November 8, 2013
Tackling debt: It all starts with an action plan
Be it credit cards, mortgage payments or student loans, if you're like many Americans, you have personal debt. According to credit.com, as of June 2013, Americans owed approximately $850 billion dollars in revolving debt, with the average consumer carrying close to $4,000 in credit card debt alone.
But not all debt is bad. A positive credit history, which demonstrates the ability to make timely payments, plays a role in everything from qualifying for loans to getting a job. However, general rules suggest that you shouldn't be using more than 7% of the credit you have available or have your debt burden exceed 36% of what you earn.
Carrying excessive debt can keep you from accomplishing important financial and lifestyle goals such as saving for retirement, buying a new car or even taking a family vacation.
Having a plan to pay off your debt is the first step towards regaining control of your finances. Here are some simple strategies to help you get started:
- Acknowledge and accept that you are in a situation that needs to be remedied and requires a specific plan of action.
- Get a handle on your spending. Keep a daily log of your spending (food, gas, entertainment, household items, etc.) for a month and then look at where to trim expenses.
- Start paying it down. Based on your monthly budget and any additional financial flexibility you may have uncovered in your daily log, determine a realistic amount of money to allocate to debt repayment efforts each month.
- Pay off your highest interest rate debts first. To get out of debt in the most efficient way possible, pay down the balances of loans or credit cards that charge the most interest while paying at least the minimum due on all other debt. You may also want to transfer your higher-interest balances onto your credit card with the lowest interest rate.
October 6, 2013
Better budget behaviors
Making a budget is tough. Sticking to it can be even tougher, as unexpected expenses have a way of derailing even the best laid budget plans. So, whether you’re working towards a financial goal or believe in budgeting as a way of life, the following tips can help keep you on track.
- Work as a team. Get the whole family onboard with budgeting and commit to spending within the set limits. Also, talking to your kids about budgeting may help prevent meltdowns in shopping malls and supermarkets. Once your kids are looped in, you can make it fun with coupon clipping and savings challenges.
- Save receipts and look for spending patterns. It’s easier to identify opportunities to cut back on spending if you have a clear view of where all your money is going.
- Limit temptation. Pulling out your credit card for unplanned extras is a common budget buster. Leaving the cards at home and using the cash in your wallet can curb the tendency for unnecessary spending.
- Anticipate extras. There are certain unplanned expenditures that are a priority. Avoid having your budget broadsided by creating a “miscellaneous” bucket. Any “miscellaneous” money remaining at the end of the month can be rolled over into the next month, used to help play debt or placed into savings.
- Review your budget periodically. Every so often, it’s valuable to see if the budget you set still makes sense for you and your family. Have your fixed costs changed? Did you or your spouse get a raise, or have other financial events changed your lifestyle? Take a moment to revisit your written budget.
- Most importantly, get money smart! The more you learn about managing your money, the better you’ll be at sticking to your plan.
Check out these resources from Northwestern Mutual to create a budget you can stick to:
September 13, 2013
Calling all carpools!
Why sharing the driving is good for your pocketbook, your pals and the planet.
Back to school season is here (already?) which means we've already begun shopping for all those must-have items that tend to blow our monthly budgets.
Carpooling is one way to reduce costs, save you time, and cut back on fuel emissions. Sharing the responsibility of driving kids to and from after school activities can also foster closer ties with neighbors and broaden your family's circle of friends. If you're still thinking that you don't want to be locked-in to a carpool schedule, remember that carpooling will:
- Cut your car expenses. With gas prices inching towards $4.00 per gallon, reducing the miles you drive can mean real savings with fewer tank refills. You’ll also reduce the mileage on your car resulting in less frequent oil changes or tire replacements which will save you even more money over time.
- Reduce carbon dioxide emissions. The less we drive the greater the environmental benefit through reduced auto emissions. Carpooling means cleaner air and less congestion on our roads.
- Save you time. While organizing a carpool schedule may seem like too much to manage, once you have a plan in place just think of how much time will be freed up for other activities. Wouldn’t it be nice to spend less time driving around town and more time to spend on things like getting dinner ready before the kids get home?
- Create connections with others. Pitching in with friends and neighbors can strengthen these bonds and establish a feeling of community which is beneficial for you and your children. It’s also a great way to teach your kids a lesson about teamwork. If anything, spending quality time getting to know your kids’ friends will keep you in-the-know – just think of the backseat conversations!
