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Young Money

January 14, 2010

MY DOLLAR PLAN shares good advice for <A>YOUNG people managing money.

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Raising Financially Savvy Kids

June 12, 2009

Every parent wants their child to grow up to handle money responsibly.  Many of us know from experience what financial dangers await them when they approach adulthood.  It’s wise for us to prepare them now with knowledge and experiences that help them manage money well in their adult years.  Below are some actions parents can take to begin shaping childrens’ money knowledge.

1) Discuss money with your child.  Children need to know that money has to be earned.  They need to know that it is finite (there is only so much).  They need to know that it’s a result of work.

2) Encourage saving.  Children need to see the value of this at an early age.  Simply getting a clear plastic container and putting their money in there can be a good start.  A parent could even put a picture of their desired purchase on the container as a visual reminder of why they are saving their money.

3) Discuss giving.  Teaching the value of giving can do wonders to help your child be a helper of those in less fortunate situations.  Dropping change in a Salvation Army tub or the offering plate at church can be opportunities for your child to know they are helping others.  It’s also smart to teach your child that they can give in non-materials ways as well.  Activities such as helping the elderly with lawn care, planting flowers at their school are a few examples of help that doesn’t cost money.

4) Start working early.  Children need jobs.  As early as 3 years old children can begin doing tasks around the house.  These jobs need to be age appropriate and well defined.  It’s OK to pay them for additional jobs that you find acceptable.  They have to complete their non-paid jobs first, however.

5) Partnering up on meeting goals.  Parents of preteens and teens can partner up to help their child reach financial goals.  If a child wants a $300 game system the parent can match every dollar they save up to $150.  The child gets exposure to goal setting and responsibility while the parent ponies up to the agreed upon match.  This can even apply to college spending money as well.  If you’re the parent of a college age student summer time is a great time to institute this type of agreement.

What are your thoughts about raising financially smart children?  What would you add to my list?  Feel free to drop a comment.

5 Signs You Are A Money Magnet

June 10, 2009

Is money actually drawn to some people? Is it repelled by others?  Interesting thought isn’t it.  How is it that some people never want for money while others never have 2 nickels to rub together.  Which one are you?  If you’re interested in becoming a money magnet here are some traits that I think are necessary to attract money:

1) You know where your money goes.  It’s plain and simple.  People with money have a system wherewith they keep track of how it is spent.  Whether it be business or your own checking account, you must be a money tracker.  For many of these folks it means they have a budget (a plan).

2) You place high value on saving.  Money is attracted to people who respect it enough by saving some of it.  It’s not the spent dollar that makes you wealthy but the one you save that does the trick.  You can’t reap the benefits of compound interest if you never save or invest your money.

3) You seek wise counsel.  Nobody is ever successful with money without surrounding themself with competent money managers.  None of us were born with all the skills necessary to manage money.

4) They seek out profit not wages.  The wealthy aren’t concerned about how much they can make an hour.  Their focus is ROI – return on investment.  They seek out investments and ventures that promise great profits.

5) They value diversification.  The wealthy seldom put all their eggs in one basket.  They have a game plan that accounts for unexpected market movements.  When they suffer in one sector, the other portions of their portfolio fare well.

How many of these traits apply to you?  If you had a 6th sign to add to this list, what would it be?

Newlyweds & Money: It’s About Teamwork

May 3, 2009

In her article, “6 Money Mistakes of Newlyweds,” Erin Burt shares mistake #3: That one partner shouldn’t give the other the financial reins.  This is so true.  Managing money in marriage is a shared undertaking.  Both partners have a vested interest in the final decisions.  When two partners marry they become one.  Their decision to marry means meshing their financial interests together.  Marriage partners need equal input into money decisions.  If one partner is better with details and budgeting it’s OK for them to create and maintain the budget.  The critical practice is that both partners have the freedom to discuss how money is spent.  It all comes down to communication.  How does money get managed in your marriage?

The other 5 money mistakes are: 1) Keeping money secrets; 2) Not having a budget; 3) Dragging debt down the aisle; 4) Sweating the small stuff; 5) Failing to plan for an emergency’

Create Your Own Stimulus

April 15, 2009

We’ve heard the term stimulus a lot in the last 3 months.  Our President, congressmen, and senators have thrown billions of dollars at the economy trying to jolt it into a recovery.  Whether the funds will accomplish the intended results remains to be seen.  My intent is for you to worry about what you can control.  While the stimulus is putting billions of dollars into this economy, the actual help it provides to your bottom line is probably minimal.  I think you your time is better spent creating your own stimulus plan.  Below are some clear cut measures you can take to create your own stimulus plan. 

