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4 Essential Formal Financial Services that you Should Know About


Financial Literacy

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Unit Video

Unit Summary

Part of financial planning is learning the services provided by your banks and other financial institutions.
These institutions provide the following 4 essential services you can use today:
  • Insurance
  • Savings Accounts
  • Cards
  • Investments

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Hi. Part of financial planning is learning the services provided by your banks and other financial institutions. In this video, you will learn about 4 essential ones available today.
Such services improve your current financial situation by helping you make rational decisions about where your money should be allocated. Get to know these services well and what advantages they provide. Also, you are suggested to acknowledge the downgrades of these services to avoid life changing problems.
These institutions provide the following 4 essential services you can use today:
  • Insurance: Money you pay for a company to provide you with future protection against financial, life and health losses. This type of service is common today since it helps customers sleep better at night knowing they are in safe hands.
  • Savings Accounts: You can open a savings account at a bank or through mobiles such as e-banking. If you don’t have access to a bank, postal saving accounts are still available. This account provides you with a safe convenient method for saving money, moving you financially forward.
  • Cards: Help you access money without carrying amounts of cash with you all the time. A debit card is a card that allows you to withdraw money only from the amount credited in your personal bank account. A credit card, however, allows you to borrow money from your card issuer (bank or financial institution). This amount is interest-free if paid back by the end of the month. Debit cards are more advisable since they free you from debt accumulation.
  • Investments: Purchasing bonds or stocks in the market. When buying stocks an investor becomes an owner in the company. However, by buying bonds an investor becomes a creditor to the company. The stockholder has a share in the profits if the company does well but the bondholder doesn’t. However, a bondholder gets paid before a shareholder in case of bankruptcy.
As explained, there are many financial services available. Analyzing the market and acknowledging both advantages and disadvantages of these services could help you make the right decision on what choices to take. But remember to take your precautions and pay your debts on time to stay safe!