Money – It’s How Much You Keep that Matters

How much you earn matters, but how much you keep, and what you do with your money matters more.  Don’t overlook the importance of reviewing your financial statements for accuracy and completeness. 

Mistakes made by financial institutions with your money allow the money to slip away quietly when you’re not looking.  Oversights or mistakes that you make will, of course, have the same effect.  And don’t be afraid or too lazy to ask questions or to push the envelope a little and ask for discounts or fee reversals.  The worst that could happen is that they say no.

Don’t underestimate the importance of your credit rating or credit score, which is like your report card grade for the real life class, “Borrowing Money.”  A low score will cost you money with higher interest rates and fees.  A really low score may mean that no traditional lenders will want to lend you any money. 

Think a few late or missed payments are not a big deal?  Think again.  Here’s an example that likens a class grade point average with credit cards.  You take a class where the instructor gives four evenly-weighted tests in a semester.  It’s something like having four credit cards in your wallet.  If you score a 92 on your first test and an 88 on your second, you’d have a 90 average.  If you bomb the third test and score a 66, your average would drop to an 82.  You basically went from an A- to a C+ just because you had a bad day and didn’t do well on one test.  Even if you do really well on the last test and score a 90, your overall average for the semester would only be an 84.  This may be an oversimplification, but the consequences of missing one or two payments, or paying a few bills late, can be great.  Try to consider this before you delay payments.

This post is an excerpt from my slightly sarcastic, yet comprehensive personal finance guide, “Goodbye Money – 1,000 Ways to Waste It, or Not”.

Also check out my Amazon Bestseller, “Intro to Money” DVD for tweens and teens.

Money Lessons for Life offers innovative financial literacy assemblies, Money Field Trips, classroom workshops and individual money coaching.  These interactive programs are great for elementary school students, middle school students, high school students, college students and adults.

New credit card rules affect students

Credit card companies have been feverishly changing their policies to recoup projected lost revenues due to the new credit card legislation that recently went into effect.   This means that if you haven’t already received a notice stating changes that will cost you more money, you probably will in the near future.  I just received a notice from Citibank stating that my credit card annual fee will increase from 0 to 60 in a few seconds (actually as of April 1, 2010).  They will refund the $60 fee if I spend at least $2,400 a year with that card.  Although they have 170 different types of credit cards, they were unable to tell me which ones won’t have an annual fee come April.  I will most likely cancel the card after I give Citi one more chance to keep me as a customer.  This may slightly decrease my credit score because I have had this account for over 12 years with an excellent credit history, but I am willing to take that chance.  The credit card companies literally earn billions of dollars a year.  They earn plenty of money from the merchants I shop with even though they earn nothing additional from people like me who pay their bill in full and on time every month.  They don’t need my $60 a year to remain hugely profitable.

I have not heard of any credit card company negative responses (yet) to the new credit card rules for young adults.  Maybe because the new rules don’t have as dramatic or as fast of a negative impact to their bottom line profits.  Credit card companies can no longer sign up new customers for credit cards without proof that they have the ability to repay the money they spend or without a co signor.   What a concept!  This is very good news and a great opportunity to teach your children and your grown children how a credit card works and how to use one responsibly.  It’s also a red flag warning about the dangers of cosigning a credit card account for your offspring or for anyone for that matter.  When you cosign a contract or loan, you are 100% responsible for paying the debt on time if the other person does not regardless of who spent or used the money.  Both parties credit score will be affected by both good and bad credit behavior.  I strongly urge parents to require their children to start working at least part-time before they get a credit card rather than having someone cosign for their account.  It will offer the greatest early life lessons of being responsible for repaying money they borrow.  No more excuses such as they have to spend their free time studying or I don’t want my children not to enjoy their youth.  A little work never hurt anyone and it definitely increases your appreciation for money.  Here are just a few simple, yet powerful money lessons:

• Earn before you spend and spend wisely.
• Money  mistakes can cost you a lot of money now and in your future.
• It’s also lot easier to spend money than to make money.

NEW for teachers and parents:  Credit Card Module designed for high school and college students includes lessons, activities, money tips and review questions.  You won’t find a better investment for your children’s future.  This environmentally friendly PDF version is available for only $10.  It is not yet available on our website, but you can call or e-mail to order your copy. 561$333$1220  friends@moneylessonsforlife.com

 Money Lessons for Life offers unbiased financial literacy for students and adults including school assemblies, classroom workshops, Money Field Trips, educational materials and individual money coaching.  http://moneylessonsforlife.com