1) Have A Written Budget.  Unlike the earmarks and fat of the stimulus, have an exact destination for your money.  Have categories for expenses such as mortgage, groceries, utilities, insurance and the like.  You can’t captain a good ship without knowing the conditions of all the parts.  You need a written plan for your money before the first dollar is spent.

2) Fund and Emergency Fund.  You must prepare for the unexpecteds of your financial life.  Murphy will come visit you.  You need a buffer between you and life.  This is your emergency fund.  Having a mimimum of $1000 will keep you from having to take the bailout money (credit cards).

3) Turn a Hobby Into Part-Time Income.  When you have a shortage of funds, seek out other types of income.  If you have a strong interest or aptitude for woodworking, start a part-time business.  If you’re a computer whiz, folks will pay you for repairs or consulting work.

4) Slash Your Expenses.  There are cheaper ways to finance your life.  Must you have premium cable with all the extras?  Must you have a brand new gadget when the one you have works just fine?  Must you pay full price for groceries?  Couponing can make a difference.  Good deals can be had at garage sales, consignment sales, and flea markets.  Imagine how much better our government would be if they only spent what was in the account.

The only money you have control over is your own.  Don’t wait on Washington to solve your problems.  Get your own plan together and create your own stimulus.

Personal Wealth Redefined

April 13, 2009

Can wealth only be measured by dollars and cents?  Are there investments you can make that cost nothing materially and still yield great gains.  The answer is yes. 

Good Investments.

1) Time with your children.  I’ve heard it said that children spell love T-I-M-E.  You don’t get a do over when it comes to parenting.  We all get one shot and we best get it right.  There’s a lot at stake if we don’t.  Our children deserve our support, time, and attention.  As I was writing this post my 3 year son asked me to toss ball with him.  I put my pad down and entertained for a few minutes.  Let’s not get too busy and forget the valuable investment of time with our children.

2) Time with spouse.  As the father of two children I can tell you quality time with my spouse is hard to find.  Is it worth the effort? Absolutely.  My decision to marry meant that I should put the needs of my partner above my own.  While I don’t practice this daily, I do try to communicate well with my spouse and work with her as much as I can.  My children will only be around until their early 20’s (hopefully). I plan for my wife to be around for the rest of my life.  I need to invest in our relationship as much as I can.  Don’t neglect the needs of your spouse.  You made a commitment when you said “I do.”  Do your best to honor that.  Your marriage will only improve when you do.

3) Time with God.  I am a Christian.  I place high value on God in my life.  While I don’t spend time daily in prayer, my relationship with God is important. When I chose him as my savior I became a different person.  I try to live a life that shows that change.  My words and actions should reflect that change.  He is the foundation of my life. 

4) Making Memories.  I want my wife and children to share great times with me.  I think I need to focus on having great times with my family.  Family is about traditions and fun.  While I feel the pressure to achieve great things in financial terms, I pray I never lose sight of the opportunities to have great times with those I love the most.  If I become too selfish and let these moments go by I will have become bankrupt.  I will have squandered opportunities that I can never get back.

What about you?  What is your definition of personal wealth?  Does yours only involve dollars and sense?  Look at the people around you.  What are your values?  Spending a moment thinking on these things may give you a different angle on what wealth is all about.  What non-material investments do you place value on?

If you desire more information on this topic let me recommend a great book:  LifeFocus: Achieving A Life of Purpose and Influence by Jerry Foster.

6 Ways to Create $50 a Month

April 7, 2009

Maybe your skeptical about coming up with the $50 a month to start funding your retirement?  Times are tough and squeezing an extra $50 can seem daunting for some folks.  Below are 6 straightforward and simple ways to find the $50.00 (or more).

1) Couponing.  My wife has been couponing for nearly three months and saving $50.00 can be found quite easily using a few tried and true methods.  For more information read my post, “Winning with Coupons.”

2)Part-time job. 

3) Invest Your Raise.  Look at this math. $40,000/yr job gets a 2% raise equals 800.00 a year.  After taxes, $600 a year.  600/12 months is $50 a month on the nose. 

4) Downsize something.  Satellite TV package, insurance, car, cell phone package, etc.

5) Sell Something.  Some examples are Ebay, yard sale, consignment sales, or anything else that takes up space in your life.

6) Income Tax Return.  Most returns average well above the $600 you need to fund your extra $50 a month.

What do you say?  Are you up to the task?  Is your future worth a few small changes now?  Go ahead and take action today to start your journey toward a better future for yourself and your family.

