Money Management Guide

Tips to help you better manage your money

by Emily Suchara

10 Important Facts About Depository Institutions


  • There are two types of Depository Institutions: Commercial Banks and Credit Unions
  • Commercial Banks can be used by anyone, Credit Unions require the person to have certain requirements; but both have most of the same benefits
  • Offers a safe and secure place to store your money
  • Offers the ability to earn interest on your money
  • Offer services to help you manage your money such as online/mobile banking, credit, savings tools, financial advice, safe-deposit boxes, and so much more
  • You can access deposited money anytime by writing checks, using a debit card, withdrawing cash from an ATM, and electronically transferring money
  • Online banking benefits: access account information at any place, transfer money quickly, pay bills/set up recurring bill payment, and apply for credit
  • An overdraft fee may be charged if you exceed your checking account balance when using a debit card
  • A person can earn OR be charged interest when using a Depository Institution
  • Some Depository Institutions have many locations and other only have a few or one

10 Important Facts About Taxes

  • Taxes are a way that members of a community provide for one another
  • Funds creation of roads, public schools, police and fire departments, military for national security, and much more
  • Communities of taxpayers include the U.S., States, Counties, and Cities/Towns
  • More benefits of being apart of these committees: government assistance programs, universities, recreational areas (parks and trails), and political leaders
  • Income (money earned from working for pay) tax is divided into federal income tax and state income tax
  • State Income tax is payed by people living in that state and helps fund things such as state highways; Federal Income tax is payed by the majority of people living in the U.S. and helps operations of the federal government, national roads, education, and much more
  • Payroll Tax: a tax earned on income that supports the Social Security (income for disabled and retired people) and Medicare Programs (helps pay health care for people over 65)
  • Property Tax: a tax on property such as land, buildings (including homes), and cars
  • Sales Tax: tax on purchased goods (6% sales tax for every $1.00)
  • Excise Tax: taxes collected from the seller or retailer and as such often remain hidden in the price of a produce or service. Examples include the purchase of hotel rooms, cigarettes, and gas.

10 Important Facts About Statements of FInancial Position

  • 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 (similar to statement/balance sheet)
  • Assets: everything a person owns with monetary value (ex. a car)
  • Liability: a debt/obligation owed to others (ex. loans, balance on credit card)
  • Calculates net worth (the measure of financial wealth)
  • Wealth: indicated the monetary value of all possessions that a person owns
  • There can be two types of assets: Monetary assets( can quickly and easily be converted to cash) and Investment assets (financial assets purchased with hopes they'll generate income and increase value)
  • Net Worth = assets - liabilities
  • You can increase net worth by reducing liabilities and increasing assets
  • A Statement of Financial Position should be calculated once a year
  • Statement of Financial Position calculates a person's present financial state

10 Important Facts About 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 year)
  • Income and Expense Statements are based on a person's past financial state (tells you where your money came from and how it was spent)
  • Helps you manage money; you evaluate past financial decisions and allows you to make new changes to reach goals and improve net worth and financial well-being
  • Three components to calculate Income and Expense Statements: Income, Expenses, and Net Gain/Loss
  • Income: money received; can be earned (money earned from working), unearned (not from work), or received from government programs (usually temporary)
  • Gross income is the amount received before taxes; Net income is the amount received after taxes are deducted
  • Expenses: money spent; exs. taxes, savings, investing, insurance, housing, transportation, food, etc.
  • Net Gain/Net Loss = income - expenses = net gain/loss
  • Net Gain: use the leftover money for savings/other expenses; Net Loss: increase income and/or decrease expenses
  • Use a tracking method to keep track of what you spend and what you receive as it pertains to finances

10 Important Facts About a Spending Plan

  • An income and expense statement sometimes referred to as a budget which records both planned and actual income expenses over a period of time (a budget)
  • Important for financial planning (helps manage your money in a positive way, increases net worth, helps reach goals, etc.)
  • Spending plan evaluates a person's future financial state
  • Developing a plan: track current income and expenses > personalize your spending plan > assign money to each category
  • Maintaining a spending plan: implement and control > evaluate and make adjustments
  • Following the steps helps ensure spending plan is realistic
  • Use the Income and Expense Statement to develop a Spending Plan
  • Use applications, spreadsheets, or money management software to develop a plan
  • When assigning money to different categories you should consider trade offs and opportunity costs, goals, and contractual expenses
  • Calculate Net Gain/Loss = income - expenses