STUDENT LEARNING PLAN Lesson 5-1: Checking...

STUDENT LEARNING PLAN

Lesson 5-1: Checking Accounts

©2014 National Endowment for Financial Education www.hsfpp.org Lesson 5-1: Checking Accounts High School Financial Planning Program June 2014

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 TASKS These tasks match pages 3-21 in Student Guide 5.

__ 1. There’s a new song you want—quick! Brainstorm as many different ways you can shop for and/or pay for this item.

__ 2. 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.

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.

__ 5. 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.

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.

http://www.gcflearnfree.org/moneybasics/6

Activity 5.1: Proof of Payment

©2014 National Endowment for Financial Education www.hsfpp.org Activity 5.1: Proof of Payment High School Financial Planning Program June 2014

NAME: DATE:

Directions:

Give two instances in your life when a check is a good option to use as proof of payment rather than

paying with cash.

Activity 5.2: Check Writing 101

©2014 National Endowment for Financial Education www.hsfpp.org Activity 5.2: Check Writing 101 High School Financial Planning Program June 2014

NAME: DATE:

Directions:

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.

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.

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

Activity 5.2: Check Writing 101

©2014 National Endowment for Financial Education www.hsfpp.org Activity 5.2: Check Writing 101 High School Financial Planning Program June 2014

2008 _______________________________

_______________________________

_______________________________

1015

0 02 003 0 04 1 0 9 5 85 772 3 1 0 1 5

1016

0 02 003 0 04 1 0 9 5 85 772 3 1 0 1 6

1017

0 02 003 0 04 1 0 9 5 85 772 3 1 0 1 7

Activity 5.3: Make the Deposit

©2014 National Endowment for Financial Education www.hsfpp.org Activity 5.3 Make the Deposit High School Financial Planning Program June 2014

NAME: DATE:

Directions:

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.

Here’s an example of Brianna’s endorsement:

Brianna Richie

Activity 5.4: Keeping Track

©2014 National Endowment for Financial Education www.hsfpp.org Activity 5.4: Keeping Track High School Financial Planning Program June 2014

NAME: DATE:

Directions:

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.

Code Date Description of Transaction Payment (—) Deposit (+) Balance

Is your final balance $201.65?

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

Activity 5.5: Does it Balance?

©2014 National Endowment for Financial Education www.hsfpp.org Activity 5.5: Does it Balance? High School Financial Planning Program June 2014

NAME: DATE:

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.

Directions:

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. 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.

Step 2. 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?

Activity 5.5: Does it Balance?

©2014 National Endowment for Financial Education www.hsfpp.org Activity 5.5: Does it Balance? High School Financial Planning Program June 2014

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

Activity 5.6: What Do They Offer?

©2014 National Endowment for Financial Education www.hsfpp.org Activity 5.6: What Do They Offer? High School Financial Planning Program June 2014

NAME: DATE:

Directions:

Visit the website of a financial service provider in your community to learn about services they

provide for customers.

Name of financial service provider:

What are the minimum balance requirements for checking and savings accounts?

Checking:

Savings:

What is the current interest rate earned on a basic savings account?

Banks offer other types of services such as safe deposit boxes for customers to store valuable

documents. List at least two other types of non-account services that the provider makes available to

customers, either for a fee or at no cost.

1.

2.

Activity 5.7: Get Jason Organized!

©2014 National Endowment for Financial Education www.hsfpp.org Activity 5.7: Get Jason Organized! High School Financial Planning Program June 2014

NAME: DATE:

Directions:

Review the scenario on the next page about Jason’s messy finances.

A. What types of financial services could he use to better stay on top of his money?

B. If he ends up moving to another state or country, what will make it convenient enough for him

to keep his accounts where he’s currently banking?

Activity 5.7: Get Jason Organized!

©2014 National Endowment for Financial Education www.hsfpp.org Activity 5.7: Get Jason Organized! High School Financial Planning Program June 2014

WIPEOUT!

