Category Archives: Money

4 Tips for Teaching Kids about Money

4 Tips for Teaching Kids about MoneyLifelong financial responsibility begins at a young age. Wise parents start teaching their kids how to handle money from the time the children are old enough to understand budgeting principles. A few basic guidelines are often enough to help children understand how to manage income and savings through adolescence and into adulthood.

Follow a Budget

Kids should be taught how to manage money before they begin to handle it. Starting with an allowance or casual earnings from lawn care and babysitting, they should know what to do with their income before they receive it. An effective plan typically allocates a certain amount for discretionary spending, such as fifty percent. Another portion should go to savings, perhaps short-term and long-term. Many families encourage kids to give a third portion of their earnings to charity for religious purposes or charitable contributions. As kids grow into their teen years and get part-time jobs, the budget can be adjusted accordingly. Some parents train their children to take on more personal financial responsibility when they get a job, such as paying for a cell phone plan or car insurance. This gives teens a taste of real-world finances.

Make Responsible Purchases

While children should be able to buy fun things with part of their earnings, it is up to parents to teach them how to make wise purchases. Frivolous playthings that break easily or cause mischief should be discouraged. Creative activities like art projects or building kits are a better use of children’s earnings. Parents can also use shopping ventures to teach children about the advantages of discount shopping or coupon use. Learning to become frugal while young can become a useful lifetime habit.

Watch Savings Grow

Establishing a passbook savings account or a youth-oriented limited investment plan is a great way to help children learn to save money on a regular basis. Watching savings grow from ongoing contributions and possible interest feeds their excitement and encourages additional savings in the future. Periodically checking the balance for interest or dividends makes the sacrifice more meaningful and teaches character values like patience and persistence. Many kids who learn the joys of saving money while young grow up to become savvy financial managers.

Help Others

As children begin to appreciate the empowerment that comes with effective money management, it is important to balance monetary control with the goal of sharing with others in need. This may include options such as donating to a place of worship, giving to a local charity, or assisting a community cause like a family in need after a natural disaster. When kids can physically visit real places and literally hand over their hard-earned money to a meaningful cause as opposed to simply mailing a donation, they begin to understand the importance of giving to others who may be less fortunate or have a special need.

Conversely, children who are handed money randomly and allowed to spend it as they wish often face more challenges in learning how to manage money as adults. Prudent advice from parents and grandparents to kids at a young age provides children with valuable knowledge that will serve them for years to come.

Parents who set a prudent example of good money management provide added support to their children’s understanding of finances. Talking frankly about age-appropriate money issues such as bill-paying and credit cards will ensure that children learn what they need to know from a responsible adult rather than a careless friend. Money is a serious subject that children need to learn over several years’ time. The better prepared they are for the real world of finance as adults, the more likely they will be able to successfully navigate the economy.

When You Should Spend Money to Save Money

When You Should Spend Money to Save MoneySaving money is always a good idea, especially in challenging economic times. However, sometimes you have to spend money to save money. While that may seem counter-intuitive, there are good reasons to pay extra on an expense now that could save you hundreds or thousands of dollars in the future.

Pay Extra on the Mortgage

Making one extra house payment a year can reduce your overall mortgage balance by several thousand dollars over the life of the loan. You can make that payment from an income tax return, a job bonus, or the sale of unused household items.

To accelerate the payoff on a $200,000, 30-year mortgage with a 5% interest rate, make an extra $742 house payment each quarter, and you’ll save $69,483 in interest and pay off your loan 10 years early!

Check with your mortgage lender about possible prepayment penalties in your loan terms that could prevent you from making extra payments or paying your home off early. Paying extra now can help you pay off the mortgage sooner and free up that hefty payment each month.

Buy a New Car

Instead of driving a beater that requires frequent repairs, invest in a newer model car that comes with a warranty and is in good condition so you will have reliable transportation. Putting a car in the shop for repair and arranging for alternate transportation can be very inconvenient and even costly. When you buy a reliable late model or new car, you can rest easy knowing your vehicle should drive safely and consistently. When you pay off the car, and if you can do it early, you will have a great running vehicle that has been well maintained. A good car can last a decade or longer if you take care of it. Instead of driving something that may not get you there safely or at all, consider a reasonable car payment on a car that will get you where you need to go and eliminate costly repair bills.

