personal finance: a gospel perspective

Personal Finance: a Gospel Perspective

Cash or Liquid Asset Cash or Liquid Asset ManagementManagement

Day 6 Objectives

A. Understand the importance of good cash A. Understand the importance of good cash management and how it can help you achieve your management and how it can help you achieve your goalsgoals

B. Understand the different cash management B. Understand the different cash management alternatives?alternatives?

C. Understand that while technology can help, unless C. Understand that while technology can help, unless you plan and spend at least 1-2 hours a week you plan and spend at least 1-2 hours a week following your finances, you will not be able to following your finances, you will not be able to keep up with your financial goalskeep up with your financial goals

D. Understand the different types of financial D. Understand the different types of financial institutions, and how they can help you meet your institutions, and how they can help you meet your financial goals (and pay you the most on your liquid financial goals (and pay you the most on your liquid savings)savings)

Your Personal Financial Plan

• Section VI: Cash Management Section VI: Cash Management • What is your current Cash Management What is your current Cash Management

Framework?Framework?• What are you earning on your Savings? What are you earning on your Savings?

• What costs/fees are you paying?What costs/fees are you paying?• What are you earning on your Checking?What are you earning on your Checking?

• What costs/fees are you paying?What costs/fees are you paying?• Which Cash Management vehicles should Which Cash Management vehicles should

you be using and why? you be using and why?

Application

• You are with a friend who heard you have taken You are with a friend who heard you have taken Personal Finance at the Marriott School. She just got Personal Finance at the Marriott School. She just got married two months ago, and she and her husband married two months ago, and she and her husband were given $3,000 as a wedding present. She will be were given $3,000 as a wedding present. She will be graduating in two years, and she and her husband want graduating in two years, and she and her husband want either to save the money for law school when she either to save the money for law school when she graduates or to use it to go on a vacation before law graduates or to use it to go on a vacation before law school. Her husband wants to invest the money in the school. Her husband wants to invest the money in the stock market—he has two stocks he really likes, but stock market—he has two stocks he really likes, but she is unsure of what to do. She asks for your advice. she is unsure of what to do. She asks for your advice. What should you tell her?What should you tell her?

A. Understand the Importance of Good Cash Management

• What is cash management?What is cash management?• The management of cash and liquid assets to help The management of cash and liquid assets to help

you meet your personal goalsyou meet your personal goals• What needs does cash supply?What needs does cash supply?

• The need for liquidity--protectionThe need for liquidity--protection• Liquidity enables you to have immediate access Liquidity enables you to have immediate access

to your fundsto your funds• It keeps you from selling less liquid long-term It keeps you from selling less liquid long-term

investments at substantial discountsinvestments at substantial discounts

Cash Management: the Tradeoffs

• Key Cash Management tradeoffs:Key Cash Management tradeoffs:• 1. The Risk-Return tradeoff1. The Risk-Return tradeoff

• Higher liquidity means lower returnsHigher liquidity means lower returns• 2. The Spending-Investment Risk tradeoff2. The Spending-Investment Risk tradeoff

• Cash on hand is easier to spend than investments Cash on hand is easier to spend than investments • 3. The Time Expended-Return tradeoff3. The Time Expended-Return tradeoff

• Returns are smaller, so time expended should be Returns are smaller, so time expended should be smaller.smaller.

• However, you still can impact your portfolio in a However, you still can impact your portfolio in a big way by using liquidity wisely—get into the big way by using liquidity wisely—get into the habit!habit!

The Key: Relate your Personal Goals to Cash Management

What do you want to accomplish?What do you want to accomplish?• Let Cash Management help youLet Cash Management help you

• Want to save more money?Want to save more money?• Automate Savings: Pay Yourself First and Just Automate Savings: Pay Yourself First and Just

Do It! Do It! • Do it through payroll deductions or Do it through payroll deductions or

automatic depositautomatic deposit• Want to shorten your time working on finances?Want to shorten your time working on finances?

