You & Your Money
Class 2, Part 1 – Your Budget
International Center
at Catholic Charities Community Services
April 2013
Instructor: Virginia Guilford
Class Schedule
• Class 1 - Thursday April 11, 4:00 – 5:00 PM
– Your Income
– Your Taxes
• Class 2 – Thursday April 18, 4:00 – 5:00 PM
– Your Budget
– Your Bank Accounts
• Class 3 – Thursday April 25, 4:00 – 5:00 PM
– Your Credit
– Learning More
Please Be Aware
• This course does not give you professional
– I am not a lawyer.
– I am not an accountant.
– I am not a banker.
• This course explains the basic concepts and
vocabulary that you need for understanding
work, taxes, budgeting, banking and credit.
Please Be Aware
• This course does not give you professional
– I am not a lawyer.
– I am not an accountant.
– I am not a banker.
• This course explains the basic concepts and
vocabulary that you need for understanding
work, taxes, budgeting, banking and credit.
Your Budget
• You will want to make sure
that the money you earn will
take care of your needs
• A budget is a kind of plan
that lists your expected
income (your net income)
and your estimated
Estimating Your Income
• Employee with a fixed salary
– Monthly or Twice a Month
– Every Two Weeks
• Scholarships & Grants
– Monthly Stipend
– Annual Payment
Estimating Your Expenses
• Write down a list of what you estimate your
expenses will be
– Review your checkbook
– Keep a list for a month
Analyzing Your Expenses
• Analyze your Expenses
Required Expenses – items you need to survive
Optional Expenses – items that are ‘extras’
Fixed Expenses – the same from month to month
Flexible Expenses – different from month to month
• Examples
Required Fixed Expenses – rent/mortgage, monthly metro card
Required Flexible Expenses – groceries, laundry/dry cleaning
Optional Fixed Expenses – car payment, standard phone plan
Optional Flexible Expenses - entertainment, clothing, gifts
How to Manage an Irregular Income
• “Making Your Nut”
• Giving Yourself a Salary
How to Manage an Irregular Income
• “Making Your Nut”
– Know what your ‘nut’ is – the minimum you
need to cover your basic required expenses
• First earn enough to make your ‘nut’
• Then – think about extras
– Good if you earn lots of small amounts of
How to Manage an Irregular Income
• Giving Yourself a Salary
– Know what is a sensible amount for a salary
that will cover most of your needs
• Put all income into a savings account
• Transfer the salary amount each month to your
checking account
– Good if you get large amounts of money at
different times
Put Savings First
Saving for Emergencies
– Enough to cover 3-6 months basic expenses
• Saving for Retirement
– Even if you are young, try to put away
– Use tax advantaged accounts
• Saving for a Goal
– Decide how much you will need, and when you
will need it
– Calculate how much you will need to save each
pay period to reach your goal
You & Your Money
Class 2, Part 2 – Your Bank Accounts
International Center
at Catholic Charities Community Services
April 2013
Instructor: Virginia Guilford
Kinds of Banks
• There are different kinds of banks
– Commercial Banks
– Savings Banks
– Credit Unions
– Internet Banks
• In earlier times, each different type of bank
was only allowed to provide a specific kind of
bank service. But now, most types of banks
can do all the same basic things.
Choosing Your Bank
• Convenience
– Branches /ATMs located near your home or work place
– International branches, if you need international services
– Open at convenient times for you
• Services
– Offers the kind of bank accounts you need
– Safe online banking that is easy to use
• Fees
– Reasonable fees compared to other banks. Verify at “Find A
Better Bank” (
FDIC Protection
• The Federal Deposit Insurance Corp (FDIC) protects against
the loss of deposited money if an FDIC-insured institution fails
– Does cover funds in checking accounts, savings accounts, money
market accounts, and CDs
– Does not cover stocks, bonds, mutual funds, life insurance, annuities
or municipal securities
• Most commercial banks, savings banks and credit unions will
post signs indicating that they are FDIC-insured.
