Money Management Guide

By: Summer Tracy

Depository institution – A business that provides financial services

Commercial Banks and Credit Unions

Commercial banks and credit unions offer different services and benefits and each should be evaluated before choosing the institution that best suits your needs.

Commercial Bank: For profit and open to everyone.

Credit Union: Not for profit/Owned by members and open only to those who meet membership requirements, such as a common employer.

Checking and Savings Accounts

Checking Account: Provides quick access to funds for transactions. Use deposited money anytime by writing checks, using debit cards, withdrawing cash, or transferring money.

Savings Account: An account for money not intended to be used for daily expenses. Access to money is more limited than a checking account. Earns interest.

Taxes - A sum of money demanded by a government to support the government itself as well as specific facilities or services

Types of Taxes

Income Tax: Tax on earned and unearned income.

Payroll Tax: A tax on earned income that supports Social Security and Medicare programs.

Federal Income Tax: Tax on earned and unearned income that funds: Operations of federal government, national roads, education, national defense ,disaster relief ,national parks & museums, and government assistance programs.

State Income Tax: Similar to federal income tax but funds state affairs.

Property Tax: A tax on property such as land, buildings/homes, and motor vehicles.

Excise Taxes: Taxes collected from the seller or retailer and as such often remain hidden in the price of a produce or service

Taxes and Money Management

Taxes play a role in both earning and spending, and are one of the largest expenses for many people.

Statement of Financial Position - A financial statement that describes an individual or family’s financial condition on a specified date by showing assets, liabilities, and net worth

Net Worth

Net worth is a measurement of financial wealth; Wealth being the monetary value of all possessions that a person or household owns, minus the total amount owed to others. Net worth depends on how a person manages their income. A person may have low income and high net worth or vice versa.

Calculating Net Worth

Net Worth = Assets - Liabilities

Assets = Liabilities + Net Worth

Liabilities = Assets - Net Worth

Income and Expense Statement: Lists income and expense transactions that have taken place over a specific period of time (usually a month or year)

An income and expense statement is an important financial tool that summarizes past transactions to help you objectively evaluate you past financial decisions.

Your present self impacts your future self

Keep your net worth in mind while making financial decisions. Make sure to think about how your financial decisions will affect your future net worth.

Spending Plans - An income and expense statement sometimes referred to as a budget which records both planned and actual income and expenses over a period of time

Why is a spending plan important?

- Helps manage your money in a positive way

- Analyzes the opportunity costs of your trade offs to maximize financial well being

- Helps set and reach goals

- Helps increase net worth

Spending Plan Development Process


Step 1: Track current income and expenses

Step 2 : Personalize your spending plan

Step 3: Allocate money to each category


Step 4: Implement and control

Step 5: Evaluate and make adjustments