Vocab
Some banks charge a ______________ each month just to keep your checking or savings account open.
Maintenance Fee
Many employers offer _______________, which electronically transfers your paycheck into your bank account.
Direct Deposit
What percentage of your income should you try to save?
20%
True or False: You need a debit card to withdraw or deposit money into an ATM.
True
Is overdraft protection free and required?
No and no.
Some financial institutions require you to maintain a ____________ in your account to avoid being charged fees.
Minimum Balance
To avoid an ____________, ensure you have enough funds in your account to cover all transactions.
Overdraft Fee
What is compound interest? Interest made from ____________
Interest
What does it mean to be unbanked? Why might someone be unbanked?
Being unbanked means not having a bank account or not belonging to a bank. Reasons may include:
- Insufficient Funds
- Unable to keep a minimum balance (which would result in fees)
- Lack of trust in banks
Explain the 50/30/20 Rule
50% of your money to needs, 30% of your money to wants, and 20% of your money to savings.
Using ____________ on your banking app allows you to deposit checks without visiting a branch.
Mobile Deposit
A _____________ shows all the transactions in your account and is typically sent to you once a month.
Bank Statement
How much should you try to save in an emergency fund? Why do they recommend that amount?
3-6 months of expenses - in case you lose your job or something unexpected happens, you have something to fall back and pay your bills while on while you get back on your feet.
How do banks make a profit?
By lending out deposited money at higher interest rates than they pay on deposits.
Explain the Pay Yourself First strategy.
Money will be transferred to your savings account regularly - it is an out of sight out of mind method to help you build your savings.
To avoid frequent trips to the bank, many people use a(an) ________________ to withdraw cash or check their account _______________.
ATM and Balance
Your savings grow by earning ____________, which is paid out as a percentage of your savings balance.
Interest
What are 2 challenges that can make it difficult for people to save money?
- Living paycheck to paycheck
- Having expenses that are higher than income
- Price increase due to inflation
- Trying to pay off debt
What is a retirement plan through your employer called? Why is it best to start contributing to that plan as early as possible?
401K - To make it grow over time, the earlier you start, the more you will have for retirement.
Explain the pros and cons of having overdraft protection.
Con - You have to pay a fee
Pro - You have protection and your transaction goes through
__________________ protects your deposits in the bank up to $250,000 in case your bank fails.
FDIC (Federal Deposit Insurance Corportation)
Some banks charge a _____________ each month just to keep your checking or savings account open.
Maintenance Fee
Explain 2 differences between a checking account and a savings account.
Checking is used for everyday transactions and no limit on transactions.
Savings accounts are used to build interest and have a limited number of withdrawals.
What are 2 questions you should ask a bank before opening an account with them?
- What kind of fees are associated with the account
- Is there a minimum balance
- Are there any perks
What are 3 strategies you can use to avoid bank fees?
- Set up alerts
- Use in-network ATMs
- Maintain minimum balance