• Use cash management/budgeting softwareUse cash management/budgeting software

Cash Management: Your Emergency Fund

• What is an Emergency Fund?What is an Emergency Fund?• It is a resource that can be used to meet unexpected It is a resource that can be used to meet unexpected

needs for cashneeds for cash• How much should include?How much should include?

• The traditional rule of thumb is for sufficient liquid The traditional rule of thumb is for sufficient liquid assets to cover 3-6 months of expenses. I changed assets to cover 3-6 months of expenses. I changed expenses to income so you won’t ever need to tap expenses to income so you won’t ever need to tap into long-term money to meet current needsinto long-term money to meet current needs

• Is it still wise to have this emergency fund in this Is it still wise to have this emergency fund in this world of credit cards and home equity lines of credit?world of credit cards and home equity lines of credit?

• Yes—perhaps even more soYes—perhaps even more so

B. Understand Cash Management Alternatives

• There are lots of alternatives, each of which has their There are lots of alternatives, each of which has their benefits and costsbenefits and costs

• Checking accountsChecking accounts• Savings accountsSavings accounts• Money market deposit accounts Money market deposit accounts • Certificates of depositCertificates of deposit• Money market mutual fundsMoney market mutual funds• Asset management accountsAsset management accounts• U.S. Treasury bills, U.S. Series EE bonds, U.S. U.S. Treasury bills, U.S. Series EE bonds, U.S.

Series I BondsSeries I Bonds

Cash Management (continued)

• Traditional Cash Management InstrumentsTraditional Cash Management Instruments• Checking accountsChecking accounts

• Liquidity: Very liquid, dailyLiquidity: Very liquid, daily• Required minimum balances: low Required minimum balances: low • Interest rates: Fixed, but minimal, currently 0% Interest rates: Fixed, but minimal, currently 0%

to 1.2%to 1.2%• Safety: Very -- FDIC insuredSafety: Very -- FDIC insured• Penalties for early withdrawal: NoPenalties for early withdrawal: No• Source of information: banks and credit unionsSource of information: banks and credit unions• How to invest: contact a bank or other financial How to invest: contact a bank or other financial

institution to set up an accountinstitution to set up an account

Checking Account Rates over Time

Source: Bankrate.com 5/3/05


• Savings accountsSavings accounts• Liquidity: Very liquid, dailyLiquidity: Very liquid, daily• Required minimum balances: Low Required minimum balances: Low • Interest rates: Fixed, but minimal, currently .25% Interest rates: Fixed, but minimal, currently .25%

to 3.30% (at UFB direct WSJ C2)to 3.30% (at UFB direct WSJ C2)• Safety: Very --FDIC insured Safety: Very --FDIC insured • Penalties for early withdrawal: NoPenalties for early withdrawal: No• Source of information: traditional and internet Source of information: traditional and internet

banksbanks• How to invest: contact a bank or other financial How to invest: contact a bank or other financial

institution to set up an accountinstitution to set up an account

Savings Rates over Time



• Less Traditional Alternatives:Less Traditional Alternatives:• Money Market (Deposit) Accounts (MMA or MMDA) Money Market (Deposit) Accounts (MMA or MMDA)

• An alternative to a commercial bank’s savings accountAn alternative to a commercial bank’s savings account• Liquidity: Very liquid, dailyLiquidity: Very liquid, daily• Required minimum balances: Higher than savingsRequired minimum balances: Higher than savings• Interest rates: Variable, but higher than savings, Interest rates: Variable, but higher than savings,

currently .50%-2.51%currently .50%-2.51%• Safety: Very – FDIC insuredSafety: Very – FDIC insured• Other features: Limited check writingOther features: Limited check writing• Penalties for early withdrawal: NoPenalties for early withdrawal: No• Source of information: Bankrate.com)Source of information: Bankrate.com)• How to invest: contact a financial institution to set upHow to invest: contact a financial institution to set up