Retirement Made Simple..Can You Spare $50?

April 6, 2009

If today’s economy has taught us anything it is the simpler the better.  I don’t think many folks today have a couple extra hundred dollars a month to throw at their retirement.  My question is, “Can you spare $50? a month?”  There is one caveat here: You must have a $1000 emergency fund before doing so. Why? You don’t need to fund retirement before being ready for the financial unexpecteds of life.  Retirement funding before emergency fund is putting the cart before the horse.  If you need help starting an emergency fund, I have previous posts on the topic.  Once you have your emergency fund, begin setting your $50 aside in an automatic savings account.  Example:  I want you to do this consistently until you reach $1000.00.  At that point you can begin shopping for solid mutual funds to start a ROTH IRA.  For information on Roth IRA benefits, consult my previous post.  You may wonder if it’s worth the effort.  What can $50 a month do for me long term? I’m glad you asked.

A 35 year old invests $50 a month for30 years getting 7% return = $17,872 (after inflation)

A 45 year old invests the samefor 25 years at same return = $11,872 (after inflation)

I think this tells you that a little can become a lot.  If you desired more you could increase your contributions to get more.  Investing in stock mutual funds  (long term) can bring returns higher than 7%.

You have to start somewhere.  The journey of a thousand miles begins with one step.  You have to decide if that time is now or later.  Maybe you can’t come up with $50.00 a month. My next post will give you several suggestions.

Get Your Head In The Game!

March 31, 2009

Have you ever been out of touch? clueless? puzzled?  Maybe you got benched by your coach for not having your head screwed on right?  You just weren’t up to the task and you were sent to the pine for some reflection time.  You ask yourself:  What did I do?  What was I thinking?  How did I forget what we practiced? Mismanaging money kick you to the sidelines as well.  Managing money is a game.  There are rules to follow.  There are offensive and defensive moves that must be practiced.  Neglecting the principles and practices can result in failure.  Below you will find some tried and true advice to keep yourself in the financial game.

1) Know where the goal is.  You must know your destination.  You need to know what produces results.  Is your goal to be debt free?  more unity with your partner about money? start investing for retirement? I’ve heard it said that a goal is a dream with a deadline.

2) Have a solid offense.  Offense means putting points on the board.  If your goal is to have a comfortable retirement, then you need to designate a place for this money to go.  Some of your choices are IRA, Roth IRA, 401K, and pensions.  You must have a budget as well.  If your dollars don’t have a destination you will not get the most out of them.

3) Have a solid defense.  You need to protect what you earn.  If you’re married and have children this part of your game needs serious attention.  Some examples of good defenses are: having reliable insurance (home, life, auto, health,disability), emergency fund, and a will.  Life has risks and you need to be prepared ahead of time. 

4) KnowYour Strengths.  You need to be aware of the options available to you.  Not using Michael Jordan or your 401K can have disastrous results. In regards to retirement, you need to know what is offered by your employer.  You need to educate yourself about these options so you can maximize the benefits you are offered.

Marriage, Money and Manners

March 30, 2009

Have you ever considered how manners play out in how you and your spouse discuss money?  Is it reasonable to consider manners in regards to money?  You may wonder what does manners have to do with money.  It comes down to respectful communication.  Just as manners tell you to say ‘thank you’ and ‘please,’ common courtesy also applies to money as well. 

Checking In.  I’m delighted when my wife calls me first before purchasing an unplanned item.  This conveys respect for the money that we work hard to earn.  Checking in with your spouse about financial issues ensures peace and keeps you both on the same page.

Teamwork.  The keyword when it comes to marriage and money is team.  We are not separate when it comes to financial decisions.  Every financial decision impacts the overall picture.  Whether it is an expense or savings, it needs to be discussed by the team.  

Two Heads Are Better Than One.  Sometimes your partner can see things that don’t occur to you.  Gaining their input may provide a different view on how that purchase may conflict with other financial goals that you have.  Your spouse may also offer other alternatives that you can’t create from your own mind.

Power of Agreement.  You can’t discount the power of agreement in a marriage.  When a husband and wife enter into marriage it is about two becoming one.  When you choose to marry you choose to involve another person in your choices.  You and your spouse need to enthusiastically agree on money decisions.

In conclusion, how you and your spouse discuss money is important.  It’s imperative that both partners feel free to discuss money issues openly.  Money secrets can weaken the trust that must be present for a relationship to remain strong.

What money manners do you practice in your relationship?  Please share what works so others can glean from your wisdom.