Financial institutions are companies focused on providing financial and monetary transactions such as deposits, loans, investments, and currency exchange.
Why should you use a financial institution to manage your financial transactions? Here are five key reasons to do so:
- Safety: It’s risky to keep your money in cash. It could easily get lost, stolen, or even destroyed in an unexpected event such as a house fire. By keeping your money in a financial institution, you’ll have the peace of mind knowing your funds are safe.
- Convenience: By using a financial institution, you don’t have to carry large amounts of cash, but you can conveniently get cash when you want it at bank branches, ATMs, grocery stores, and many other convenient locations — even when you travel away from home. —An added convenience? Most banks and credit unions offer online and mobile services products which allow you to view your account balance(s), transfer funds between accounts, pay bills (or people), deposit checks and more.
- Saves money: Many people who don’t have a bank account use check cashing stores instead, which often come with high processing fees. You can usually save a lot by using a bank account with no fees.
- Security: Are you worried that a bank might mismanage your money, or even go out of business? All U.S. banks have to follow federal and state laws and regulations. And at most banks, your funds are insured by the Federal Deposit Insurance Corporation, or FDIC. At most credit unions, your funds are insured by the National Credit Union Administration or NCUA. That means that if anything ever happened to the bank, your money up to $250,000 is insured or protected.
- Financial future: By working with a financial institution, you’ll have financial professionals you can talk to and work with. The knowledgeable advice of these professionals can be a valuable resource to help you and your family to build a better financial future.
Primary types of financial institutions (and remember, these can be traditional “brick-and-mortar” retail and commercial businesses, as well as online companies) include:
- Banks – for-profit, financial institution licensed to receive deposits and make loans
- Credit unions – nonprofit, financial institution licensed to receive deposits and make loans
- Investment banks – for profit, financial services company that acts as an intermediary in large and complex financial transactions
- Investment companies – a corporation or trust engaged in the business of investing the pooled capital of investors in financial securities
- Brokerage firms – a company that connects buyers and sellers to facilitate a financial transaction
A Journey to Personal Financial Success
At Morgan Franklin Fellowship (MFF), we support the concept of financial freedom – by teaching participants how to save by paying themselves first, invest for their future and grow their net worth.
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Our Standards of Financial Literacy – Learning about money series is engaging, full of interesting information, and easy to navigate. Adapted from the National Standards for Personal Financial Education developed by the Council for Economic Education (CEE), this robust curriculum features six short lessons on such important topics as earning income, understanding the value of saving and using credit. When completed, this program lays the foundation for becoming an MFF Fellow.
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