Month: July 2015

A few weeks ago, a stockbroker came to our school to encourage us kids to save our money and invest so that we too could have an ensured future. I want to share the 5 ways that I learned with you.

Start Now

As they say, it’s never too early to save. Time is an investment too and it’s running!

Invest your Money

Make your money grow. Go to Stock Exchange websites and observe the nature of stocks. Once you’re sure in the company you want to invest your money in, seek the help of a stockbroker.

Try to set aside a meager percentage of your earnings

This is where small things turn big in due time! This is the actual basic saving. Don’t spend everything you earn.

Set a goal

Identify your reasons for saving (Ex. You want to buy a car, open up a business, etc.)And make them motivate you.

Remember, it’s not how much you earn; it’s how you much you spend!

Sometimes, people go over their budget so they use their credit cards to purchase instead. But here’s the thing, once your money is not enough to buy you the things you want YOU CAN’T AFFORD IT.

Many western cultures do not expect children to spend their early married life putting aside enough money so that they can financially support their parents, as the parents would rather they spent the money on establishing their new family unit and supporting themselves with their own day to day expenses.

But in many Asian cultures and further afield, children willingly see that it is their duty to financially support their parents who are of modest means, rather than view their parents as a financial burden. Even if the children move to a more affluent country, such as the United States, their culture does not leave them. Many adult children continue to do what they can to support their parents by sending money home each month.

Own Family Concerns

However, not all newlywed adult children are in a position to offer financial support to their parents for a number of reasons. Some couples decide to start a family right away, which means they will need to save as much of their income as possible once they have their own children to support.

A newlywed couple who hail from the same country and cultural background will understand the unspoken responsibility that they will continue to assume. But a couple who do not share the same background may find that they cannot offer financial assistance to their parents because their spouse does not wish to support their in-laws. Instead, they may prefer to use the money to pay off any outstanding wedding debt or to save up to buy a house. This difference of opinion can cause friction in a marriage whether financial support continues or if it ceases. A couple will need to discuss how they feel about the issue of offering financial assistance and decide whether they will stop the support, send occasional gifts of money or if more regular support will be required until the parents are in a position to support themselves.

Division of Responsibilities

While an only child may at times secretly feel financially burdened with supporting his or her parents, multiple children can help to ease the stress by dividing their responsibilities amongst themselves so that they all have a share in caring for their parents.

Offering financial support to your parents when you are a newlywed can help to keep parents afloat as they struggle to make ends meet, or it can cause tension in your own marriage. There is no right or wrong answer when it comes to offering financial support. Many factors come into play when deciding whether to continue to offer support or not. But the most important point to keep in mind is to discuss the matter with your new spouse and come to an arrangement that will benefit all concerned without draining your own resources.

Money gives people- both young and-old decision-making opportunities. Educating, motivating and empowering children to become regular savers and investors will enable them to keep more of the money they earn and do more with the money they spend. Everyday, spending decisions can have a far more negative impact on children’s financial futures than any investment decisions they ever make. When do you start? As soon as a child can count and begin to distinguish between coins, she’s ready for her first financial strategy: Don’t eat the money. Here’s how to teach about money at each stage. Toddlers and Preschoolers At this stage, children can sort money, learn their value and begin to understand how money gets converted into “things” 5-to 10-year olds By the time they start school; many children are ready to receive allowance. The goal is to give your child the oppurtunity to budget, spend and save his own money. Most experts agree allowance should not be linked with chores or grades. Extra money for special jobs such as cutting your lane is fine.

The amount of the allowance depends on which expenses the child is expected to pay, so sit down with your child and map out a weekly or monthly budget. One suggestion is to pay some amount of money for each week of the child’s age. You can encourage saving by dividing the allowance among piggy banks. Money in jar 1 can be spent on whatever the child chooses to like toys, books or any other thing. Money in jar 2 can be used for long term savings such as college fund. Money in jar 3 can be used for investments. Give the money consistently every week and don’t take it away as a form of punishment Age 11 to 14 Increase the child’s allowance and responsibilities each year, and provide opportunities to earn extra money from additional chores. Help your child save and talk about how they can save for what they want most. Give them lessons on investment Age 15 to 20 Start to set goals. Invite your child into family budgeting and planning discussions. Talk about short- and long -term goals , such as University education. Help your child achieve independence by opening a savings account with an ATM card. Encourage them to get jobs outside the home.