Money Market Accounts over Time



• Certificates of Deposits (CDs)Certificates of Deposits (CDs)• Pays a fixed rate of interest for a fixed period of Pays a fixed rate of interest for a fixed period of

timetime• Liquidity: Less liquid, generally monthly, Liquidity: Less liquid, generally monthly,

depending on maturitydepending on maturity• Required minimum balances: HigherRequired minimum balances: Higher• Interest rates: Higher rates, currently 1m 3.05%, Interest rates: Higher rates, currently 1m 3.05%,

3m 3.16%, 6m 3.39%, 5 yr 4.21% (C2)3m 3.16%, 6m 3.39%, 5 yr 4.21% (C2)• Safety: Very – FDIC insuredSafety: Very – FDIC insured• Other features: NoneOther features: None• Penalties for early withdrawal: YesPenalties for early withdrawal: Yes• Source of information: WSJ page C15 Money Source of information: WSJ page C15 Money

RatesRates• How to invest: contact a financial institution to How to invest: contact a financial institution to

purchase a CDpurchase a CD

CD Rates over Time



• Money Market Mutual Funds (MMMFs)Money Market Mutual Funds (MMMFs), , • Pool funds from many investors to buy higher Pool funds from many investors to buy higher

priced securitiespriced securities• Liquidity: Very, dailyLiquidity: Very, daily• Required minimum balances: Much higherRequired minimum balances: Much higher• Interest rates: Higher, with current rates: 0.5%-Interest rates: Higher, with current rates: 0.5%-

1.2%1.2%• Safety: Not FDIC insuredSafety: Not FDIC insured• Other features: Limited check writing, charge Other features: Limited check writing, charge

administrative fees, bought by the shareadministrative fees, bought by the share• Penalties for early withdrawal: NoPenalties for early withdrawal: No• Source of information: Brokers, Source of information: Brokers, www.bankrate.comwww.bankrate.com• How to invest: contact a mutual fund company How to invest: contact a mutual fund company

to set up an account and purchase a fundto set up an account and purchase a fund

http://www.bankrate.com/


• Asset Management Accounts Asset Management Accounts • Offer comprehensive financial servicesOffer comprehensive financial services

• Liquidity: Very, dailyLiquidity: Very, daily• Required minimum balances: HigherRequired minimum balances: Higher• Interest rates: Higher, currently 0.75%-2.25%Interest rates: Higher, currently 0.75%-2.25%• Safety: Not insuredSafety: Not insured• Other features: Checking accounts, credit cards, Other features: Checking accounts, credit cards,

loans, brokerage services, overdraft protection, loans, brokerage services, overdraft protection, • Penalties for early withdrawal: No, but charge Penalties for early withdrawal: No, but charge

higher annual fees ($50-125)higher annual fees ($50-125)• Source of information: Brokerage firmsSource of information: Brokerage firms• How to invest: contact a financial firm to set up How to invest: contact a financial firm to set up

an accountan account


• U.S. Treasury BillsU.S. Treasury Bills • Short-term, less-than 12 months, government debtShort-term, less-than 12 months, government debt

• Liquidity: Somewhat, monthlyLiquidity: Somewhat, monthly• Required minimum balances: Much higherRequired minimum balances: Much higher• Interest rates: Higher, currently 3m 2.69%, 6m 3.085%:Interest rates: Higher, currently 3m 2.69%, 6m 3.085%:• Safety: Very, guaranteedSafety: Very, guaranteed• Other features: state and local income tax exempt, and Other features: state and local income tax exempt, and

purchased at a discount, but don’t accrue periodic interest purchased at a discount, but don’t accrue periodic interest payments payments

• Penalties for early withdrawal: YesPenalties for early withdrawal: Yes• Source of information: WSJ page C15 Money RatesSource of information: WSJ page C15 Money Rates• How to invest: 3 or 6 month bills can be purchased from How to invest: 3 or 6 month bills can be purchased from

www.treasurydirect.govwww.treasurydirect.gov, and other bills from banks/brokers, and other bills from banks/brokers

