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Copyright 2002 by Harcourt, Inc. All rights reserved.

CHAPTER 4:

MANAGING YOUR

CASH AND SAVINGS

Clip Art 2001 Microsoft Corporation. All rights reserved.

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Role of Cash Management in

Personal Financial Planning

Cash management deals with the

routine, day-to-day use of liquidassets.

Liquid assets consist of cash and

other assets which can be readily

converted to cash with little or no

loss in value.

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Purpose of Liquid Assets:

Make purchases.

Meet recurring living expenses.

Provide reserve for unexpectedexpenses or opportunities.

Used temporarily to accumulate

funds for longer-term financial

goals.

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The Financial Marketplace

Financial products

checking and

savings accounts credit cards

loans and

mortgages

insurance

mutual funds

Financial services

financial planning

tax preparation

brokerage services

real estate

trusts

retirement

estate planning

The financial services industry markets:

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Types of Financial Institutions

Only type of financial institution

that can offer noninterest-paying

checking accounts.

Clip Art 2001 Microsoft Corporation. All rights reserved.

Commercial Banks

Largest type of

traditional financialinstitution.

Offer full array of

financial services.

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Savings and Loan Associations

Offer many of the same services ascommercial banks.

Typically pay slightly more on

savings deposits.

Channel depositors savings into

mortgage loans for purchasing and

improving homes.

Some are mutual associations.

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Savings Banks

Similar to savings and loan

associations.

Offer interest-paying checking

accounts.

Typically offer savings rates similar

to those of savings and loan

associations.

Most are mutual associations.

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Credit Unions

Provide financial products and

services to specific groups of peoplewho have a common tie.

Qualified persons become members

by purchasing a share of ownership.All are mutual associations; owned

and sometimes operated by

members.Typically pay interest rates higher

than those of other financial

institutions.

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Nondepository Financial Institutions

Life insurance companies

Finance companies

Mutual fundsStockbrokerage firms offer cash

management accounts, money

market mutual funds, wrap accounts,credit cards

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THE END!

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