America Saves Week: February 19-26, 2012

Posted on February 21, 2012 by Lorin Benke
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Tips for Saving Money

America Saves Week aims to raise awareness of the need for saving money, reducing debt and building wealth. What a terrific opportunity to learn about and develop better savings habits.  Saving money is indeed a habit, which means that you can learn to do it!  The only way to save is to spend less than you earn, and for many of us this seems hard to do.

Maybe that’s because many of us don’t have a plan.  You need a good plan to practice good money saving habits, and you need to stick to it! The longer you stick to your plan, the more savings you’ll accumulate.  The first step in any good savings plan is to open a savings account that pays interest.  Shop around.  There are lots of different types of accounts, and generally, the more you have in the account and the longer you keep it there without taking it out, the more interest you can earn.

Next, you need to set a budget.  A budget helps you to plan where you’ll spend your money each month, and how much you’ll have left over to save.  Take stock of where your money is really going.  This is where you really get down to what’s important to you in your life.  Do you need the top of the line cable package, or can you get by on just the basic plan?  Could you get by with a coffee maker at home instead of the daily stop at your local coffee shop?  You’d be surprised at how much a few small changes in lifestyle can add up to over the years.  The important thing is to get clear on where your money is going and look for opportunities to spend less.  If you spent just $50 less each month and saved that money in a savings account earning just 1% interest, you’d have over $6,000 ten years from now!  Once you know how much you can save, have that amount withdrawn electronically each month from your paycheck directly into that savings account you’ve opened.

The biggest threat to saving money is getting into debt.  You should try to save the money ahead of time for the things you buy so that you don’t have to borrow or use credit to get what you need.  Set smaller savings goals for the things you want to buy.  Using a simple calculator tool, you can determine how much to save and for how long to have the amount you’ll need to buy the item.

Get in this habit of monitoring spending closely and regularly adding savings to an interest earning account that continues to grow over time, and you’ll have a sense of well-being that is priceless! You’ll be able to handle emergencies when they occur without anxiety.  One recent study found that typical American households spent an average of $2,000 on unexpected expenditures!  You’ll be able to pay for the things you want and need without having to borrow or use credit.  The important thing is to get started today!  Read more tips for saving money and managing it .

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Teaching Your Children About Sales Tax

Posted on February 14, 2012 by Jennifer Whitehouse
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Understanding sales tax is an important part of financial planning and teaching money skills. When you make a purchase, you have to consider the TOTAL cost of the item, including the sales tax. If you don’t, you might be spending more than you think you do. It’s also important for children to understand sales tax. That $50 lacrosse stick could really cost $53 when a 6% sales tax is added. While that may not seem like much, to a child who saves and saves but can’t afford the sales tax may get frustrated.

The next time your child wants to purchase an item, try to have them take the burden of the sales tax as well as the cost of the item. If a parent covers the sales tax, the child will never learn that sales tax is a major part of any purchase. You could also choose to have the conversation with your child that covers how sales tax differs in states and countries. The next time you go on vacation, you could compare sales tax amounts. You might even want to discuss why we pay sales tax and where the money goes… to our government to fund basic community services.

To help your child understand sales tax, the next time they want to make a purchase, have them calculate the total cost before the purchase: the cost of the item in addition to the sales tax at the rate required by your state. In the end, they’ll realize that sales tax is important to financial planning.

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What Teens Want To Know About Money

Posted on February 7, 2012 by Michelle Zimmerman
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For many parents, talking to teens about money falls into the category of uncomfortable or taboo topics we dread discussing. However, what we often forget is that our teenage children rely on us as the foundation for their financial education and it is critical that we start preparing them for future success at a young age. According to a study conducted by Charles Schwab in 2011, 77% of teens say that their parents have been great role models when it comes to money management. That being said, the same study revealed four topics teens would like their parents to talk more about.

Source: CHARLES SCHWAB 2011 TEENS & MONEY SURVEY FINDINGS

Here are some ways teach your teens about the topics that matter most to them.

