14. Types of bank accounts.

People may have three basic types of bank account:

Current account is the most popular one which is used day-to-day finances. It is used for everyday transactions such as paying bills, transferring money and drawing cheques. The current account holder doesn't usually receive any interest. But thise typed of account has some advantages. Firstly, it allows people to keep their money in a safe place. Secondly, this type of account allows people to withdraw their money at any time. Thirdly, it provides people with a cheque book so that they don't have to carry much cash.

As a rule, the banking officer wants to know the applicant's occupation and place of work. Then after the interview if the manager is satisfied with the applicant's status he will approve the application. The current account holder can have an overdraft on this type of account, i.e. he can withdraw more money than he has in the account. Deposit account is another popular account which is really designed for saving money and may be used for short-term, small savings. The money paid into this type of account earns a small amount of interest. This type of account, it has some advantages over a current account for to draw cheques or have an overdraft . Firstly, it is easier to open a deposit account than a current account because there is no need to have an interview with the branch manager. Secondly, a deposit account earns for the account holder. It occurs because the bank invests the money that the depositor pays in and in return the bank pays the client interest. But the client should remember that if he wants to take his money out of the deposit account he mustn't forget to give a bank a week's notice. If the client wants his money immediately, he loses some interest. Investment account may be used for larger, long-term savings. Money paid into this type of account usually earns more interest, but the customer can't get his money at once. He has to inform the bank in advance when he wishes to withdraw the money. The customer may have a fixed-term account. In this case the account holder may not be able to withdraw the money for a certain period agreed with the bank, for instance, 3-5 years.

15. Making a personal budget.

When you live on your own you understand that something should be done with your unlimited wants and limited resources. You should use your income as effectively as possible. Choices must be made concerning spending and saving. You never know whether you can afford another outing, or a disco, or a concert. Then you come to the conclusion that you must develop a useful personal budget. And if you want to do it you should keep track of your actual income and expenses for a month, and, of course, at first you have to clear out what should be recorded.

Money resources may include allowance, part-time jobs, babysitting, errands, interest on savings. You must list all sources of income. And it means that if somebody presented you with a sum of money on an account with a bank, so you can rely on interest on savings and allowance have to be included.

Then you should record how much you spend for food, entertainment, clothing, college supplies, personal care, transportation, and miscellaneous items. You wonder in which category you spend the most and the least. You think that you should decide what changes to make in the budget if you want to reduce your expenses.

You have to understand that there is some difference between fixed, optional and flexible expenses. Fixed expenses are set in advance and must be paid regularly (e.g. rent payments, tuition, higher purchase installments). Flexible expenses are necessary but change with circumstances (food, clothing, college supplies). Optional expenses vary and are not always necessary (entertainment, personal care).

Thus you can compare your income and expenses. And of course you understand if you want to live good expenses should not be higher than income.