Earn a College Degree

There are many ways to earn college credit these days whether you go full-time or take an occasional class. Some courses are offered online, making it convenient to study from home based on your schedule. Various kinds of financial aid are available, from loans to scholarships to grants. Some employers pay tuition remission when employees maintain an average or above grade point average. A college degree has been proven to provide a generous return on investment in career opportunities, so getting a degree is rarely wasted.

Buy a Coupon Discount Book

A coupon discount book for a modest fee offers discounts or freebies on items you need or enjoy. For example, you can find many restaurant coupons and entertainment discounts, and also helpful services like dry cleaning or car rentals at reduced rates when you buy a coupon book. You can also find two-for-one deals that you can share among family members or with friends. Check out vendors featured in a coupon book to be sure they offer services you will use. Spending $20 or $30 could save you hundreds.

Buy Yourself Gift Cards.

Some supermarket chains offer cash or discount incentives for buying gift cards at their store. For example, if you buy a gift card for a product that you would use anyway, such as a coffee shop or restaurant, not only will you have the card available in preparation for your next visit to that vendor, but you may earn bonus points at the supermarket for things like fuel discounts. You may also earn discounts or cashback fees on hair salon visits, dry cleaning, and other valuable services. Check with your favorite supermarkets to see if they offer gift card purchase incentives. You might be able to double your benefits by purchasing gift cards to earn bonus points that offer reductions for things that you would purchase anyway.

In planning your monthly budget, invest in a few key initiatives that will save you money in the long run. Spend a little time reviewing available opportunities to find those that will maximize your purchasing power. Be careful not to spend more than you can afford, and don’t get caught up in the excitement of saving money to the point where you crimp your budget. Buy with an eye on the future.

How Being Lazy is Costing You Money

How Being Lazy is Costing You MoneyYou can easily miss out on all the ways being lazy costs you money – possibly because you’re too lazy to think about them. Even being just a little bit lazy can cost you in big ways. Think about your own habits. Is being lazy costing you money?

You overspend. Being too lazy to budget means you’re spending without a plan. It’s a situation ripe for big money mistakes. You need to put at least a little energy into calculating your total monthly income and bills and making sure you have enough money for all your expenses. You won’t know whether you need to cut back or make more money unless you actually review your budget.

You pay late fees. Not bothering to pay your bills on time or check your payment amounts can lead to expensive late fees. With credit cards, your late fee can be up to $35. Rent and mortgage late fees can easily be $100 or more. Some services may be disconnected and you’ll have to pay a lefty reconnect fee to have your services restored. Throwing away money on fees is wasteful, especially when you can set your bills for autopay.

You pay higher prices than necessary. If you buy on the spot because you don’t want to drive to another store or even pull out your smartphone to check prices, you could be spending hundreds more than you have to. Many stores match prices of competitors which means you can get the lower price without having to go to another store.

You miss billing errors. Don’t take for granted that your billers are going to accurately bills you each month. Being too lazy to read your bills means you could pay for transactions that you never made. Billers can sneak in fees or raise prices on services right under your nose. Review your bills each month to confirm you’re being charged the correct amount.

You keep memberships you aren’t using. Being too lazy to use the membership and too lazy to cancel it hits you twice. Cancelling most memberships only takes a phone call. If you have several you need to cancel, making one a day will yield more results than if you did nothing at all.

You miss out on rebates. How many times you do you choose a product specifically because it offers a rebate. How many times you have you put for energy to claim the rebate. Not sending in the rebate (which the company is hoping you will) costs you money. Send in rebates right away instead of waiting.

You keep keeping unwanted items after the return date. Once the return date is gone, you’re stuck with an item you have no use for. If this is a habit, you’re wasting potentially hundreds of dollars simply because you won’t put in the effort to take a product back to the store in a specific timeframe.

You don’t research better investments. If you have money to invest, but don’t take the time to seek out sound investments, you’re leaving hundreds, maybe thousands of dollars on the table. Active investing can help you reach your financial goals much sooner.

Fortunately, you have total control over your laziness. Build a habit of being more actively involved in your finances to combat your lazy habits and start saving money.

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