After seeing that his checking account balance on Monday morning was $35, Jason uses his

debit card to buy a $19 phone charger for his car. Later that day the bank deducts a debit card

payment for Saturday’s $18 pizza. Then later that night, the $2 shortfall prompts the bank to

charge his account with a $30 overdraft fee.

In the afternoon, Jason uses his debit card at a fast-food place. His bank approves the $9

transaction but charges him another $30 overdraft fee.

Unfortunately, Jason forgot to record the $25 check he’d written to the school last week. When

his bank receives it on Monday, they reject it and deduct a $30 nonsufficient funds fee.

Jason checks his account that night and flips out when he sees that his balance is –$101.

“That’s stupid! My account is negative and I still get charged these fees!”

Later …

Jason is trying to figure out how convenient it would be for him to keep his local bank if he joins

the Coast Guard. He’s also made a list of issues he’s having with his money, to see if the bank

has options to help him better manage his finances.

Jason’s list includes:

Forgetting to transfer $50 of each paycheck from his checking account to his

savings account. The money usually ends up getting spent.

Getting charged late fees by his cellphone provider and gas credit card company

for paying late every month, even though he has the money in his account.

Needing to keep better track of his transactions so he doesn’t wind up with more

overdraft fees.

Challenge 5-A: Use a Checking Account

©2014 National Endowment for Financial Education www.hsfpp.org Challenge 5-A: Use a Checking Account High School Financial Planning Program June 2014

NAME: DATE:

Use a checking account register or create a spreadsheet to record transactions for two months. Check

your accuracy by reconciling the account each month. As you work through the lessons and activities in

NEFE’s High School Financial Planning Program, compile your completed challenge activities into a

personal financial planning portfolio.

Directions

1. Ron Ziesmer is a single 24-year-old who lives in Rochester, Minnesota. He recently opened a new

checking account at the Rochester Credit Union. Use the data provided to track two months of

Ron’s transactions. Go through the steps to write the first two deposit slips and first four checks.

The first few transactions have already been recorded for you. Monthly statements are provided

so you can reconcile Ron’s account each month.

2. Preview the criteria listed in the Scoring Guide to ensure you are meeting the minimum criteria as

you complete this assessment.

3. Before sharing your final work with the instructor, self-assess your work using the Scoring Guide.

Required Criteria Status

Content

1. Transactions are recorded in chronological order. acceptable not acceptable

2. Payment amounts are recorded in the payment column. acceptable not acceptable

3. Deposit amounts are recorded in the deposit column. acceptable not acceptable

4. The account balance is recalculated and displayed with each transaction. acceptable not acceptable

5. You reconcile the account with the November statement data. acceptable not acceptable

6. You reconcile the account with the December statement data. acceptable not acceptable

7. The final account balance is accurate. acceptable not acceptable

General

8. Transaction data is completely recorded. acceptable not acceptable

9. Reconciliation worksheet data matches your register and statement data. acceptable not acceptable

10. Documentation is neat and easy to read. acceptable not acceptable

Feedback: Score: _______ /_______



Record the following routine transactions along with the transactions noted in the calendars.

When the account was opened, Ron arranged for the following bills to be paid automatically

on the 10th of each month:

Rent to LK’s Rental Properties, $550

Phone, Internet, and cable TV service provided by eConnect, Inc., $108.75

On the 15th and 30th of every month, Ron’s paycheck is automatically deposited to his account, $1,256.67.

On the 15th of every month, Ron has arranged to have $200 transferred from his

checking account into a savings account.



Reconcile Worksheet - November



= Subtotal

- Outstanding Payment




= Adjusted Credit Union Balance

Does the adjusted number match Ron’s ending balance?



Reconcile Worksheet - December



= Subtotal




= Adjusted Credit Union Balance

Does the adjusted number match Ron’s ending balance?

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