Include them in decisions about significant future events such as their education and how the family would pay for it. As children grow, they become more independent in many ways, including financially. in the tween and teen years, youths have more responsibilities to earn money on their own. From household chores to odd jobs for the neighbours, children may be enthusiastic about earning money. they begin desiring what their friends have; the latest electronic device, specific clothing, cell phone, music, etc. This may be time to expand his or her resources, a visit to the bank would teach about will teach about interest and saving options. Getting into the habit of depositing earnings into a savings account can help your child build a lifelong way of managing money. It is important that the teenager learns the importance of earning” their incomes just like mom and dad do. Try to raise your children right and teach them values, and while morals and ethics are important, it’s important to be sure that they learn about money and finances.

We’ve all heard horror stories about older teens and young adults mismanaging their finances so badly that they incur mountains of debt by their mid-twenties. Those that get into trouble generally lay blame at the door of predatory credit card companies or huge college loans. In fact, we parents can take steps right now to help our children avoid many financial traps and learn to handle their money responsibly. We can help them avoid the bad start that comes with poor credit. As with most important life skills, the teaching starts almost at birth, and the sooner you start, the better off your child will be.

It can be tough to teach about money matters when you don’t have the cash for practical lessons, but skills such as these truly are built from infancy. It’s a very sound idea to move this teaching high on your priority list and help give your kids the very best possible start on the road to financial success.

Start from the beginning. You, the parents, need to be setting the best possible example. Make sure that you are running your household on a written, planned budget. This not only will show your children how it is done, but it will also help you have the bits of cash you will want for allowances and even college savings plans. The less money you have, the greater your need for a sound spending plan!

Not sure how to begin? Here are the basics: Start by writing down what you spend each day for one to three months. Account for EVERYTHING. This is one time when it’s good to be obsessive. After you have an idea about where your money goes, categorize your expenses. Don’t forget to account for quarterly and annual bills. If the bills are larger than your paycheck, you either need to cut back on some optional expenses, or reduce what you pay by shopping with coupons or looking for bargains. And as you budget, set aside a few dollars to use to teach your child financial skills. It’s well worth skipping a sandwich out, a few cups of coffee, or a case of pop each week.

Once your own financial house is in order, focus on the kids. What and how to teach will depend strongly on their age and stage. Little children, for example, need to start with little bits of money. Open a child’s savings account at your local bank. Most will allow a minor to hold an account with no minimum balance to encourage kids to save. Require that a certain percentage of all money the child gets go into the savings account. Many families use 50%. For some, donation to the church or a charity is also an important habit to build, and these parents require that 10% of any income be given to a good cause. That will leave 40% or so for your child to use as he or she sees fit.

Where can little children get money? Many times, it comes inside of birthday and holiday cards. It’s also a good idea to set up a list of chores that can be paid with a few coins around your house. Many parents have good luck with giving a small weekly allowance in exchange for routine chores and separate payment for unusual effort around the house. For example, when the kids were little, we paid them fifty cents for doing small loads of dishes by hand. They wrote their chores on a note posted on the fridge, and money was doled out at the end of the week according to who put the most effort into housekeeping.

As children grow, so should their financial responsibility. Allow them to use “their” money as they see fit (within reason!), but also you can consider giving them their share of the family clothing budget each month to manage. If the budget allows $100 per month for clothing for your family of four, then it follows that each person gets roughly $25 per month. If an ambitious child spends the $75 that she saved up for a single trendy garment, then she may find herself shopping at the local Goodwill store for jeans when she accidentally rips a pair the following week. Some families also involve lunch money in the fray. If lunch at school costs $3.00 per day, the child is given $15 for the week for lunch. That allows him or her to choose an extra ice cream for dessert from time to time, but usually also means that he or she will need to pack a lunch somewhere along the way to balance the budget.