Teaching how to invest money…

As parents, we tend to emphasize the importance of saving to our children and rarely remember to introduce them to the world of investing. “How to invest money” is the leading topic teens would like their parents to talk about more with them… but how do you start?

Sit with your teen and review their current savings. Help them decide how much money they would like to pull out of their savings for investing.  There are many ways your teen can invest their money… stocks, bonds, mutual funds, etc. Talk to your teen and help them to understand the differences between all of these options and explain to them the risks and potential rewards of each different method. If possible, share with your teen how you have invested your money. Once you and your teen decide how you would like to invest and how much, make it happen. Be sure to involve your teen in the entire process from start to finish. Let them take the reins and be there not only to offer guidance but also oversee the process and step in if necessary. Once the investment is made, have your teen set up a system for charting the investment to keep them engaged.

Teaching how to establish good credit

There are many ways to teach your teen how to establish good credit. The first, and the most important, is to explain to your teen how credit works. What causes your score to go up or down? What are the benefits of a good credit score? What are the consequences of a poor one? Emphasize to your child that although credit cards offer convenience, their purpose is to establish good credit and not to enable lavish spending. Establishing healthy credit habits at an early age will help your child throughout their adult life.

If you choose to get your child a credit card consider getting one with a low limit. This will allow them to start establishing credit and good spending habits while avoiding the risk of large credit card debt. Be sure they understand the times it is appropriate to use a credit card and the impact of interest. Punctuality is also one of the biggest factors of a credit score; help your teen to set up alerts or schedule payments online to ensure that the balance is paid off in full at the end of each month. Additionally there are plenty of applications out there that can help your teen track spending so that they do not go over their monthly spending limit.

Helping explore career aspirations

Research shows that parents tend to have the most influence on their child’s career choices. Start by talking to your teen about their interests, income and lifestyle goals. Often times encouraging your teen to think out load can lead to new ideas and directions in terms of career directions. For those teens that do not have an idea of what direction they would like to take with their career, consider bringing them to a career fair. While these are generally intended for people applying for jobs, your teen can hear about different types of jobs that they would be interested in and be introduced to jobs they may not have known existed.

Once your teen has narrowed down some different career options, help them research what types of training or education is necessary to get into this field. If possible have them volunteer in this field or talk to an experienced professional in the area of interest to gain insight into what it is like to work in that industry on a day to day basis. Many fields offer internships to teens still in high school or in their early years of college. Take these internships as an opportunity to explore careers and find a good match for your teen’s interest.

Teaching how to budget money

Teaching teens how to budget can often be tricky because they generally lack true expenses. Managing a budget is a key tool for all teens and will help them control their spending in college. Having your teen budget is a great way to teach them the true cost of things because it will force them to think through all of the costs associated with each purchase.

Start by having your teen keep all of the receipts from their purchases for a month to see where they are spending their money. Use these learning’s to help them set up a budget for the month- make sure to account for some money towards savings. Next, give your child their allowance up front. If you usually pay allowance weekly, give them a whole month’s worth at one time and let them know they need to make this money last throughout the month according to the budget they set up.

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The Importance of Learning Through Play

Posted on January 31, 2012 by Jennifer Whitehouse
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Do you remember how much you loved to play as a child? Even as adults, play is an integral part of our lives. We are constantly trying to make dull things fun and work less boring. But what you may not realize is how much you learn through play. True, play is often a good time and you may not feel as though you’re learning, but actions, communication, and skills are all learned through play, which we internalize without realizing. For example, when you play BubbleBall or AngryBirds, you learn physics and trial and error through experimentation. You use scientific thinking to analyze the situation and problem solve. So while your boss may yell at you for wasting time playing games, in fact you’re improving your analytical problem solving skills.

This same idea applies to children and gaming; children can learn many skills and problem solving techniques through gameplay that they might not be able to remember after memorization of knowledge. Gameplay helps children use and apply concepts in a way that they develop skills beyond simple knowledge of a topic. For example, a child who plays SandDollarCity (www.sanddollarcity.com), which is a virtual world that teaches financial literacy, will develop skills of comparison shopping and setting goals. They will know how to apply the knowledge of the steps of each of these skills in a way that will ensure good decision making. As in SandDollar City, a child experiences life as a shopkeeper, learning to keep financially afloat. The child will learn the methods for computing interest, but will also need to apply them to continue the game. Income no longer is only a term, but a part of the avatar’s life. As children work their way through the quests, they learn the consequences of their decisions in a safe environment.