Treasury Bills over Time


• U.S. Series EE BondsU.S. Series EE Bonds • U. S. government savings bondsU. S. government savings bonds

• Liquidity: Somewhat, after 5 years Liquidity: Somewhat, after 5 years • Required minimum balances: HigherRequired minimum balances: Higher• Interest rates: Higher, 3.5% fixed through Oct05 Interest rates: Higher, 3.5% fixed through Oct05 • Safety: VerySafety: Very• Other features: State and local income tax exempt, Other features: State and local income tax exempt,

issued at half their face value, interest tax-free if spent issued at half their face value, interest tax-free if spent on eligible college tuition, sold in $25 to $10,000 bondson eligible college tuition, sold in $25 to $10,000 bonds

• Penalties for early withdrawal: 3 month before 5 yearsPenalties for early withdrawal: 3 month before 5 years• Source of information: Source of information: http://http://www.savingsbonds.govwww.savingsbonds.gov/)/)• How to invest: can purchase via the above websiteHow to invest: can purchase via the above website

http://www.treasurydirect.gov/




• US Series I BondsUS Series I Bonds • U.S, Government Savings bonds linked to inflationU.S, Government Savings bonds linked to inflation

• Liquidity: Very, after 5 yearsLiquidity: Very, after 5 years• Required minimum balances: MinimalRequired minimum balances: Minimal• Interest rates: Linked to inflation, 4.80 until Oct05Interest rates: Linked to inflation, 4.80 until Oct05• Safety: Very, guaranteedSafety: Very, guaranteed• Other features: taxed only in year cashed, interest tax-free if spent on Other features: taxed only in year cashed, interest tax-free if spent on

eligible college tuition, interest income free from state and local eligible college tuition, interest income free from state and local taxation, sold in $25 to $10,000 bondstaxation, sold in $25 to $10,000 bonds

• Penalties: Yes, 3 month penalty before 5 yearsPenalties: Yes, 3 month penalty before 5 years• Source of information: Source of information: www.treasurydirect.govwww.treasurydirect.gov• How to invest: can purchase via the above websiteHow to invest: can purchase via the above website


WSJ 4May05 C15 Bankrate.com

Comparing Cash Management Alternatives

• How do you compare different alternatives?How do you compare different alternatives?• 1. Use comparable Interest rates1. Use comparable Interest rates

• Look at the Annual Percentage Yield (APY)Look at the Annual Percentage Yield (APY)• The APY is the yield or return number you The APY is the yield or return number you

should use when comparing different cash should use when comparing different cash management alternativesmanagement alternatives

• Financial institutions are required by law to Financial institutions are required by law to state the APY which converts the different state the APY which converts the different interest rates into similar compounding periodsinterest rates into similar compounding periods

• 2. Consider safety2. Consider safety• Some alternatives are explicitly or implicitly Some alternatives are explicitly or implicitly

guaranteed by the governmentguaranteed by the government

Comparing Alternatives (continued)

3. Use comparable after-tax returns3. Use comparable after-tax returns• A. Calculate the after-tax return of taxable assetsA. Calculate the after-tax return of taxable assets

• After tax return = taxable return (1- tax rate)After tax return = taxable return (1- tax rate)• Tax rate = (Federal + State + Local taxes)Tax rate = (Federal + State + Local taxes)

• B. Calculate the equivalent taxable yield (ETY) for B. Calculate the equivalent taxable yield (ETY) for tax-advantaged assetstax-advantaged assets

• The ETY is the yield that is offered on a The ETY is the yield that is offered on a comparable taxable bond to give the same after-comparable taxable bond to give the same after-tax yield as a tax-advantaged security.tax yield as a tax-advantaged security.

