Financial Literacy
For Your Future



Financial Institutions

Every community from big city to a small rural town is serviced by at least one financial institution. These businesses are absolutely necessary if the community is to survive let alone grow and prosper. Simply, financial institutions keep the money flowing and safe. The primary way they earn money is by taking in money from people who don’t need to use it currently and lend it to people who have a productive use for it.  Interest (the price of money) is paid to the depositor or investor for the use of their money by the borrower. The institution helps organize the redistribution process and earns money over costs for the service. The deposited money can be used for many purposes and depending upon the financial institution, it can impact the local, state, national, or international economies. Good examples of local impact include building homes or buying large ticket consumable items such as an automobile. Buying equities can impact businesses that are local or even international. If many financial institutions are present in a community such as banks, credit unions, and investment firms each may specialize in certain services. They will usually provide different products that will help community members manage their money and other assets.

It is important to note that financial institutions are closely regulated by state and national agencies and these regulations are designed to help make depositors and investors confident that their assets are well cared for. One of the agencies is the FDIC which actually guarantees savings deposits up to a set amount. This helps people from thinking that their money is safer hidden under their mattress and it keeps the money flowing to productive purposes. It is important for people to know that they can save their money in a safe place so it can build and then be used for a desired purchase. Yes it is possible to plan to buy a larger item later and pay cash rather than buy it using a credit card or a collateral loan.

As financial institution employees are usually community members as well and they earn a salary from the services they provide other community members, they represent a good source of advice and basic financial management help. It is a good plan to get to know these experts/service agents in your community. In rural communities they may be your next door neighbors. In almost every case, these people will be more than willing to help you form and implement your financial budget and plan. Use them!


1) Personal Finance

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