Topic$ for Talk

How well and how often do you work money management topics into daily conversations with your kids? Here's a chance to evaluate your efforts.

Don't avoid talking about money just because kids are young. Simple lessons about money should start early in your child's life and become more complex as your child matures. For example, with very young children, you can use grandparents to begin to talk about retirement. Let's consider how you might talk to kids of different ages about a Rainy Day fund.

Very young child: You might say that "extra money" works like an umbrella that keeps you dry in a storm. You've got it when you need it. Talk about how having change in your pocket enables you to buy a juice when you're thirsty.

Slightly older child: You might talk about a "just-in-case" fund used to get out of minor trouble. Good thing I had some money in my pocket because I couldn't find my movie ticket, and I had to buy another one.

Older child: Kids around 10 should begin to understand that you save for unexpected events. You get a flat tire that's too damaged to repair. You need money on hand to buy two new ones.

A teenager: Teens should know that such a fund gives you the security to live without borrowing when the need for money arises. The refrigerator cannot be repaired and you must buy a new one. Because you have the money, you don't need to pay interest on a loan in addition to paying for the cost of the fridge.

College student: These young adults should understand that money gives you a feeling of security in a world of more complex situations where anything can happen, including losing your job.

How well do you think you are doing? What money-related topics do you talk about?

Source : themint.org

Your Money & Your Mate

ABC's Financial Planning

Goal $etting

Goals are the foundation for plans of action. They often are personal, but can be professional as well. It is good to set both long-term and short-term goals. A long-term goal might be saving money to go to college. Setting and achieving goals can be easy if you set SMART goals.

SMART goals have 5 characteristics

Goals must be....

• Specific: "Get out of debt is too boroad,while pay off your credit card is specific."
  


• Measurable: "Paying an extra $30 a month towards your credit card is measurable --- you can see each month that you are working towards your goal."
  


• Attainable: "If you pay an extra $30 a month, can you reach your goal? "
  


• Realistic: "Is it possible to pay off your credit card?"
  


• Time bound: "Paying off your credit card has no time frame, but paying off your credit card in the next 12 months has a deadline."
  

Our priorities influence our goals, what we do with our time, and even how we spend our money. We have many goals and a limited amount of time in which to accomplish them. Therefore, it is important that we develop a plan to help us achieve our goals.

Financial planning is an ongoing process that changes over time, especially when major changes happen in one’s life, such as going to college or buying a home.

How Much Ri$k Do You Want To Take?

Here are some things to think about when determinating the amount of risk that best suits you.

Financial Goals

• How much money do you want to accumulate over a certain period of time? Your investment decisions should reflect your wealth-cretaion goals.

Time Horizon

• How long you can leave your money invested? If you will need your money in one year, you may want to take less risk than you would if you won't need your money for 20 years.

Financial Risk Tolerance

• Are you in a financial position to invest in riskier alternatives? You should take less risk if you cannot afford to lose your investment or have its value full.

Inflation Risk

• This reflects savings' and investments' sensitivity to the inflation rate. Some investments such as savings account have no risk default, there is risk that inflation will rise above the interest rate on the account.

Debt Rate

Debt rate = Total monthly debt payment/Monthly take-home pay

Example: If your total monthly debt payment is
$200 and your monthly take-home pay is $1,200,
what is your debt rate?
$200/$1,200 = 16.6%

• 10 percent or less
Congratulations! You are in the safe limit
and probably feel little debt pressure.

• 11 to 15 percent
You are in the safe limit but you may feel
some debt pressure. Be cautious about taking
on more debt.

• 16 to 20 percent
You are probably hoping that no emergency
arises. Start working on reducing your debt.

• 21 to 25 percent
You are probably worrying about your debt
load. It is time for a dramatic change. You
may need help from a credit counselor.

• 26 percent or more
You definitely have more credit than you can
handle. You need professional help
immediately to reduce your debt.

Fact$ & Figure$

How to $tay Disciplined with Your $avings

• Just do it! Pay yourself first!

• Gather all important financially-related documents and receipts to a central location. File them so you will be able to easily find the items you need in the future. Consider a computer based financial program so you can keep track of every dime you spend – financial control is a special form of power!



• Spending every dime and more? Start by cutting back on a few items per week and putting away that money. Pay yourself first. Just say no to spending more than you have.

• Ask for direct deposit at work if they offer it – you’re saving money, and you don’t even see it. A savings plan at work that pays you a “matching contribution” is the fastest way to save. Pay yourself first!
  

• Do not use credit cards. Force yourself to pay cash so that you can track the dimes. You will never have a late payment (now as much as $75) and you will never pay interest to others at the very high rates credit cards charge.
  
  
• Financial freedom will be worth everything you put into it. Don’t want to work forever.
  

How Much Doe$ a Cup of Coffee Co$t you?

If you buy a cup of coffee every day for $1.00 (an awfully good price for a decent cup of coffee, nowdays), that adds up to $365.00 for just one year. If you saved that $365.00 for just one year, and put it into a savings account that earns 5% a year, it would grow to $465.84 by the end of 5 years, and by the end of 30 years, to $1,577.50.

Source : http://www.sec.gov/

Tips for $ticking to Your Financial Plan

Making changes is challenging. It’s difficult to adopt new ways of doing familiar tasks. Making financial changes in a family is no different. It requires thoughtful, realistic planning, goals that reflect family priorities, time to refine and evaluate progress, and determination keep working long enough to see results. As you begin to make financial changes, choose some tools to help make it easier. Make a list of questions to ask yourself before making purchases.