If you’ve managed to enforce the mandatory savings deposits at the bank, the youngster may have amassed several hundred dollars by middle childhood. Your job is to see that whatever of that savings necessary is preserved for a start on adult life, but some of the total should be considered discretionary for the child. This will allow the good feelings that come with saving for a dream, whether it is a new video game or a fancy pair of shoes. Every acquisition is more meaningful (and usually will be more appreciated) if children have scrounged and saved the money on their own.

In the teen-aged years, teaching fiscal responsibility takes on a new urgency. Most of us realize that our time and influence are slipping away. We need to teach those sound decision-making skills before the kids leave for school or adult life. If possible, allow your child to get a part-time job. As long as it doesn’t interfere with education or health, young people gain many, many skills from working as teens.

Consider getting your teen a debit card with parental controls. These programs allow your child to carry plastic, but at the same time help you teach responsible use of credit. Many major credit card companies and banks offer programs with prepaid cards. Set up an account with your child, reach an agreement about who is responsible for loading cash onto the card, and monitor the activity on the card to make sure it’s being used wisely.

For children who are leaving home to head off to college, you might want to discuss keeping at least one bank account in the child’s name with parents as signers. This will allow you to help out in emergencies. Consider having bills (like credit card or cell phone) and bank statements sent to your primary residence even when they are in your child’s name. This way, you will be able to monitor what’s being paid, whether payments are made on time, and whether or not fees are being incurred. Most banks and businesses offer on-line accounting, so you can use this tool, as well. Be sure that both of you understand the terms of financial contracts and that your child sets up some accounts and a credit card in just his or her name as soon as it is feasible. Paying these bills on time and in full will build your child’s credit score, and will eventually help him or her to take loans for life’s larger purchases.

And the ultimate goal, of course, is to “launch” your young adult into the world of finance without damage to either one of your credit scores. Start right now, and teach your child how to budget and manage his or her money. Help him or her to understand credit, learn to check the credit score, and get the most out of sensible credit card usage. Teach as much as you can about savings and investment, and help your child learn where to go for reliable financial advice. Stress the importance of sound money management and hopefully, your child will become successful as an adult while avoiding the pitfalls that can come with debt and credit use.

“I want to be financially independent!” Jim stated as he walked into my office. “Tell me how in ten minutes.”

“In ten words,” I responded quickly. “Win a big lottery, marry a rich someone or both.”

“I’m serious!” Jim continued when we stopped laughing at the cliché. “I’ve tried all kinds of plans, and I don’t feel I’m any closer than I was ten years ago. I’m earning more than I ever did in more ways than ever, and the goal of being financially independent seems to get further and further away. What am I doing wrong?”

Coming from someone earning a six-figure income, with a million-dollar-plus house, and all the other trimmings, it is a strange question. I’ve been asked similar questions by many others: rich, poor and everywhere in between. I’ve given many different answers, all of which have had a fair degree of success. But Jim’s “ten minute or less” got me thinking: could I give him an answer he could use in that time frame?

What could I say that would be different from what he’d heard before?

“Basic, Immediate, and Empowering . Three words that encompass all solutions to financial independence.”

The Basic

Financial independence is an emotional state. It gives a true sense of security. It might not be absolute, but safety and security are the foundation. Every thing else is built on this basic.

It sounds simple, but few people have it. It does not matter what their incomes and job security are. The are relying on others to make it so. Rich, poor, in-between, without this basic, no one ever manages to get financial independence.

The Basic rule says you need a security blanket. It is a relatively fixed amount of cash that will see you through practically all crises. You don’t pick this amount out of the air – people who do generally think in terms of millions, and realise that they can’t make it happen, and their sense of security never eventuates. You need to calculate it, based on what you feel is important.

The first thing here is to realise that no crisis lasts forever. In fact, the period will range from as little as a month, for young people, to perhaps a couple of years, for someone about to enter retirement. Calculate just how much cash you will need to survive in a very basic way for that period, and that’s how much you need for your security blanket. Then work at putting exactly that much in as safe a place as you can, where you can access it quickly, IF you ever need to.

Jim started to interrupt, but I cut him off with “It’s my ten minutes – you just listen, and then we can do the calculations.”

The Immediate

The next step is to convert the amount you calculated for your Basics into an annual figure. This represents the immediate yearly income you need to maintain yourself at the basic level. It also ensures that your security blanket stays safe.