August 1, 2013
Learning at the Lemonade Stand
Setting up a lemonade stand or community bake sale with your kids is a great way to mix business and pleasure this summer. The planning, prepping and profiting phases of your small business venture are ripe with opportunity for lighthearted learning. Practicing how to make correct change for customers, designing marketing posters and fliers, and buying supplies nurtures creativity while promoting important math and business concepts, as well as the benefits of teamwork.
Here are some practical tips to help your young entrepreneurs get the most out of the experience.
- Plan where, when, how and who
Ensure that your venture has the best shot for success by working with your kids to determine the best day and time to maximize sales. And just like in the real world, figure out who is best suited to manage the different aspects of the sale.
- Determine what items you'll sell and how much you'll charge
Defining your shopping and inventory lists and then assigning prices is a natural springboard to help your kids understand how retail works. The fringe benefit is that once they understand the idea of mark-ups they may be more amenable to waiting for something they want to go on sale.
- Encourage your kids to donate a portion of the proceeds to charity
Helping those in need is one of life's most important lessons. Also, working with your child to figure out how they'll use their earnings is a great opportunity to reinforce spending vs. savings principles. If you're looking for ideas, check out Alex's Lemonade Stand for ways you can support childhood cancer research.
- Clean up afterwards
Good corporate citizens regard and protect the environment and their communities. This is also a chance to talk about the benefits of recycling.
Most importantly, let your kid be the boss! While children need our guidance, it's important that we empower them to make their own decisions.
July 17, 2013
Send your kids to Grandparent Money Camp
Contrary to popular belief, grandparents aren't only wired to spoil the grandkids rotten. In fact, they're probably one of our greatest untapped resources for teaching important life lessons and reinforcing the core values of the family. After all, they have years of wisdom and experience, and are respected by your kids.
So what better allies to enlist in your mission to turn your children into money mavens? While you're busy working or taking care of your daily "to do" list, grandma and grandpa are the perfect people to have fun with your kids while helping them become more financially fit.
Here are some suggestions for getting Nana and Poppy onboard with your summer money camp:
- Set aside a specific time each week for an ice cream or lunch date to chat about family history and finances. Possible topics could include grandpa's first job, how he and grandma financed their first home or steps they take to save for special gifts for their kids and grandkids. Aside from the financial lessons, this is an opportunity to bond and deepen your kids' understanding of their background and legacy.
- Get them to take the kids for volunteer work or to a charity event. This will open the door to valuable discussions about not taking what they have for granted and the benefits of helping others..
- Pull out the tablet or fire up the computer and explore online resources like TheMint.org, to discuss important money concepts and lessons. Grandparents should be encouraged to provide examples from their personal experiences to complement the information and interactive tools on the site.
May 14, 2013
Technology provides an anytime/anywhere experience, but can it help us reach financial security tomorrow?
Nearly one in three (31%) Americans say they find the immediacy of society today (email, texting, instant messaging, etc.) distracting, and an alarming 69% say the fast pace makes it hard to stick to long term goals, according to recent Northwestern Mutual research.
To balance the benefits of technology with thoughtful, longer term planning, use technology as a tool to help facilitate small steps toward greater financial goals. Help your family learn and practice good financial habits with the following tech-savvy tips.
- Keep a money journal: Use the “notes” feature on your phone or iPod to record your actual expenses each day. You’ll have a clearer picture of where and why you spent your money, as well as opportunities to save or refine your spending.
- Develop a monthly budget: Whether it’s downloading a budget app for your smartphone or creating a simple spreadsheet on your computer, keeping track of how much money is available to spend on the items you need can help limit unnecessary or impulse purchases.
- Choose a long term savings goal: Contribute to your goal by setting aside a certain amount of money each week or month. When you do this consistently over time, you’ll be surprised at how much these funds will grow.
Technology may continue to revolutionize the way we live, but the basic tenants for successful, long term financial planning – and good financial habits - never change.
March 27, 2013
Get Educated for Financial Literacy Month
April is Financial Literacy month so it's a great time to sit down with your kids and talk about money matters. Consider it a type of 'New Year' for your money habits and use it as a jumping off point to help your family learn about financial planning, save more and spend smarter in the year ahead.
Focusing early on financial education has never been more important. Kids today have the chance to live well into their 120th year and along the way they'll need to be able to spend, save, grow and protect their assets through every life phase from college to home ownership to marriage and kids, on into retirement.