• 4. Consider inflation4. Consider inflation• Calculate your return after the impact of taxes and Calculate your return after the impact of taxes and

inflation inflation

Application:Calculating After-tax Returns

• Calculate the after-tax return for each of the Calculate the after-tax return for each of the following bonds for Bill and Suzie. Bill is an following bonds for Bill and Suzie. Bill is an investor in the 15% federal marginal tax investor in the 15% federal marginal tax bracket and 7% state tax bracket. Suzie is an bracket and 7% state tax bracket. Suzie is an investor in the 35% Federal tax bracket and 7% investor in the 35% Federal tax bracket and 7% state tax bracket. Which bonds should Bill or state tax bracket. Which bonds should Bill or Suzie purchase? Suzie purchase? • A 6.5% corporate bond (all taxable)A 6.5% corporate bond (all taxable)• A 4.75% municipal bond (federal tax-free)A 4.75% municipal bond (federal tax-free)• A 5.0% treasury bond (state tax-free)A 5.0% treasury bond (state tax-free)

Answer

• Bill (After-tax return = taxable return (1- tax rate))Bill (After-tax return = taxable return (1- tax rate))• 6.5% Corporate Bond6.5% Corporate Bond

• 6.5% * (1 - (.15 + .07) = 5.07%6.5% * (1 - (.15 + .07) = 5.07%• MB: 4.75% * (1 - .07) = 4.42%MB: 4.75% * (1 - .07) = 4.42%• TB: 5.0 * (1 - .15) = 4.25%TB: 5.0 * (1 - .15) = 4.25%

• The corporate bond is the best for BillThe corporate bond is the best for Bill• SuzieSuzie

• CB: 6.5% * (1 - (.35 + .07) = 3.77%CB: 6.5% * (1 - (.35 + .07) = 3.77%• MB: 4.75% * (1 - .07) = 4.42%MB: 4.75% * (1 - .07) = 4.42%• TB: 5.0 * (1 - .35) = 3.25%TB: 5.0 * (1 - .35) = 3.25%

• The municipal bond is the best for SuzieThe municipal bond is the best for Suzie

Application: Calculating Equivalent Taxable Yields

• Assume you are in the 25% federal and 7% state tax Assume you are in the 25% federal and 7% state tax bracket. What is the equivalent taxable yield to you of bracket. What is the equivalent taxable yield to you of a U.S. Series I bond that earns 4.8% and where the a U.S. Series I bond that earns 4.8% and where the principle and interest are:principle and interest are:

• A. Planned to be used to pay for your child’s A. Planned to be used to pay for your child’s college tuition expense? college tuition expense?

• B. Planned to be used to save for family personal B. Planned to be used to save for family personal goals?goals?

Answer

• A. If you use the principle and interest for tuition, the A. If you use the principle and interest for tuition, the bond is both federal and state tax exempt. bond is both federal and state tax exempt.

• Return Return after tax after tax = return = return before taxbefore tax * (1 – tax rate) * (1 – tax rate)• Since this asset is federal and state tax-free, the Since this asset is federal and state tax-free, the

equivalent on a taxable bond would be:equivalent on a taxable bond would be:• 4.8% = x *(1 – (.25+.07)) or x = 4.8% / .684.8% = x *(1 – (.25+.07)) or x = 4.8% / .68• x = 7.06%x = 7.06%

• B. If the bond is used only for personal expenses, it B. If the bond is used only for personal expenses, it is only state tax free. The equivalent on a taxable is only state tax free. The equivalent on a taxable bond would be:bond would be:

• 4.8% = x * (1 - .07) or x = 4.8% / .93 4.8% = x * (1 - .07) or x = 4.8% / .93 • x = 5.16%x = 5.16%

Application: Calculating After-tax After-inflation Returns

• Calculate the real rate of return to a taxpayer in Calculate the real rate of return to a taxpayer in the 35% federal marginal tax bracket and 7% the 35% federal marginal tax bracket and 7% state on a $50,000 money market account, state on a $50,000 money market account, assuming 4.5% yield and 3.5% inflation. What assuming 4.5% yield and 3.5% inflation. What are the implications of this result for cash are the implications of this result for cash management decisions? (Note: the dollar management decisions? (Note: the dollar amount is not necessary for this calculation)amount is not necessary for this calculation)

