Read pages 1, 2, and 3 “Which Checking Account is Right for You?”

Now read pages 4, 5 and 6 and learn about the ownership of accounts and how accounts are to be titled.

Read page 7 and make a copy of this worksheet for your own personal use. When you are selecting a financial institution this is a good tool to use as you shop for the bank that best fits your needs.

Pages 8, 9, 10, 11, 12, 13, 14, 15, and 16 make up your written exercise for this chapter. Let’s go through them one page at a time.

• Page 8 – Read this and learn the correct way to write a check. Note: this is one area where you cannot become too creative – you can only write a check the correct way. If not, the bank will not honor it as a negotiable instrument. So read this information carefully.
• Page 9 – Instructions for Student Practice Checkbook – you will write checks for the month of August, 2000 following the instructions set out on page 9.
• Page 10 – Bank account reconciliation worksheet – set this aside for now. You will complete this page later.

• Page 11 – This is the check register that goes with the Instructions for Student Practice Checkbook on page 9. It may be easier to complete this if you take it out of the book and set it beside the page 9 instructions.
  
• Pages 12, 13 and 14 – these are your checks.

• Now begin the exercise. On page 9 you see a balance brought forward of $235.20. Enter that in the right hand column at the top of the check register on page 11.
• Check #101 – Write that check according to the instructions you read on page 8. Enter the check in the check register on page 11 in the payment/debit column. Subtract the amount of this check from the balance and enter the new balance.
• Check #102 – Write it, enter it into the check register and subtract this amount from the balance.

Deposit paycheck on August 5. Enter $450 in the deposit/credit column. Add this amount to the balance and enter the new balance.

 

Do you see the pattern? If it is a check you enter the check number, the date, who the check was written to (description of transaction) and the amount in the payment/debit column. Then subtract that amount from the balance. The service charge on the checking account is handled like a check, there is just no check number. But the amount is entered into the payment/debit column and subtracted from the balance.

If it is a deposit you enter the date, who the deposit was from (description of transaction) and the amount in the deposit/credit column. Then add that amount to the balance.

Now complete the entire exercise. Your ending balance is $374.91. If that is not your balance, go back and find your error.

Now it is time to reconcile (balance) your checking account. Look at pages 15 and 16 and pull page 10 out of the book. First carefully read the instructions on page 15. They tell you how to balance your check book balance to the balance on your checking account statement.

Page 16 is your bank statement. Following the instructions on page 15 and using the worksheet on page 10 complete this exercise. You are done when the balance on page 10 equals the balance in your check register -- $374.91.

Read page 17 - Am I Making My Account Work for Me? Keep this as a reference when you are considering banks and checking account options.

Read pages 18 and 19 – the information on Depositing Checks and Kinds of Endorsements.

Do the exercise on page 20 Think About Saving Money.

Read page 21 Savings Accounts.

Look at pages 22 and 23. Read this information. You could copy these two pages and use them as a worksheet when you are selecting a financial institution or savings account product.

On page 24 there is a quiz. Take that. It will help you understand the Magic of Compound Interest.

Individual Retirement Accounts are special savings accounts designed to set aside money for retirement. Read the information on pages 25, 26, 27, 28 and 29 to learn about these retirement accounts and how they can help lower your tax bill while they help you set aside money for retirement.

See the table on page 30, “The Rule of 72”. Keep this as a handy reference to help you make savings and investment decisions when you are saving for a long-term financial goal such as retirement or children’s college. The Rule of 72 in a nutshell – Divide the interest rate into the number 72 to determine how long it will take to double your money.

Special supplemental information on the Federal Reserve Bank is included on Appendix A on page 31 and Appendix B on pages 32 and 33. The Federal Reserve system has governance and oversight responsibilities for banks in the U.S. and provides member banks with services.