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MANAGING MONEY – CHECKING ACCOUNTS
Unit Overview
In this unit, the student will learn about checking accounts and how this service makes managing money easier.
Checking Accounts
Checking accounts are another service offered by banks. A checking account keeps your money safe and gives you a way to pay bills without carrying cash. Using a checking account also helps you manage money by keeping track of your income and spending. Checking accounts make it easy to deposit money and to write checks to pay for expenses. You can open a checking account much the same way you open a savings account. You go to the bank, fill out an application and deposit money into the account. You will be given checks and most banks also offer debit cards. A debit card is a plastic card that you can use to pay for purchases. When you use a debit card the money is transferred directly from your bank account to the merchant.
You need to be careful to keep track of your balance. If you write checks for more money than you have in your account, your check will bounce and you will have to pay an overdraft fee.
The ABCs of Checking Accounts (02:12)
Questions to ask yourself when looking for a checking account that is best for you
- How much money do I need to open an account?
- Does the account pay interest?
- Is there a monthly service charge on the account?
- Is there a minimum balance I have to maintain to avoid fees?
- Is there a limit on the number of checks I can write per month?
- How much will it cost for new checks?
- Is there a fee for an overdrawn check?
- Does the bank offer overdraft protection?
Answer Assessment questions 1-3.
Making Deposits
To put money into your checking account, you need to follow the steps listed below to complete a deposit slip.
- Name and address - Usually your name and address are printed on the deposit slip. If they aren’t, you need to write them in.
- Fill in the date.
- Record any currency you are depositing. Money is listed as currency (paper money i.e. 5 dollar bill, 20 dollar bill, etc.) and coins (pennies, nickels, dimes, etc.)
- List the amount of each of the checks you want to deposit. If you have more than lines on the deposit slip, you need to list the additional checks on the back of the slip. These checks are then totaled and that amount is written on the front of the deposit slip on the “ total from other side ” line.
- Next add currency, coins and check amounts; record the sum next to subtotal.
- If you want to keep some of the money as cash, you need to write that amount on the “ less cash received ” line. You also have to sign your name on the signature line.
- The last step is to subtract the “less cash received” from the subtotal and record the amount on the total deposit line.
Let’s Practice Filling Out a Deposit Slip
Open document Riley’s Deposit Slip and follow the directions. The document is an Adobe Acrobat file. Click on the pencil icon to open the document. Save the document to a folder on the computer; then then enter answers in the textboxes.
Deposit Slip
Name Street Address City, State, Zip Code
Date June 15, 2011 _______________
Signature_____________________
Sign here for cash
Currency Coins Checks
Total from other side Subtotal Less cash received Total Deposit
The top right line on the check is where you write the date you are writing the check. You should always use the actual date. Using a date in the future, called postdating is not legal. July 22, 2011
The line that reads “ Pay to the Order of ” is where you write the name of the person or company that is to receive the money. Make sure to spell the name correctly. R & J Sporting Goods
To the right of the dollar sign ($), write the amount of money you are writing the check for using numbers and a decimal between the dollars and cents. Start at the left end of the line so no one can write in additional numbers before what you have written. 326.
Write the dollar amount you are writing the check for in words followed by the cents over 100 on the line that ends with the word DOLLARS. Three hundred twenty-six and 89/
After completing the check amount in words, fill in the remainder of the line with a wavy line. This again prohibits someone from changing information you have written.
The dollar amount written in numbers and the amount written in words should always be the same. If they are not the same, the bank will pay the amount written in words.
The bottom left line which may read “ Memo ” provides space for you to jot down what the check is being written for. golf clubs
The bottom right line is where you sign your name in cursive. This is the official proof that you are the one writing the check and, therefore, giving the bank instructions for paying this check out of your checking account. Your Signature
The bottom left of the check has a series of numbers already printed on it. This is called the routing number. It is used by the bank as part of its accounting system and includes your individual account number. :600101037:0772:
Checks (03:25)
Let’s Practice Check Writing
Riley needs some help with her check writing. Look at each of the following checks and identify her mistakes.
Riley did not place the number 326.89 close enough to the dollar sign to prevent someone from writing in additional numbers i.e. 1,326.89.
After completing the check amount in words, Riley did not fill in the remainder of the line with a wavy line. Riley did not fill out the memo line.
Riley Thomas No. 101 4471 Brakeman Rd. Chesterland, Ohio July 22, 2011
PAY TO THE ORDER OF R & J Sporting Goods $ ____326.
Three hundred twenty-six and 89/100 -----------------------------------------------------------------DOLLARS
Bank Name
Memo golf clubs Riley Thomas __
:600101037:0772:752 101
Riley Thomas No. 101 4471 Brakeman Rd. Chesterland, Ohio July 22, 2011
PAY TO THE ORDER OF R & J Sporting Goods $ 326.
Three hundred twenty-six and 89/100 ____________________________________________DOLLARS
Bank Name
Memo ________ Riley Thomas __
:600101037:0772:752 101
Using a Checkbook Register
To keep track of the money in your checking account, you have to use a checkbook register. A checkbook register is a place to record all your deposits and checks.
Checkbook Register
Check Number Date Description of Transaction Payment/Debit Deposit Balance
101 5/10/11 J&R Mortgage Co. 425.55 - 425. House payment 274. 102 5/18/11 Speedway 31.00 - 31. gasoline 243. Deposit 5/20/11 Paycheck 475.00 + 475.
Deposit 5/27/11 Computer refund 50.00 + 50.
Column # In the left hand column, record the check number if you are writing a check or the word deposit if you are making a deposit.
Column # In the second column, write the date of the check or deposit.
Column # In the “ Description of the Transaction ” column, each time you write a check make note of who received it and what was purchased. If you are making a deposit, write the source of the deposit (i.e. paycheck, refund, etc.) in this column.