As a parent, you have many important things to teach them. First and foremost is imparting them with a real and practical understanding of money. This will put your kids on a better path to long-term financial security. Think of it as the gift you give today to their future selves.
Here are a few tips to help get you started this month:
- Get the basics down and make it fun: Today's kids will face many major life expenses before they even embark on their careers. Take college: a four year university degree runs in the six-figures. With that in mind, find fun ways to teach and reinforce the fundamentals early - saving, investing, debt and risk. This empowers kids for the challenges ahead.
- Learning by doing: As adults, thinking about and preparing for your financial future reduces the stress around day-to-day money issues. That's reason alone to help your kids get comfortable talking about and dealing with money. Start with something simple like an allowance.
- Set the example: Teaching children to become financially responsible adults isn't easy, but the earlier you start the better. Learning the value of planning and saving, and the value of a dollar, will help them throughout their lifetimes. Demonstrate this every day by adopting good money habits yourself, and then share your decision making with them.
TheMint.org is just one resource that can provide tips and tools to help you raise money-smart kids.
Here's to a financially fit year!
February 11, 2013
Why Your Family Needs an Emergency Fund
In life, it's wise to expect the unexpected. Having a financial cushion is a smart strategy to keep you and your family on firm ground when the unforeseen happens. An emergency fund can help protect you from the burden of assuming additional debt to meet unanticipated financial pressures. A sudden job loss, death in the family, accident, or large home and auto repairs can be managed with an emergency fund in place. You may already know that risk products are a great way to accrue funds and protect your income, but an emergency fund will serve as an important component of your broader strategy for managing a wide range of risks.
How Much Do I Need?
Most experts agree that an ideal amount to set aside in your emergency fund is between three and six month's worth of your living expenses. Your particular circumstances will determine the amount that is best for you. Some of the determining factors may be how many children you have, whether or not you carry substantial debt or have different types of insurance coverage.
The reason for having three to six months of expenses saved up is that a sudden loss of income is the most common reason for needing an emergency fund. If you or your spouse loses a job, it may take several months to find suitable new employment.
How Can I Get Started?
Saving money can be difficult. One recommended approach is to pay yourself first; as soon as you get your pay check, you should set aside money for your savings. This strategy lessens the temptation to spend it elsewhere. Saving even a small amount of money on a regular basis will add up. It pays to be consistent and patient.
Where Should I Keep it?
Once you've saved up some cash, it's important to put that money into an easily accessible savings account. Remember, this is money you may need at an unspecified time; it shouldn't be invested in stocks or mutual funds that could lose money in the short-term. You don't want to put these funds in a savings vehicle that will penalize you for early withdrawals should you need the money before it has reached its maturation dates, such as those with certificates of deposit (CDs).
Don't let the unexpected derail your financial wellness. Plan for the unforeseen by creating an emergency fund today.
January 9, 2013
Tech Tools for Money Matters
Innovations in technology have made managing our personal finances easier than ever. If you currently pay bills with checks or track your accounts with a pen and paper, 2013 may be the year to start using personal financial technologies. If you are already tech-savvy in this arena, you can look forward to some exciting emerging tools, such as virtual wallets or mobile payment capabilities for items scanned with your smartphone.
These smartphones and hand-held devices allow us to engage in a wide range of money-smart behaviors including checking account balances, transferring money or obtaining e-receipts with a few taps on a touch screen.
Consider a few ways these tools can support your use of technology for money-conscious decision-making:
- Clarity and control. Software packages or specialized apps can give you a holistic view of your unique financial picture so you can track your spending and saving habits and gain deeper insights into how your behaviors impact the fulfillment of your financial goals. The ability to clearly assess your finances will enable you to develop sharper plans for achieving these objectives.
- Fact finding. Before making decisions, do some research online to compare prices or read consumer reviews. Knowledge is key when it comes to smart shopping decisions and money management.
- Convenience. Whether it’s an app for your smartphone or a tablet-friendly tool, you can’t beat the usefulness of these devices for immediate updates on balances, automatic bill payment or checks deposits. No longer are consumers limited by the hours of banks or the location of the nearest ATM.
If you’re not already using technology to enhance how you approach money management, now might be the time to see how you can improve your financial decision-making.