Gaming is also a wonderful way to teach important lessons to children while giving them a venue to practice without impact on their financial futures. It allows children to make mistakes and learn from them without tarnishing their financial lives. If a child were to end up in financial ruin within SandDollar City, they could just start over again and learn from their mistakes.  But if a child were to do that in real life, they would have trouble starting over. The game gives children a safe environment to learn and make mistakes, so that when they are faced with the same decisions in real life, they can make appropriate choices.

Teaching through games is an easy way to give children experiences which result in skills and knowledge that they might not otherwise gain through basic drill and practice learning. It engages more aspects of the mind, requires a deeper level of thinking, and provides children with a way to have fun while also learning important concepts. Thus, learning through play is a valuable part of a child’s- and an adult’s- ongoing education.

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Kids Chores, Without the Hassle

Posted on January 23, 2012 by Michelle Zimmerman
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Chores for kids are like training wheels for the real world. They are a great way to teach children about responsibility and time management. The trouble lies in motivating our children to actually complete their chores, regardless of any rewards or allowances that may be tied to it. Maybe it’s not the actual chores that are the problem but rather the way in which we expect them to be completed.  Here are a few tips to help our children get their chores done without the hassle.

Remove Distractions:

We all do it, we go to vacuum the living room and get sucked in to a television special we didn’t know we were even interested in. We go out to water the plants and end up chatting with our neighbors. Well, our children are no different.  Part of getting our children to complete their chores is to remove distractions. Try turning off the television while chores are being completed and turning on the radio instead. It will prove to be less of a distraction while also keeping the chores from seeming like a punishment.

Set a Schedule:

Instead of having your children complete all of their chores in a big block of time spread them out over the day/week.  Try breaking chores down into 10-15 minute jobs. This will not only give your child a break between chores but make them more likely to focus on the chore and get the job done right. Try scheduling chores on the weekend mornings and making them a family event.

Find Out What Chores Your Kids Like:

Talk to your children about their chores when you are making their chore chart. It is rare that children will love doing chores, but there are some chores that they will like more than others. When assigning chores take into consideration your children’s interests. Do you have one kid who likes the outdoors? Have them help you rake leaves. Do you have a child who likes baking? Have them help out around the kitchen. Children are more likely to complete the chores that they like, and they will get the same benefits of time management and responsibility regardless of what chore they are completing.

Assign Chores That Are Age Appropriate:

You would be surprised by how much even the smallest children are capable of. When you are assigning chores, make sure they are age appropriate tasks that your child is capable of completing. If chores are too challenging they can become overwhelming and frustrating to a child, making them less likely to be completed. Chore charts and lists can also be used to give children a sense of accomplishment as their tasks are completed.

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Organizing Your Family: Set up a File System

Posted on January 17, 2012 by Jennifer Whitehouse
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A critical part of getting organized is setting up a home filing system. Do you have a place in your home to store important documents like warranties, product information, and financial documents? If you do, then you’re on the right track for keeping your finances secure. Most families have some sort of a system for organizing bills, receipts, and important documents, and for good reason, too! If you keep your important things in a safe, secure, organized place, then you are more likely to spend within your means and have a good sense of your financial situation.

So if you are already financially organized, why not pass this on to your children? Just the same as you teach them to keep track of their homework, you would benefit them by teaching them to organize their money. Show your child how you organize your bills to make sure they get paid. Let them see how filing product information makes it easy to find. Children will be willing to offer suggestions as well and you could ask them how they might organize this information. Another way to show them financial filing is to share with them a checkbook register. Discuss how you keep track of the balance by subtracting purchases and adding income.

If you want to go a step further, have your child set up a place where they can keep track of money they spend and money that comes in. Perhaps make a chart on a board in his/her room. You could even have the child make a folder for receipts of purchases they make.

