Exam 5: Cash or Liquid Asset Management

When college students start saving early

Liquid assets or funds are important to

Card-blocking occurs when you use a debit card (or credit card)to check into a hotel or rent a car and the anticipated expenses are blocked-in effect,placing a hold on the money.

Money-market mutual funds (MMMFs)provide an alternative to traditional liquid investments offered by financial institutions.What are/is the advantage(s)of an MMMF?

How do you compare cash management alternatives to determine which is best for you?

A debit card is the same thing as a smart card.

What is the importance of the APY?

Christopher just received his checking account statement from his bank. He has a NOW account with free checking that pays 0.75% APR on the balance and requires a $500 minimum balance. His statement shows that he currently has a balance of $3,950. In looking at his statement he notices that his car payment check for $400 is still outstanding, and that his recently received payroll deposit of $3,600 had not posted at the time the statement was created. His normal living expenses average $1,500 per month including his car payment. Other than his car loan, he rarely writes any checks as he prefers to use his debit card and ATM card for day-to-day living expenses. He pays his credit card balance in full every month. Other than his checking account he does not own any investments. He has always dreamed of owning a house, and would like to buy one within the next five years. He has access to a 401(k) pension plan at work where his employer will match contributions up to 6% of his salary. He currently contributes 2% of his salary to this plan. -How is Christopher doing with his cash management?

When you automate your savings you are less likely to spend those dollars because they never become part of the funds in your checking account.

Nondeposit-type financial institutions are commonly referred to as mutual funds and brokerage firms.

Christopher just received his checking account statement from his bank. He has a NOW account with free checking that pays 0.75% APR on the balance and requires a $500 minimum balance. His statement shows that he currently has a balance of $3,950. In looking at his statement he notices that his car payment check for $400 is still outstanding, and that his recently received payroll deposit of $3,600 had not posted at the time the statement was created. His normal living expenses average $1,500 per month including his car payment. Other than his car loan, he rarely writes any checks as he prefers to use his debit card and ATM card for day-to-day living expenses. He pays his credit card balance in full every month. Other than his checking account he does not own any investments. He has always dreamed of owning a house, and would like to buy one within the next five years. He has access to a 401(k) pension plan at work where his employer will match contributions up to 6% of his salary. He currently contributes 2% of his salary to this plan. -Christopher would like to have $20,000 for a house down payment seven years from now.How much money would he need to save every quarter in an investment that pays 9% APR compounded quarterly?

Why are liquid assets important in cash management?

What is another name for an interest-bearing checking account?

The APY is the APR after taxes.

The Johnson family is very conservative financially. They have a retirement plan where John works and share a joint checking account at their bank. They keep a lot of money in their checking account to cover short-term needs and emergencies. Both of them want to step up to a higher interest rate than a checking or savings account pays, and at the same time stay with their bank. -The Johnsons have been thinking about the financial principle - Pay Yourself First.Being very conservative,they might consider having their bank

When you use your debit card or ATM card,you should enter the transaction into your check register.

Liquid assets allow you to cover unplanned expenses without having to interrupt your long-term investments or liquidate any tangible assets.

The Truth in Savings Act of 1993

Describe the disadvantages of online and mobile banking.

Once you have examined a financial institution's service and convenience you will want to ask three questions about their cash management alternatives.What are they?