• Credit unions can make use of NCUA, a federal agency that
regulates credit unions and insures deposits for up to
Kinds of Accounts & Bank Offerings
Checking Accounts
Savings Accounts
Money Market Accounts
Tax-Advantaged Accounts
Checking Accounts
• Checking Accounts
– Allows you to take money out whenever you want
– Money can be withdrawn by using a check, or an
ATM/Debit card
– Some checking accounts also pay interest on
money in the account
Savings Accounts
• Savings Accounts
– Allows you to take out money whenever you want
– Money can be withdrawn by a visit to the branch,
or with an ATM/Debit card
– Savings accounts pay a small amount of interest
on the money left in the account
CD (Certificate of Deposit)
– You agree not to take out the money for specified
amount of time, until a specified ‘maturity date’
– CDs have maturity dates that range from 3 months
to 5 years or more
– CDs usually pay a higher amount of interest than
savings accounts
– CDs in higher amounts, with longer maturity dates
pay more interest
Money Market Accounts
Money Market Accounts
– An MMA is an FDIC-insured deposit account
• Pays slightly higher interest rates
• Usually has a minimum balance
• Usually limits the number of withdrawals
– Not the same as a Money Market Fund (MMF)
• An MMF is a kind of mutual fund
• An MMF is not FDIC insured
Tax-Advantaged Accounts
Tax-Advantaged Accounts
• Federal & State tax laws allow you to shelter
some income from income tax
IRA Retirement Account
ROTH IRA Retirement Account
HSA Health Savings Account
ESA Coverdell Education Savings Account
• Most banks and brokerage firms offer tax-advantaged
Access to your Bank Accounts
• Deposits
• Withdrawals
– At the Bank
– ATM Withdrawals
– Using Your Debit Card
– Check Payments
– Certified Checks
Deposits to your Bank Accounts
• Deposits of cash or checks
– ATM or Teller Deposit
– Smart Phone Photo Deposit – some banks provide an app for your
phone to allow check deposits and some other banking transactions
– Endorsing your Check for Deposit
• Add your signature on the back
• Add the words “for deposit only” underneath your signature
• Direct Deposit
– Employer
– Tax refunds
Withdrawals from Bank Accounts
• Cashing a Check at the Bank
– Most easily done at your own branch (where you
opened your account)
• Your own branch will have your signature on file
• You may be personally known to someone at the
– Give the teller a check written on your account
made out to ‘cash’
– You may also be able to use your Debit or ATM
card to get money from the teller without a check
Withdrawals from Bank Accounts
ATM Withdrawals
–Bank-provided ATM card
–Debit card
• Avoid out-of-network ATMs
Withdrawals from Bank Accounts
• Checks
– Blank checks may be free, or there may
be a small charge
– The ‘Float’ is the time between when
you write the check and when the
money leaves your account.
Withdrawals from Bank Accounts
Certified Checks
– Large purchases (car, down payment) may
require payment with a certified check
– A check that is guaranteed by the bank
– Must be requested at the branch
• Bank verifies that you have enough money to cover the
certified check
• Bank ‘freezes’ that amount of money in your account
• No ‘float’ time between when you write the check and
when the money comes out of your account
Withdrawals from Bank Accounts
• Electronic Access
– Debit Card Purchases
• Use a bank Debit Card to immediately pay for purchases or
make cash withdrawals from your bank account
– Automatic Transfers & Bill Payment
• Automatic Transfers between Accounts
• Online Banking Bill Payment
• Vendor Activated Bill Paying Options
– Approved Automated Withdrawals / ACH
Electronic Access – On-line Banking
• On-Line Banking
– Check your balance
– Pay bills
– Transfer money
• Is It Safe?
– Most banks offer secure Internet banking
– https – indicates the connection is secured by encryption
– Internet security is a complicated issue
• Be cautious
• Be careful
Electronic Access - ACH Debit
• Approved Automated Withdrawals /
ACH Debit
– Only for limited amounts and limited time
– Only from trustworthy companies
• Companies that you know well
• Companies that you would not have trouble with if you wanted to
change or cancel your payment
– YES for major utilities, public colleges/universities, government
– NO for private profit-based schools, small companies in other
Special Banking Services
• Wire Transfers
– Money is sent electronically from one bank
account to another
– Often used for international transfers of money
– Wire transfers use networks like CHIPS (Clearing
House Interbank Payments System) or Fedwire
(the Federal Reserve Banks network)
Special Banking Services
• Overdraft Protection
– A check is ‘bounced’ when you don’t have enough money
in your account to pay it
– Banks may charge high fees if a check bounces – as much
as $20 or $30
– Overdraft protection is offered at some banks. The bank
gives you an automatic loan if you don’t have enough
money to cover a check you wrote.
• Look carefully at any overdraft protection
• How much will it cost?
• Is there a charge only if you use it or is there a monthly charge?
Special Banking Services
• Stop Payment Orders
• If a check you have written is lost or stolen, or if you don’t
want to pay it for some other reason, you can put a ‘stop
payment’ order on that check
Check payee
Check amount
Check date
Check number
• A fee may be charge for a stop payment order
• The stop payment order may only be good for a specific
amount of time – for example 6 months
Special Banking Services
Automatic Transfers
• You can set up a regular, automatic transfer that will happen
on the same day, at regular intervals
– Once a month
– On your payday
• If you have online banking, you can set up a regular transfer
through your online interface
• You can also ask the bank to do make the transfer for you
You & Your Money Glossary
• A list of commonly used financial terms with
• Go to and download
the Glossary from the “Docs and Links” page.
(The PowerPoint presentations used in this
class are also available there)
• Or send your request to

You and Your Money - Virginia Guilford