November 26, 2012
Simple Tips for Sticking to Your Holiday Budget
The holiday shopping season has arrived (already?)! For many of us this means creating to-do lists and putting a spending plan in place. Even with a budget, it's easy to get off track. Here are some tips that will help you create and stick to your holiday budget:
- Write down EVERYTHING you'll be buying. While we're good at making our gift lists, we often forget all the seemingly small costs. These items do add up, so take a few extra minutes to plan for 'hidden' expenses such as stamps, gasoline for trips to and from the mall, wrapping paper, ribbons, tape, and other little extras.
- Be prepared to receive gifts from unexpected friends or relatives. One surefire way to blow your budget is unplanned spending on a gift for someone who wasn't on your list. When you come across affordable items with broad-appeal, you may tuck it away just in case. Of course, you can always choose not to reciprocate and send a hand-written thank you card on nice stationary (if you don't have any, stock up on that too when you see it on sale).
- Keep your list in your wallet so you always have it. With so much to remember during holiday time, don't take any chances that you will recall which items you have already purchased and what remains on your list. Being prepared when you go shopping will eliminate more trips to the store or the need to make last minute online purchases that may not be within your spending plan.
- Remember the true meaning of the holidays. When you are tempted to blow your budget, keep in mind that the holidays are about family and togetherness. This will help you put your spending in perspective so you can keep your budget on track.
November 21, 2012
Re-Gifting Do's and Don'ts
With so many presents to buy during the holiday season for family members, friends and acquaintances, re-gifting items you don't like or won't use doesn't seem like a bad idea. In fact, it's kind of like recycling, right? If you agree that re-gifting is a budget-smart strategy, here are some do's and don'ts to consider before the holiday season.
- Have good intentions. Give items you believe the recipient will appreciate. Remember: you didn’t like it enough to keep it for yourself, are you sure the recipient will?
- Re-package the item in new wrapping paper or a gift bag that you purchased along with a card.
- Gift only new, unopened items in excellent condition.
- Use common sense. Make sure the gift recipient won’t trace the gift back to its original source.
- Re-package handmade or one-of-a-kind items. Signed books or free promotional items are off limits. An item that a friend gave you from a trip abroad is also not a good idea.
- Part with an item that you don’t remember the origin of.
- Give something just to give a gift. Make sure the recipient will appreciate the specific item. If not, a gift card is another simple option.
- Re-gift if you can’t handle it. If you’re going to feel guilty or announce that the item has been re-gifted then this approach isn’t right for you.
October 24, 2012
Raising Thankful Kids
With Thanksgiving approaching, many of us wonder if we're doing enough to raise our children to be thankful -- to acknowledge and appreciate what matters in their lives and to show their gratitude to others. While these may be hard concepts for young children and even those in their tween years to fully understand, the concepts serve as essential lessons to help kids establish meaningful and healthy relationships with others, as well as to promote good feelings about themselves.
Most parents see the importance of training our pre-school age children to say "please" and "thank you" when they ask for Goldfish crackers or receive a goodie bag at the end of a birthday party. Teaching children manners is a great start, yet it is extremely important that we continue to cultivate and reinforce an 'attitude of gratitude' in our growing children that goes beyond etiquette, but into their hearts.
Here are a few suggestions to help accomplish the goal of raising a thankful child (even though it is natural for them to always want more, more, more.)
- Start with basic manners and go from there. Encourage hand written 'thank you' cards as a way of showing appreciation for birthday or holiday gifts. While your child at first might see it as a hassle, explain that this gesture makes the gift-giver feel good and that their actions will be appreciated. Developing empathy for others is fundamental to showing gratitude.
- Lead by example. - Parents' actions are a strong shaper of children's habits, so show your kids how to be generous through your own acts of kindness.
- Find ways for your children to give to others. Look for volunteer opportunities that you can actively participate in together. When kids sort cans at the local food pantry or work at a tag sale to benefit a community organization, they will develop empathy, humility and an appreciation for what they have.
- Share with family members what you are thankful for throughout the year – through a toast or prayer. The more often we focus on what we appreciate, the more natural it will become to show gratitude to others and feel it in our hearts.
