Check #101 to buy books at Wayne s Book World, $13.50 Thursday: Wrote Check #102 to self for Cash to have spending money for the weekend, $30 Friday: Automatic withdrawal for monthly phone bill $25.50 Saturday: Deposited paycheck, $ Code Date Description of Transaction Payment ( ) Deposit (+) Balance Is your final balance $201.65? 2014 National Endowment for Financial Education Activity 5.4: Keeping Track

7 Activity 5.5: Does it Balance? NAME: DATE: As you have learned in this module, the account balance shown on your bank statement isn t the amount that is actually available for you to use now. It doesn t include any deposits or withdrawals that were made but not yet processed by the bank. You need a system to keep track of every deposit made to your account and every payment or withdrawal you make so you know the actual balance as of the current moment. To ensure that your tracking record matches your bank s records, reconcile what you have recorded with your bank account statement to compare transaction information. You should do this at least once a month. This is a good habit to stick to so you confirm that your transactions are recorded accurately and also regularly check for any unauthorized activity on your account. Directions: Reconcile Jason s checking account to ensure that his records match his credit union s records. Compare the credit union statement with the checking account information that Jason tracks in a spreadsheet. Step 1. Step 2. Compare the transactions listed on the statement with what Jason recorded in his spreadsheet. Check ( ) each cleared transaction in Jason s list that is also shown on the bank statement. Any unchecked items are outstanding meaning that Jason has recorded the transaction but the transaction hasn t yet been processed by the bank. Use the formula in the box below to make adjustments to the bank statement balance. If Jason s information has been recorded accurately and your math is correct, the adjusted bank balance should match the current balance Jason shows on his spreadsheet. Credit Union Statement Ending Balance + Outstanding Deposits - Outstanding Payments Adjusted Credit Union Balance Does adjusted number match Jason's ending balance? 2014 National Endowment for Financial Education Activity 5.5: Does it Balance?

8 Activity 5.5: Does it Balance? Jason s Partial Spreadsheet (recent transactions) Ck/Code Date Description Cleared Payment Deposit Balance deb cd 10/5 JC Penney (clothes) D 10/5 Deposit (BD money) /10 West High School (fee) /12 Chester Food Bank (donation) D 10/20 Deposit (BD money) /1 Family Insurance (car ins) /3 Entertainment, Inc (concert tickets) D 11/5 Deposit (paycheck) deb cd 11/13 Bob's MiniMart (gas) auto w/d 11/15 Western Mutual Funds (investment) Jason Price 2014 National Endowment for Financial Education Activity 5.5: Does it Balance?

9 Activity 5.6: What Do They Offer? NAME: DATE: Directions: Visit the website of a financial service provider in your community to learn about services they provide for customers. Name of financial service provider: What are the minimum balance requirements for checking and savings accounts? Checking: Savings: What is the current interest rate earned on a basic savings account? Banks offer other types of services such as safe deposit boxes for customers to store valuable documents. List at least two other types of non-account services that the provider makes available to customers, either for a fee or at no cost National Endowment for Financial Education Activity 5.6: What Do They Offer?

10 Activity 5.7: Get Jason Organized! NAME: DATE: Directions: Review the scenario on the next page about Jason s messy finances. A. What types of financial services could he use to better stay on top of his money? B. If he ends up moving to another state or country, what will make it convenient enough for him to keep his accounts where he s currently banking? 2014 National Endowment for Financial Education Activity 5.7: Get Jason Organized!

11 Activity 5.7: Get Jason Organized! WIPEOUT! After seeing that his checking account balance on Monday morning was $35, Jason uses his debit card to buy a $19 phone charger for his car. Later that day the bank deducts a debit card payment for Saturday s $18 pizza. Then later that night, the $2 shortfall prompts the bank to charge his account with a $30 overdraft fee. In the afternoon, Jason uses his debit card at a fast-food place. His bank approves the $9 transaction but charges him another $30 overdraft fee. Unfortunately, Jason forgot to record the $25 check he d written to the school last week. When his bank receives it on Monday, they reject it and deduct a $30 nonsufficient funds fee. Jason checks his account that night and flips out when he sees that his balance is $101. That s stupid! My account is negative and I still get charged these fees! Later Jason is trying to figure out how convenient it would be for him to keep his local bank if he joins the Coast Guard. He s also made a list of issues he s having with his money, to see if the bank has options to help him better manage his finances. Jason s list includes: Forgetting to transfer $50 of each paycheck from his checking account to his savings account. The money usually ends up getting spent. Getting charged late fees by his cellphone provider and gas credit card company for paying late every month, even though he has the money in his account. Needing to keep better track of his transactions so he doesn t wind up with more overdraft fees National Endowment for Financial Education Activity 5.7: Get Jason Organized!