Answer

• After-tax return = return (1-federal + state tax After-tax return = return (1-federal + state tax rate)rate)4.5% (1-.42) = 2.61%4.5% (1-.42) = 2.61%

Real Return = Real Return = (1+ after-tax return) (1+ after-tax return) -1 -1 (1 + inflation)(1 + inflation) (1.0261/1.035) –1 = -.86%(1.0261/1.035) –1 = -.86%It is very difficult to do much more than keep up with It is very difficult to do much more than keep up with

taxes and inflation with liquid assets. Only the taxes and inflation with liquid assets. Only the amount need to meet immediate emergency needs and amount need to meet immediate emergency needs and short-term goals should be here. The result is worse short-term goals should be here. The result is worse when you factor in charitable giving.when you factor in charitable giving.

Questions

• Do we understand the importance of cash Do we understand the importance of cash management in helping us reach our goals?management in helping us reach our goals?

C. Spend the Time Necessary

• While technology can help, unless you plan While technology can help, unless you plan and spend at least 1-2 hours a week following and spend at least 1-2 hours a week following your finances, you will not be able to keep up your finances, you will not be able to keep up with your financial goals.with your financial goals.• Set aside the time and use it wiselySet aside the time and use it wisely

Spending Time (continued)

• From the book, the Millionaire Next Door it states:From the book, the Millionaire Next Door it states:• People who become wealthy allocate their time. . in People who become wealthy allocate their time. . in

ways consistent with enhancing their net worth. ways consistent with enhancing their net worth. [They] allocate nearly twice the number of hours [They] allocate nearly twice the number of hours per week to planning their financial investments as per week to planning their financial investments as [those who do not become wealthy] do. (The [those who do not become wealthy] do. (The Millionaire Next Door, p. 71)Millionaire Next Door, p. 71)

• Unless you are spending 1-2 hours a week on your Unless you are spending 1-2 hours a week on your financial oversight, budget, investing process, it will financial oversight, budget, investing process, it will be very difficult to reach your goals. be very difficult to reach your goals.


• Set aside the time, once a week, to:Set aside the time, once a week, to:• Review and update your goals and what you Review and update your goals and what you

want to accomplish in lifewant to accomplish in life• Update your budget—how are you doingUpdate your budget—how are you doing• Balance your checking/cash management Balance your checking/cash management

account, and account, and • Ensure all charges/balances are correct from Ensure all charges/balances are correct from

your credit cards/EFTsyour credit cards/EFTs


• Fixing ErrorsFixing Errors• Be alert to human and computer errors.Be alert to human and computer errors.• Never deposit cash in an ATM.Never deposit cash in an ATM.• Call the institution that made the error.Call the institution that made the error.• Write the institution within 60 days of Write the institution within 60 days of

receiving your statement.receiving your statement.• Write the Federal Reserve Board’s Division Write the Federal Reserve Board’s Division

of Consumer and Community Affairs if of Consumer and Community Affairs if problems are not resolvedproblems are not resolved

Questions

• Do you have any questions on the need to Do you have any questions on the need to spend 1-2 hours each week on your finances?spend 1-2 hours each week on your finances?

D. Understand the different Types of Financial Institutions

• There are two main types of institutions (but There are two main types of institutions (but the distinction is blurring through the distinction is blurring through deregulation)deregulation)• ““Banks” or deposit-type financial Banks” or deposit-type financial

institutionsinstitutions• Non-deposit-type financial institutionsNon-deposit-type financial institutions

• The choice of which one you use depends on The choice of which one you use depends on which will serve your needs the bestwhich will serve your needs the best

Financial Institutions (continued)

• Deposit-type Financial InstitutionsDeposit-type Financial Institutions• Commercial banksCommercial banks

• Offer the widest variety of services. Generally Offer the widest variety of services. Generally do not offer the highest rates, as they compete do not offer the highest rates, as they compete with a broad range of serviceswith a broad range of services

• Savings and loan associationsSavings and loan associations• Slight ownership differences, but essentially Slight ownership differences, but essentially

similar to commercial banks. May offer higher similar to commercial banks. May offer higher rates.rates.