Column # Write the amount of the check in the “Payment/Debit” column. If it is a deposit, nothing goes in this column.
Column # In the Deposit column, record the amount of the deposit. If it is a check, nothing goes in this column.
Column # The “Balance” column has the amount of money in your account. To figure your balance, ADD deposits and SUBSTACT checks. Check registers have every other line white and every other line gray. Use the white line to record the balance and the gray line to make addition or subtraction calculations.
Note : You can use a computer spreadsheet to keep your checkbook register. A spreadsheet can be set up so the math is done for you.
Let’s Practice Completing a Checkbook Register
Open document Riley’s Checkbook Register and follow the directions. The document is an Adobe Acrobat file. Click on the pencil icon to open the document. Save the document to a folder on the computer; then enter answers in the textboxes.
Riley’s Checkbook Register
Check your work by opening document Riley’s Checkbook Register – Check Sheet.
For assessment question 6 , open document Riley’s Checkbook Register and follow the directions. The document is an Adobe Acrobat file. Click on the pencil icon to open the document. Save the document to a folder on the computer; then enter answers in the textboxes.
Riley’s Checkbook Register Answer Key (Password Protected)
Checkbook Register
Check Number Date^
Description of Transaction Payment/Debit^ Deposit^ Balance
101 5/10/11 J&R Mortgage Co^.^ 425.55 - 425. House payment 274. 102 5/18/11 Speedway 31.00 - 31. gasoline 243. Deposit 5/20/11 Paycheck 475.00 + 475.
Deposit 5/27/11 Computer refund^ 50.00 + 50.
Sample Bank Statement
Bank of Financial Literacy 100 Bank Street Bank, OH 00000
Riley Thomas Account Number 0772: 4471 Brakeman Rd Statement Dates: 5-01 to 5-31- Chesterland, OH 44024 Summary
Total Deposits $525.00 Beginning Balance $700.
Total Payments/Withdrawals $425.55 Ending Balance $799.
Deposits and Additions Date Description Amount
5/20/11 deposit $475.
5/27/11 deposit $ 50.
Total Deposits & Additions $525.
Checks Paid Check No. Description Date Paid Amount
101 J&R Mortgage Co. 5/15/11 $425.
Total Checks Paid $425.
Other Withdrawals, Fees & Charges Date Description Amount
Total Other $0.
Let’s Practice Balancing a Checkbook
Open document Checkbook Balancing Worksheet and follow the directions. The document is an Adobe Acrobat file. Click on the pencil icon to open the document. Save the document to a folder on the computer; then enter answers in the textboxes.
Checkbook Balancing Worksheet
Using the information provided in the checkbook register and bank statement below, complete the check balancing worksheet.
Checkbook Register
Check Number Date^
Description of Transaction Payment/Debit^ Deposit^ Balance
Deposit 2/1/11 open account 850.00 +850.
Deposit 2/5/11 refund^ 30.00 +30.
101 2/11/11 Videos-R-Us 37.45 -37. video game 842. 102 2/17/11 J & R Auto 325.00 -325. car payment 517. 103 2/20/11 RJ Super Store^ 80.77 -80. clothes (^) 436. Deposit 3/1/11 paycheck 445.00 +445.
Bank Statement
Bank of Financial Literacy 100 Bank Street Bank, OH 00000
Riley Thomas Account Number 0772: 4471 Brakeman Rd Statement Dates: 2-01 to 2-28- Chesterland, OH 44024 Summary
Total Deposits $850.00 Beginning Balance $0.
Total Payments/Withdrawals $425.55 Ending Balance $436.
Deposits and Additions Date Description Amount
2/1/11 deposit $850.
2/5/11 deposit $ 30.
Total Deposits & Additions $525.
Checks Paid Check No. Description Date Paid Amount
101 Videos-R-Us 2/15/11 $ 37.
102 J & R Auto 2/22/11 $325.
103 RJ Super Store 2/28/11 $ 80.
Total Checks Paid $443.
Other Withdrawals, Fees & Charges Date Description Amount
Total Other $0.
Restrictive endorsements restrict or control what can happen to checks. A common restrictive endorsement is “For deposit only” and then your signature. This means the entire amount of the check is going to be deposited into an account. If lost after it is endorsed, this check would be harder for someone to cash.
( Back of the check )
Restrictive Endorsement
The third type of endorsement is special endorsement. You can give the check to someone else to cash by writing Pay to the Order of, the other person’s name, and your signature. This would be helpful if George made a check out to you for his soccer uniform and the check really should have been written to Coach Smith. You could use the same check by writing Pay to the Order of Coach Smith and signing your name. This would save you from having to cash the check to give the coach the money or writing a new check yourself.
( Back of the check )
Special Endorsement
For Deposit Only
Riley Thomas
Pay to the Order of (Other Person’s Name)
Riley Thomas
Lets Practice – After reading though each of the following situations, determine what type of endorsement would be best.
- Riley’s sister Hope wrote a check to Riley for their mother’s birthday present. Riley’s brother volunteered to buy the gift and told Riley to just sign Hope’s check over to him. What type of endorsement should Riley use?
- Riley needs to deposit her paycheck into her bank account, but she does not have time in here schedule. Hope volunteered to do it for her. What type of endorsement should Riley use?
- Riley is going to the bank to cash her paycheck. What type of endorsement should Riley use?
If you answered special endorsement for the first situation, you are right. There is no need for Riley to cash Hope’s check when all of the money is going to her brother.
Restrictive endorsement is the correct answer for #2. She wants to be sure the check can only be deposited and not cashed if Hope loses the check and someone else finds it.
The last situation requires a blank endorsement so Riley can receive the money in cash.
Answer Assessment questions 8-11.