Think about it: if you could have this amount of income, without working, and maintain your safety net, how would you feel? Most people would be very happy, if they knew they could always get that annual income.

The calculation is not complicated. If you need a safety net of, say, $10,000 for a three-month crisis, you just multiply the $10,000 by 12 and divide by 3 to get $40,000. $50,000 over 24 months gives an annualised income of $25,000 per year.

If you can get this much every year, independently of your normal wages or salary, then you really will be financially independent. It always comes as a surprise to people when they realise just how little income they need to be financially independent.

The Empowering

The third word is about how you can get the immediate income. This is where most people, when they look for financial independence, fall down. They will see large numbers, and it scares them off trying to make it happen.

The first part is to recognise that all income requires capital. Your nice salary is not just the result of you working for it, but owes its existence to a huge investment of capital by someone. If that investment disappeared, then so would your job, and your salary.

So, how much capital will it take to generate your calculated immediate income?

A basic rule of thumb for calculating a minimum acceptable rate of return on investment is to multiply the income by 20 – a 5% return. So, to get your $25,000 per year, you need a capital investment of $500,000.

As I said, the figures start to get large, and they become scary to most people. The secret to money is: “Money makes more money”. It just takes time to get as much as you need.

In the times that we live in today, money matters are a big deal. The economy is dropping and good jobs are much more difficult to come by than they previously were. With so much concern about money and finances, this is an important time to know how much you are worth.

So what you can you do to determine how much you are worth? First, if you do not already have paper records of all of your debts and income and assets, you will need to spend some time collecting these items. There is a basic formula that will help you:

Net worth = financial assets – financial liabilities

When you learn this formula, all you need to do is plug in the numbers and you will get your net worth.

The first step however, is to learn how to calculate these numbers correctly. Many people make mistakes in their assets and they do not have the proper objectivity to determine what is what. Here are some things to consider when figuring your assets:

• How much cash do you have at hand? Add it all up- this will include checking accounts, savings accounts and yes, that piggy bank in the corner
• Do you have marketable securities? This will include stocks and bonds, option sand more. Check to find out their current values when adding up your assets.
• Do you own a business? Are you a partner or partial owner in a business or company? If so, then calculate this into your assets as well
• Do you have mutual funds? You will need to check the financial pages to find out their current worth to add into your assets
• Do you have real estate? How much? What is it worth? Check with current market values and do not rely on old, outdated appraisals
• Do you have a cash-value life insurance policy? Find out how much your life insurance is worth and add this to your assets calculations. Don’t forget to subtract any loans that have been taken out on the policy.
• Do you have a retirement fund? If you have IRAs, 401Ks or similar funds, factor the value of these in as well
• Look around your home. Do you have collectibles or antiques of significant value? You will need an appraisal on these to be able to factor in their worth.

Now you should be able to get a reasonable figure of what your financial assets are. Now it’s time to look at your liabilities. The golden rule says your debt should be less than 20% of your take home pay. Too many people break this 20% rule but to find out where you stand, you must factor all of your liabilities. Make a list of all your outstanding bills, auto loans, student loans, home loans, life insurance loans, income and real estate taxes, other taxes, taxes due on retirement accounts, child support and alimony and other liabilities.

Now remember that equation?

Net worth = financial assets – financial liabilities

Plug in the numbers and do the math and you will find out your current net worth.

All of these tips can help you determine your net worth. What do the results tell you about your financial affairs? Are you where you would like to be? Is there room for improvement? Are there some areas you would like to change? Make it your goal right now to make these changes.

In these unsettling times you have reason to be worried about your assets. The risks fall especially hard on older workers who are being offered early retirement or are being pushed out of the jobs they have held onto for years. Anyone trying to defend personal investments will be facing hard times.

If you have savings of $100,000 or less your money is safe in your banking account. It is insured by the Federal Deposit Insurance Corp. If you have more in one account be safe and move everything over $95,000 to another account. More than $100,000 can be insured in one bank if you have different types of accounts.

