Money Management Guide

By Andy Wichmann

Depository Institutions

Types of Depository Institutions:

Commercial Banks- are for profit depository businesses that offer financial services to both consumers and other businesses. Banks are usually the largest depository institutions and offer the widest variety of services to customers.

Credit Unions- are depository institution and offer many banking services but unlike banks, they are owned by their customers, who are called members. They are non-profit organizations exempt from federal tax. This allows them to pay interest rates on deposits, change lower interest rate on loans and charge fees, compared to banks and other depository institutions.

Spending Plan

A Spending Plan- is a forward-looking income and expense statement sometimes referred to as a budget. It records both planned and actual income and expenses over a time period. A spending plan is an important part of financial planning because it helps you take control of your spending, and, therefore, control your financial future.

Different ways to keep track of your spending plan:

1. Money management computer software

2. Interest-based spending plan programs

3. Depository Institution programs

4. Check register system

5. Envelope system

Income and Expense Statements

The Income and Expense Statements lists and summarizes income and expense transactions that have taken place over a specific period of time, usually a month or a year.

Earned income is any money earned from work, suck as: Wages or salary which is gross income. It is important to record your gross income and not your net income (take home pay)

Income is what is left in your paycheck after taxes and deductions.

Commissions/Tips/Bonuses is income earned upon a sale and is often calculated as a percentage of a the purchase price. It is sometimes paid in addition to a wage or a salary.

Tax Refunds are received from your state and federal government, considered earned income, because they reflect over-withholding from your paycheck in a prior period.

Unearned income is income received from sources other than employment such as: Interest earned, Investment earnings, Money from saving and investments, Sales of assets.

Scholarships/Grants Money received from scholarships and grants from non-government sources to help pay for education.

Money from others any money received from others, such as friends and family.

Expenses is money spent. All expenses are divided into different categories: taxes, saving and investing, insurance, housing, transportation, food, and other.


Federal Income Tax- Most money earned by people in the U.S. is subject to federal income tax. However, the amount of federal income tax you pay depends on the amount of income you earn.

State Income Tax- Individual states have the option to charge their citizens a state income tax. Some states do not have a state income tax. Just like federal income tax, state income tax is determined by the amount of your earned and unearned income.

Payroll Tax- A tax on earned income. This tax deduction from your paycheck supports both the Social Security and Medicare programs, dictated by the Federal Insurance Contributions Act (FICA).

Statement of Financial Position

Net Worth is a measure of financial wealth and indicates the monetary value of all possessions that a person or household owns, minus the total amount owed to others.

A Statement of Financial Position is a financial statement that describes an individual or family's financial condition on a specified date by showing assets, liabilities and net worth. A Statement of Financial Position is similar to a balance sheet made for businesses but is designed for individuals, families, and/or households.

Monetary and Tangible Assets

Monetary Assets- are assets that can be quickly and easily converted into cash.

Tangible Assets- are personal property items such as home, an automobile, electronics, furniture and any other personal items property used to create a lifestyle or to improve your life.