September 12, 2012
Kids Buying Apps: Money lessons for kids who want to use real money to buy virtual "stuff"
Most of us parents would agree that it's way too easy for our little ones to buy apps when they borrow (or remove from our handbags and dressers) our hand-held devices. If it hasn't happened to you, surely you have a friend whose child has racked up significant charges with a few simple clicks without parental consent or even knowledge. It's hard enough to teach our children about the value of money, but now there is an added challenge when kids make purchases without seeing or touching real dollars. About half of all children paid for their first digital content by the tender age of seven, according to a study by NPD Group, a leading market research firm. It's no surprise that computer games follow music as the most frequently purchased items by children.
And, while there are technological safeguards that can be put in place to prevent accidental app purchases by changing settings or adding password protections, that only addresses part of the problem. Unless parents use their children's interest in buying apps as an opportunity to talk to their kids about the value of money, we are missing a huge chance to impart important money lessons. Chief among these lessons: the difference between wants vs. needs. Children that are old enough to play these games have the capacity to understand that people have basic requirements for living healthy lives such as eating, drinking, sleeping, wearing protective clothing, getting exercise and so forth. They can also understand that eating at restaurants or buying items from a snack bar are wants, as are new designer clothes and fancy sports equipment. Parents can explain that those things are enjoyable extras, but we don't have to have them to survive. We like playing video games or listening to music, but we don't need new apps to live.
A tip for helping teach your children about spending vs. saving starts by mapping out a way for them to save for the items they most want to purchase. They should commit to writing down on paper the item(s) they want in a notebook. They can use allowance (if applicable) or tooth fairy money, or you can help this process along by giving them small jobs around the house, such as taking out the trash or watering the plants, to help them earn money. Once your child sees how much effort goes into making a purchase, he or she will begin to understand the value of a dollar.
What makes online buying harder to grasp is that kids who have little experience with these basic money concepts can't see, feel or smell the money that is being spent. Why not take cash and a credit card out of your wallet as you explain these concepts. You can show them that a dollar bill equals a dollar that your credit company lends you, but you need to pay it back each month or you will owe more and more and more. It's not an easy concept for younger kids to understand, but that doesn't mean we shouldn't try to explain these concepts. Over time, money talk will sink in and you'll be doing your part to help raise a child who will grow to be a financially responsible adult.
August 8, 2012
Many families already know lessons on sticking to a budget happen at the hot dog stand!
According to our latest poll, this summer when families head off to festivals, theme parks or county fairs, most parents (80%) will cover admission costs and half of all parents will give their kids a set amount of money they are allowed to spend on extras and food creating opportunities to teach them about spending within their means. Only 7% of parents will buy their kids 'anything they want' and an equal number of parents won't let kids spend any money on extra items. A third of parents (34%) will let their kids spend their own money for extras.
July 2, 2012
School's out, summer spending is in
Talk with your kids about making the most of your summer dollars
Longer days, warmer temperatures and lots of free time create more reasons for spending money. During the hectic school year, we're often too rushed to provide our kids with everyday lessons about spending. For instance, we may not explain how purchasing the big box of cereal, instead of the individual packages, saved money on the grocery bill. However, summer is a great time to introduce and reinforce important lessons about sticking to a budget while still having fun.
When you're out and about this summer, consider involving your kids in decisions and activities that help them understand the value of saving money.
Here are a few tips to get you started:
- Plan ahead. Take a moment to figure out how often you can go out during the week and still stick to your budget. With your kids, decorate a calendar to mark when you'll enjoy higher cost activities.
- Bring snacks and drinks from home. By avoiding vending machines and concession stands you'll save money on marked up items. Chances are you'll also make healthier choices. By toting your own reusable bottles filled with tap water, you'll save a bundle.
- Look for discounts and coupons. Don't pay full price for entertainment. If you're planning a trip to a nearby amusement or water park, look for coupons in your local newspaper or online. Also, check with your local movie theatre to see if they offer bargain matinees. Some theatres show the same feature films at a reduced cost during the day.
- Entertain at home. Instead of going out to eat with friends and family, invite them over for a potluck meal or BBQ. Not only will you eliminate the burden of preparing food for everyone, but you'll save a lot of money.
- Host your own festival. Invite the neighborhood kids over for relay races and backyard games. You'll have a ton of fun without spending a nickel.
- Visit your community library to enjoy free air conditioning, books and other multimedia. Find out if your library has a summer reading program for kids. It will keep them busy all summer long, at little to no cost to you.
By working with your kids to make budget-friendly choices, you'll reinforce smart money habits they can carry with them for years to come. Even better, you'll have money saved up for back-to-school shopping.