Money markets are not insured but in the 37 years they have existed, they have never lost any money for individuals. If you have a money market fund check its web site. It should have a statement disclosing whether exposed to any troubled companies. Vanguard and Schwab say they are all right. Two T.Rowe Price funds sold Lehman securities at a discount but didn’t break the bank. For an entirely safe money market, choose one that invests in Treasuries and other government debt.

Stay away from the new money-fund-insurances. If they win, their bonuses rise, if they lose the government pays. That’s the kind of shenanigans that brought on our present financial crisis. Your AIG insurance policies and annuities are safe. If you are holding an AIG policy don’t replace it. You will pay fees to leave and more fees to buy coverage elsewhere. If you are shopping for insurance, however, don’t buy AIG. Look for top rated companies with no recent downgrade on their records.

The Securities Investor Protection Corp. insures your brokerage accounts for up to $500,000 ($100,000) so they are safe. Your mutual fund is also safe. Investment Company Act of 1940 takes care of that.

Delay retirement if you can. In poor markets keep your job and your health insurance. If you are let go, look for a part time job. Retirees who are living on their savings should take out as little as possible. If you have debt you are living beyond your means. Why make your life harder by paying for things you bought five years ago?

Mortgage rated have dropped but banks won’t lend and the credit card limits are being cut back. Now is the time to pay off all your debts, stay within your means and get your finances in order for the long haul…

Very few people feel more out of their element than when they are shopping for car insurance. The problem is that the agents seem to hold of the cards in this game. Most car insurance shoppers do not know enough about the specific the legal requirements for the amount of coverage needed.

Car owners understand that there are two basic types of car insurance. You can buy liability insurance, or you can buy collision insurance. Most policies combine these two along with comprehensive insurance in a complete coverage package. Like anything else that you buy, if you go armed with the right information, you will have better success buying the coverages that you need.

The government requires you to buy liability insurance. The reason for this is simple to understand. If you are going to run around at high rates of speed in a an object that weighs in excess of a half a ton, the government expects you to protect financial interests of those who you might run down or hit. It makes good sense.

The amount of liability required is generally the lowest level of coverage offered by insurance companies. Anything above this amount is sold to cover your assets in the event of a catastrophic law suit by the other side in an accident. Many states do not require you to buy anything for the medical needs of your passengers, but most agents and insurance customers will push for medical insurance for your passengers.

Collision coverage is always required by the lender on a car loan. This is the insurance that will fix your car if you have a wreck. Legally, you do not have to have collision. You can decline to purchase this insurance. If you do, the bank will either buy this insurance and charge you for it, or they will come and get your car. If you own the car without a loan, you can elect to live without this type of coverage.

You can opt to add comprehensive coverage to your collision policy. This insurance will pay if a rock breaks your windshield. It also contains protection for the contents of your car agains loss and theft. Comprehensive will pay off for hail damage or other damage from acts of God.

The amount of coverages that you buy with each type of insurance is your call. You can have high or low deductibles. You can increase the amount of liability coverages. How you pay for your policy can affect cost. You have the option to pay all at once, semi-annual, or sometimes monthly.

In today’s economy more and more people are going through financial struggles. Some people have late payments or have over extended credit. Still others are in default of loans and may have even filed for bankruptcy or been involved with a foreclosure. People who have had financial difficulties often feel they will never be able to get credit again which will make large purchases such as a home or vehicle a lot more difficult. Often, these people turn to credit repair agencies that will guarantee improved credit…but it will cost you.

For a fee, these agencies will help you repair your credit. Granted, some of these agencies are perfectly legitimate and they are providing a service, mostly their expertise in consulting with you, for a fee. Others though guarantee quick fixes, pure credit or an increased credit score in thirty days or less. Be wary of shelling out your money to these organizations as they are generally scams. There is simply no quick way to repair your credit. It takes time and effort. But it can be done. It can also be done entirely by you without having to hire someone else to do it for you or advise you on how to do it.

The first thing you will need to do when attempting credit repair is to get your credit report. You need to see where exactly you stand, what negatives are on your credit report and what positives. The basics for improving your credit are to cancel out the negatives and add to the positives. This may sound like common sense but it is easier said than done. It will take drive and discipline in order to do it and a particular commitment to reestablishing your credit. You should get credit reports from all of the major reporting agencies including Equifax, Experian and TransUnion. Then, you will need to focus on the past, present and future.