• Will this purchase help me reach my financial goals?
• Is this purchase listed on my spending plan? Can I do without this item, at least for now?
• What will I have to give up if I spend my money on this purchase?
• Do I need this item or do I need this money for one of my financial goals?
  

Make your spending plan part of your daily life. If you have a goal to save $50, look for ways you can spend less today. Cut out a snack, bring your lunch from home or pass up magazines at the grocery store. Tell someone else what you are doing and ask for their support. Write your plan down so it is clear in your mind. Break large tasks or goals into smaller pieces and work on them step by step. Plan for new situations and changes. Look ahead for increased expenses as a child enters school or the washer needs to be replaced.

Plan large expenses so they occur over several years. New carpet this year, a new refrigerator in two years, a new car in five years. Keep your spending plan where you can refer to it as you make purchasing decisions. Develop a record keeping system. Allow yourself a special treat for successfully following your plan.

RESOURCE: Successful Money Management (EC 428.1-4) by Dr. Barbara Rowe with Kay W. Hansen and Marsha M. Peterson, Utah State University Cooperative Extension Service, November 1990.

Money About$

$uze Orman ...

Only two words in the English Language end in the LETTERS "bt", and both spell big TROUBLE for you and your money. Those words are DEBT and DOUBT. You must not spend more than you have, and you must face your money with CERTAINTY. NO DEBT, NO DOUBT.

The courage to be rich has to do with vision... A rich, abundant future can be yours when you think about money in the right way !

The Art of Budgeting

Rule 1 :
Assess your personal and financial information (needs, values, life situation)

Rule 2 :
Set personal and financial goals

Rule 3 :
Create a budget for fixed and variable expenses based on estimated income

Rule 4 :
Monitor current spending (saving, investment) patterns

Rule 5 :
Compare your budget to what you have actually spent

Rule 6 :
Review financial progress and revise budgeted amounts

Budget Pie

Recreational $hoppers...

What'$ Your $pending Type?

How you spend your money depends on how you feel about money. Some people see money as power. To others it represents status and prestige. To some it means security. Some people use money to get the things they want in life. Others just want enough to pay for the day-to-day needs.

Understanding how you and other family members feel about money can help you deal with and find solutions to some of your financial differences. According to the categories below, which type of money spender are you?

TYPE I:
I spend only for what I need. I save for emergencies. I like to have $$$
in my pocket. I shop around for the best deal.

TYPE II:
I want nothing but the best! You’ve got to spend $$$ to get ahead in
life. Expensive clothes are important to me. Cheap stuff isn’t worth much.

TYPE III:
It seems like no one ever has enough money. Credit is necessary. I
deserve the best things in life and I like to buy the things I want, NOW.

TYPE IV:
I think other things are more important than $$$. Money can’t buy
happiness. Children should learn not to put a $$$ value on everything. You can have
fun without spending $$$.

TYPE V:
Worrying about $$$ never helps. The money will come from
somewhere. Keeping track of spending can drive people crazy. A person can get along
without saving.

RESOURCE: Successful Money Management (EC 428.1-4) by Dr. Barbara Rowe with Kay W. Hansen and Marsha M. Peterson, Utah State University Cooperative Extension Service, November 1990.

William A. Ward: Money Quote$

Before you speak, listen.Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.

How Financially Healthy Are U?

You may already know the bad news. Or perhaps things aren't quite as bad as they seem.When was the last time you sat down surrounded by all of your personal and financial documents and took stock of your overall financial situation, including reviewing your spending, savings, future goals, and insurance? If you're like most people, you've either never done this exercise or did so a long time ago. Financial problems, like many medical problems, are best detected early (clean living doesn't hurt, either).

Here are some common personal financial problems:

• Not planning. Human beings were born to procrastinate. That's why there are deadlines — and deadline extensions. With your finances, unfortunately, you have no deadlines, and you may think you have unlimited extensions!

• Overspending. Simple arithmetic helps you determine that savings is the difference between what you earn and what you spend (assuming you're not spending more than you're earning!).

• Buying with consumer credit. Even with the benefit of today's lower interest rates, carrying a balance month-to-month on your credit card or buying a car on credit means that even more of your future earnings are earmarked for debt repayment. Buying on credit encourages you to spend more than you can really afford.

• Delaying saving for retirement. Most people say they want to retire by their mid-60s or sooner. But in order to accomplish this financially, most people need to save a around 10% of their incomes starting sooner rather than later. The longer you wait to start saving for retirement, the harder it will be to reach your goal.
  

• Not doing your homework. To get the best deal, you need to shop around, read reviews, and get advice from disinterested, objective third parties.

• Making decisions based on emotion. You are most vulnerable to making the wrong moves financially after a major life change (a job loss or divorce, for example) or when you feel under pressure. Take your time and keep your emotions out of the picture.

• Not separating the wheat from the chaff. In any field in which you're not an expert, you run the danger of following the advice of someone who you think is an expert but really isn't. If you look in the mirror, you'll see the person who is best able to manage your personal finances. Educate and trust yourself!

• Exposing yourself to catastrophic risk. You're vulnerable if you or your family don't have insurance to pay for financially devastating losses. People without a savings reserve and support network can end up homeless. Don't wait for a tragedy to strike to learn whether you have the right insurance coverage.

• Focusing too much on money. Too much emphasis on making and saving money can warp your perspective on what's important in life. Money is not the first or even second priority in happy people's lives. Your health, relationships with family and friends, career satisfaction, and fulfilling interests should be more important.
  

Most problems can be fixed over time with changes in your behavior.