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MANAGING YOUR CASH AND SAVINGS

Cash Management Strategies

Starting Point

Go to www.wiley.com/college/bajtelsmit to assess your knowledge of cash and savings management. Determine where you need to concentrate your effort.

What You’ll Learn in This Chapter

▲ Cash management ▲ Financial institutions ▲ Financial products and services

After Studying This Chapter, You’ll Be Able To

▲ Assess your need for cash management products and services ▲ Evaluate the differences among providers of cash management products and services ▲ Choose cash management products and services that are important to your financial plan ▲ Compare cash management account options based on liquidity, safety, costs, and after-tax annual percentage yield ▲ Select appropriate tools for dealing with cash management errors

Copyright © 2012 John Wiley & Sons, Inc.

4.1 OBJECTIVES OF CASH MANAGEMENT

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INTRODUCTION

Everyone manages cash. Your very first exposure to personal financial management was probably related to cash management. Perhaps you received a small allowance when you were a child and had to decide how to spend or save the money. Access to cash to meet transaction needs and emergencies is essential to your financial plan. A central part of your cash management strategies involves choosing cash management services, such as checking and savings accounts. This chapter helps you evaluate companies and the cash management services they offer. After you select the options that best meet your needs, you can implement your plan.

4.1 Objectives of Cash Management

Many people are guilty of occasionally, or not so occasionally, neglecting to balance their checkbooks or making bill payments after they are due. Keeping track of your cash and paying your bills are both important tasks associated with cash management. Cash management includes all your decisions related to cash payments and short-term liquid investments. As discussed in Section 2.2, liquid investments are...