First, concentrate on the present. You want the latest of your credit history to be the best. Make sure you keep up with payments, do not overextend your credit and keep a sound financial picture at all times. Do not max out any credit cards you may have, in fact, keep as low a balance as possible to reduce your debt. Pay careful attention to your bank accounts and avoid any low balances or overdrafts.

Next, look to the past and take care of negative reports on your credit reports. Do you have charge offs? Are there late payments? If you have an uncollected debt, contact the agency and work out a payment arrangement to settle the account. Even if the debt shows it was significantly late in payment, showing it was eventually paid off will put you in a better credit position. It shows that you have the financial responsibility to take care of debt even if you were late in doing so. Are there erroneous reports on your credit? If so, write to the credit bureaus to have them removed from your credit. You can even add notes to your credit reports for specific financial hardships. For example, if you went through a divorce and were slow paying a debt, you can cite that so that someone looking at your report will know it was a temporary situation that has since been resolved.

Finally, you will need to look toward the future and start to re establish a history of positive credit. If you no longer have credit anywhere, obtain it. Get a small secured loan and build from there so you can show a pattern of prompt payments. Get an unsecured credit card or loan. When you apply for one as a high risk, you will pay outrageous interest rates. This can be risky but if you use it wisely, you can take advantage of the credit available. Instead of using the card for major purchases, make a small purchase and pay for it in two installments. Do this over the course of a year and you will show a positive credit history for that card. You will have to actually use the card, though. Just be careful to use it wisely and pay for it on time.

Always check your credit report regularly to ensure the accuracy of the data. Once you have cleaned up your credit report as much as possible and show a positive current credit history you will find you are eligible for many more credit opportunities. As time goes on the interest rates offered to you will also decrease as you become less of a risk. Having good credit is essential. Rebuilding your credit is a time consuming process that takes a lot of discipline and determination. But it can, and should, be done.

Your credit says a lot about you. It can dictate the type of home you own, the type of car that you drive, and the type of life you live. With data reporting agencies existing hand in hand with credit bureaus and companies around the globe all synching up data about you and how often you pay your bills, it’s important that you know what your credit report says and how to read it.

Identity theft, according to the FTC is the fastest growing crime worldwide. On a daily basis there are hundreds of thousands of reported instances of identity theft and a mounting number of fraudulent charges to banks, credit card companies, and even utility bills. With all of this risk to face, it is imperative that you protect your credit, and your identity from these malicious attackers. If the worst should occur itÕs also equally important to know how to fix your credit report and not be bombarded with empty promises on credit report repair tips from unethical companies.

There exists a multitude of different websites and literature dedicated to credit report repair tips and offering a variety of different suggestions on how to fix your credit report. Most of these websites will charge a fee either on a one-time basis or a membership fee to access their materials. The truth is, most of the best credit report repair tips are free, and can be found on credit agency websites, on credit card company websites and even at the FTC website.

Ordering your credit report on a quarterly basis is the recommended solution to monitor the status of your credit, accounts, and ensure that inaccurate data doesn’t appear on your record. Oftentimes, the longer an item is allowed to remain on a credit report, the more difficult it becomes to have it removed, regardless of it’s validity. Most credit reporting agencies offer you an easy to read credit report, showing you the timeliness of your payments and the status of all accounts over the past 7 years. The majority of these can also provide you with your FICO score, and free tips on how to improve or raise it.

It has become significantly easier to obtain regular monitoring of your credit report through the “Big 3” agencies that handle collecting and reporting data. Many of the sites offer a subscription to automatically send your credit report to you every three months like clockwork. It takes a lot of the guesswork out of when and how often to review your credit report.

Credit report repair tips are quickly becoming a dime a dozen with the escalation of incidents of identity theft mounting, it’s proving extremely difficult to detect, prevent, and at times remove fraud. Credit repair can be costly and time consuming. The FTC reports, on average, it takes 100 hours per incident to achieve removal of negative items appearing on your report. Monitoring is the first step to reducing the time spent in disputes and knowing what your credit says about you.