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 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. 1. 2. 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. 3. 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. 4. 5. 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, www.gcflearnfree.org/moneybasics/6. 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. 2014 National Endowment for Financial Education www.hsfpp.org Lesson 5-1: Checking Accounts

Activity 5.1: Proof of Payment Give two instances in your life when a check is a good option to use as proof of payment rather than paying with cash. 2014 National Endowment for Financial Education www.hsfpp.org Activity 5.1: Proof of Payment

Activity 5.2: Check Writing 101 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: 52.31 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. 2014 National Endowment for Financial Education www.hsfpp.org Activity 5.2: Check Writing 101

Activity 5.2: Check Writing 101 2008 1015 0 02 0 0 3 0 0 4 1 0 9 5 8 5 7 72 3 1 0 1 5 1016 0 02 0 0 3 0 0 4 1 0 9 5 8 5 7 72 3 1 0 1 6 1017 0 02 0 0 3 0 0 4 1 0 9 5 8 5 7 72 3 1 0 1 7 2014 National Endowment for Financial Education www.hsfpp.org Activity 5.2: Check Writing 101

Activity 5.3: Make the Deposit 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 #101-234556-678. 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 www.hsfpp.org Activity 5.3 Make the Deposit

Activity 5.4: Keeping Track 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, $113.76 Code Date Description of Transaction Payment ( ) Deposit (+) Balance Is your final balance $201.65? 2014 National Endowment for Financial Education www.hsfpp.org Activity 5.4: Keeping Track

Activity 5.5: Does it Balance? 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. 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 www.hsfpp.org Activity 5.5: Does it Balance?

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) -62.55 299.16 D 10/5 Deposit (BD money) 25.00 324.16 267 10/10 West High School (fee) -13.90 310.26 268 10/12 Chester Food Bank (donation) -25.00 285.26 D 10/20 Deposit (BD money) 100.00 385.26 269 11/1 Family Insurance (car ins) -126.50 258.76 270 11/3 Entertainment, Inc (concert tickets) -50.00 208.76 D 11/5 Deposit (paycheck) 60.00 268.76 deb cd 11/13 Bob's MiniMart (gas) -30.00 238.76 auto w/d 11/15 Western Mutual Funds (investment) -100.00 138.76 Jason Price 2014 National Endowment for Financial Education www.hsfpp.org Activity 5.5: Does it Balance?

Task: Balance Zoe s Bucks Scenario: Zoe is a college student who works part time and lives at home with her parents. She is paid every two weeks. Her parents require her to work to be able to pay for her car insurance, college books, gas, entertainment, and any other wants she might have. Use the information below to log Zoe s payments and deposits in her checking account register. Tuesday During her lunch break, Zoe opens a checking account with her first paycheck. She worked 40 hours over the past two weeks. Her paycheck totaled $280 after taxes were taken out. Enter this amount as the first entry in the register. On the way home from work Zoe stops to fill her car up with gas. Gas was $3.69 a gallon and she pumped 15 gallons into the car. She swipes her debit card to pay for the gas. Wednesday Zoe received her car insurance bill in the mail today. She writes a check for $115 to pay the bill. Record the amount for check #101 in her check register. Saturday The neighbors call to ask Zoe if she can babysit Friday night while they go out for dinner. She gladly accepts the job offer and spends four hours with the neighbor s children. They pay her $15 an hour. She deposits the full amount into her checking account on Monday. Zoe and her friends go to the movie on Saturday night. The price of admission is $12, and she also buys popcorn and a soda for $6.50. She uses her debit card twice at the theatre to pay for her entertainment purchases. Monday The professor in Zoe s finance class at the university tells the students that they will need to purchase a book by the next class. The cost is $175. Zoe realizes she does not have enough money in her checking account to pay for the book but she writes a check for it anyway. She is hoping that her next paycheck will be deposited before this check goes through the bank. Friday When she checks her account balance online, Zoe sees that she was charged $36 the previous day for overdrawing on her account. Unfortunately for her, her last check was deducted from her account before her next paycheck was deposited. During the past two weeks Zoe worked 42 hours at $7.50 an hour. From the total pay, $27 was taken out for taxes. Record the net pay that was automatically deposited into her account today. 2014 National Endowment for Financial Education www.hsfpp.org Task: Balance Zoe s Bucks

Task: Balance Zoe s Bucks Zoe s Checking Account Register Check No. Date Description of Transaction Payment/ Debit ( ) Deposit/ Credit (+) Balance 2014 National Endowment for Financial Education www.hsfpp.org Task: Balance Zoe s Bucks