The more organized the child becomes with regards to finances, the more likely they will have a successful financial future!

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10 Tips for a More Organized Year

Posted on January 10, 2012 by Michelle Zimmerman
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One of the most common New Year’s resolutions is to get organized. Organization can be a daunting task and goes far beyond simply cleaning out the clutter in the house. Family organization is an ongoing process however with the right preparation up front you can make the year ahead much less stressful. Here are some quick tips to help you and your family stay organized this year.

  1. Set a family New Year’s Resolution – it’s not too late! For example, every month we will have a “family night” like a family game night.
  2. Create a 2011 archive by backing up all of your old data and photos. Not only will this make it easier to search, access and share your old data, but you’ll have peace of mind, knowing your important files are safe.
  3. Re-evaluate all of your contracts (cell phone, gym memberships, etc.) and look for opportunities to save money this year. Are you consistently going over your allotted minutes or not? Are you not using close to what your plan allows? Readjusting your cell phone plan to reflect your actual usage can help you lower your plan cost or avoid charges from overuse.
  4. Create emergency plans and discuss them with your children. Use the beginning of the year as a time to sit down with your child and discuss what to do in case of an emergency. Show them where all emergency phone numbers are and what to do should an emergency arise.
  5. Schedule annual appointments now. Planning your annual appointments now will not only assure you the most flexibility in appointment times but will save you the trouble of having to remember and scramble to schedule them later in the year.
  6. Setup bill reminders to avoid late fees.  This is one of the easiest ways to protect your credit score.
  7. Create a home filing system.  Start your filing system at the beginning of the year to make your tax preparation easier at the end of the year.
  8. Get your kids involved in household chores. Make a list of everything that needs to be done each week, recurring and one-time-only. Give your children age appropriate tasks to complete around the house. It’s best to teach family responsibilities from a young age.
  9. Donate old toys and clothes to charity. The holidays left us all with a surplus of toys and clothes in our homes. Donate them to charity to teach the importance of year-round giving to your children. It will also make more space in your home.
  10. Update your family address book. Before storing or purging your holiday cards make sure you update or add them all to your address book. This will make sending your holiday cards easier next year.
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Teaching the Importance of Goal Setting

Posted on January 3, 2012 by Jennifer Whitehouse
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One of the key components of being financially fit is being able to set goals. Most adults set goals all the time- “next year I will need a new car,” “I want to make an extra mortgage payment this year,” “I want to only shop sales and coupons.” While setting goals may seem intuitive to most of us, to children it’s a new concept. Knowing how to set a goal can be a valuable lesson for parents to teach their children; it’s something that will give them an advantage for their futures.       So how can you teach your child to set goals when it comes so naturally as an adult? Goal-setting is not just a simple task, however. It actually requires much thinking and planning. By following a few guidelines you can teach your child the skills needed to set goals.

First, help your child choose a reasonable goal. Talk to your child about reasonable and unreasonable goals. You can give them examples you as an adult face in making goals; for example, making an extra mortgage payment this year is reasonable while paying off a mortgage in a year may not be.  Then, help them decide what may be an appropriate goal for him/her. Once the goal is set, write it down and put it somewhere visible- on a piggy bank, on the computer, on the refrigerator- it’s important that the goal is visible and written down to act as a reminder. Also choose an approximate time frame to complete the goal. Make sure you talk to your child about how they need to be flexible- sometimes things happen early, sometimes late, but that setting a time frame will help keep them from blowing off the goal.

The next key step is to plan out how to achieve the goal. With your child, discuss what your child will need to do in order to be successful. Write down these steps as well, possibly in a checklist format, and mark them when completed. Along the way, if the steps to completion are not successful, re-evaluate the plan with your child and discuss with them how being flexible is important.

Finally, the child will eventually achieve the goal and will feel successful, but don’t leave it at that. Have your child evaluate how the process went and if they learned anything. And of course, set the next goal and move on to something bigger and better! It’s important that your child continues to set reasonable goals so that they will become confident with their plans for their financial futures.

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