• Credit unionsCredit unions• Similar to above, but since not-for-profit, Similar to above, but since not-for-profit,

can offer sometimes higher rates on can offer sometimes higher rates on savingssavings

• ““Net” banksNet” banks• Electronic banks that pay more for Electronic banks that pay more for

deposits, but have no local branch deposits, but have no local branch network so lower costs and higher rates.network so lower costs and higher rates.


• Non-deposit Type Financial InstitutionsNon-deposit Type Financial Institutions• Mutual fundsMutual funds

• You can now write checks on your mutual fund You can now write checks on your mutual fund accountaccount

• Stockbrokerage firmsStockbrokerage firms• You can also write checks on your brokerage You can also write checks on your brokerage

accountaccount


• Both Banks and non-Banks can offer on-line Both Banks and non-Banks can offer on-line financial services which allow access to bank financial services which allow access to bank balances and some resources 24 hours a day.balances and some resources 24 hours a day.

• There has been a major blurring of roles There has been a major blurring of roles between deposit and non-deposit institutions:between deposit and non-deposit institutions:

• Banks can now offer investment servicesBanks can now offer investment services• Non-banks now offer check writing and Non-banks now offer check writing and

savingssavings


• What to Look for in a Financial Institution?What to Look for in a Financial Institution?• Kinds of services providedKinds of services provided

• What are your prioritized needs?What are your prioritized needs?• Safety of your moneySafety of your money

• How important is FDIC insurance?How important is FDIC insurance?• Cost of achieving your financial goalsCost of achieving your financial goals

• Which are most important now?Which are most important now?• Type of personal relationship providedType of personal relationship provided

• Is this important?Is this important?• Note: You could use more than one financial Note: You could use more than one financial

institution to take advantage of each one’s institution to take advantage of each one’s strengths.strengths.


• Choosing a Financial Institution—the three CsChoosing a Financial Institution—the three Cs• The Cost FactorThe Cost Factor

• Monthly fees, minimum balance, charge per Monthly fees, minimum balance, charge per check, balance-dependent scaled feescheck, balance-dependent scaled fees

• The Convenience FactorThe Convenience Factor• Location (branches, ATMs), safety deposit Location (branches, ATMs), safety deposit

boxes, overdraft protection, stop-payment abilityboxes, overdraft protection, stop-payment ability• The Consideration FactorThe Consideration Factor

• Personal attention, financial advice, attention to Personal attention, financial advice, attention to detaildetail

• Note that whatever institution you choose, it is your Note that whatever institution you choose, it is your responsibility to make sure they do what they say responsibility to make sure they do what they say they willthey will

Questions

• Any questions on the different types of Any questions on the different types of financial institutions and how they can help financial institutions and how they can help achieve your financial goals?achieve your financial goals?

Review of Objectives

A. Do you understand the importance of good cash A. Do you understand the importance of good cash management and how it can help you achieve your management and how it can help you achieve your goals?goals?

B. Do you understand the different cash management B. Do you understand the different cash management alternatives? alternatives?

C. Are you convinced that while technology can help, C. Are you convinced that while technology can help, unless you plan and spend at least 1-2 hours a week unless you plan and spend at least 1-2 hours a week following your finances, you will not be able to keep following your finances, you will not be able to keep up with your financial goals?up with your financial goals?

D. Do you understand the different types of financial D. Do you understand the different types of financial institutions, and how they can help you meet your institutions, and how they can help you meet your financial goals?financial goals?

personal finance: a gospel perspective

Documents

management of cash

cash management vehicles

cash management help

cash supply

personal finance

liquid longterm investments

longterm money

sufficient liquid assets