12 Challenge 5-A: Use a Checking Account NAME: DATE: Use a checking account register or create a spreadsheet to record transactions for two months. Check your accuracy by reconciling the account each month. As you work through the lessons and activities in NEFE s High School Financial Planning Program, compile your completed challenge activities into a personal financial planning portfolio. Directions 1. Ron Ziesmer is a single 24-year-old who lives in Rochester, Minnesota. He recently opened a new checking account at the Rochester Credit Union. Use the data provided to track two months of Ron s transactions. Go through the steps to write the first two deposit slips and first four checks. The first few transactions have already been recorded for you. Monthly statements are provided so you can reconcile Ron s account each month. 2. Preview the criteria listed in the Scoring Guide to ensure you are meeting the minimum criteria as you complete this assessment. 3. Before sharing your final work with the instructor, self-assess your work using the Scoring Guide. Required Criteria Status Content 1. Transactions are recorded in chronological order. acceptable not acceptable 2. Payment amounts are recorded in the payment column. acceptable not acceptable 3. Deposit amounts are recorded in the deposit column. acceptable not acceptable 4. The account balance is recalculated and displayed with each transaction. acceptable not acceptable 5. You reconcile the account with the November statement data. acceptable not acceptable 6. You reconcile the account with the December statement data. acceptable not acceptable 7. The final account balance is accurate. acceptable not acceptable General 8. Transaction data is completely recorded. acceptable not acceptable 9. Reconciliation worksheet data matches your register and statement data. acceptable not acceptable 10. Documentation is neat and easy to read. acceptable not acceptable Feedback: Score: / 2014 National Endowment for Financial Education Challenge 5-A: Use a Checking Account

13 Challenge 5-A: Use a Checking Account Record the following routine transactions along with the transactions noted in the calendars. When the account was opened, Ron arranged for the following bills to be paid automatically on the 10 th of each month: Rent to LK s Rental Properties, $550 Phone, Internet, and cable TV service provided by econnect, Inc., $ On the 15th and 30th of every month, Ron s paycheck is automatically deposited to his account, $1, On the 15th of every month, Ron has arranged to have $200 transferred from his checking account into a savings account National Endowment for Financial Education Challenge 5-A: Use a Checking Account

14 Challenge 5-A: Use a Checking Account 2014 National Endowment for Financial Education Challenge 5-A: Use a Checking Account

15 Challenge 5-A: Use a Checking Account 2014 National Endowment for Financial Education Challenge 5-A: Use a Checking Account

16 Challenge 5-A: Use a Checking Account 2014 National Endowment for Financial Education Challenge 5-A: Use a Checking Account

Challenge 5-A: Use a Checking Account Reconcile Worksheet - November Credit Union Statement Ending Balance + Outstanding Deposits = Subtotal - Outstanding Payment - Outstanding Payment - Outstanding

17 Challenge 5-A: Use a Checking Account Reconcile Worksheet - November Credit Union Statement Ending Balance + Outstanding Deposits = Subtotal - Outstanding Payment - Outstanding Payment - Outstanding Payment - Outstanding Payment = Adjusted Credit Union Balance Does the adjusted number match Ron s ending balance? 2014 National Endowment for Financial Education Challenge 5-A: Use a Checking Account

Challenge 5-A: Use a Checking Account Reconcile Worksheet - December Credit Union Statement Ending Balance + Outstanding Deposits = Subtotal - Outstanding Payment - Outstanding Payment -

18 Challenge 5-A: Use a Checking Account Reconcile Worksheet - December Credit Union Statement Ending Balance + Outstanding Deposits = Subtotal - Outstanding Payment - Outstanding Payment - Outstanding Payment = Adjusted Credit Union Balance Does the adjusted number match Ron s ending balance? 2014 National Endowment for Financial Education Challenge 5-A: Use a Checking Account

LEARNING TASKS These tasks match pages 3-21 in Student Guide 5.

LEARNING TASKS These tasks match pages 3-21 in Student Guide 5. STUDENT LEARNING PLAN Lesson 5-1: Checking Accounts OVERVIEW Nothing beats the feel of a crisp new $20 bill in your hand. But as you move toward the real world after high school, you ll run into situations