Financial Literacy is more than eating rice and beans

It’s April.  Do you know where your money is?  April is Financial Literacy Month and although you won’t get a 3 day weekend to celebrate this “holiday”, it’s a good time to reflect, set goals and learn about money. 

Financial Literacy is more than eating rice and beans for dinner every night or using 3 squares of toilet paper isn’t of 4.  Yes, saving and budgeting are important parts of building a successful financial future, but there’s so much more.  How much do you, your children and your adult children know about personal finance?

A lot of people don’t realize that paying their credit card bill, car payment or student loan payment late just once or twice can really take a dent out of their credit score.  Companies that loan money “talk” among themselves and bad news travels fast.  If you aren’t paying your FasterCard on time, Meeza card might also decide to raise your interest rate.  Paying late usually comes with an added bonus you didn’t ask for –> late fees.  Also, a lower credit score can cost you extra money with higher interest rates when you want to borrow money for something else like furniture or a home.  If your credit score is low enough, it may even prevent you from borrowing additional money.

Let’s switch gears to investing.  Do you and your children really understand what a stock is?  Here are a few brief points to explain stock:

• A company initially issues and sells stock to raise money to operate and grow their business.
• By purchasing stock, an investor actually owns a piece or portion of the company.
• If the company’s stock is actively traded on a stock exchange it can be sold rather quickly to someone else.
• Some companies pay a portion of their earnings as dividends to their stockholders.  Dividends increase the return earned on a stock investment.
• If you sell the stock for more than you paid you will have earned a capital gain which is the increase of the stock’s value.
• Your total return would be any dividends paid + the appreciation of the stock price – any commissions or fees paid.

For more unbiased financial information that’s made easy to understand, consider buying the “Intro to Money” DVD  and our lesson plans for classroom and home use.  Money Lessons for Life also offers Money Field Trips, School Assemblies and private money coaching.

This message has been brought to you by Money Lessons for Life and Garrett Jay.  You can also follow and list me on Twitter

Ponzi Scheme

So how do people fall for a Ponzi scheme?  They are shmoozed and hypnotized by the person “selling” an investment opportunity that sounds too good to be true.  Earn high returns, invest with the big boys including institutions and be part of an elite group.  A Ponzi Scheme usually works by paying older investors with new investors’ money that is coming into the fund.  The major problem is not how well the underlying investments are performing.  There’s not enough money to pay back all of the investors.  Period.

Here are two very basic Money Lessons for Life:

1.  If it seems too good to be true, it often isn’t.  A significantly higher than normal return for a given investment should at least trigger a yellow flag in your mind.  Be sure to conduct due dilligence before making any significant investment.  Don’t just trust people you know or people you think you know.

2.  Never put all of your eggs in one basket, no matter how amazing that basket appears to be.  Diversify your money with different types of investments (stocks, bonds, real estate, commodities), different industries(energy, biotechnology, agriculture, health care), maturity of investments (1 year, 5 year, 10 year horizons), and geographical location (Asia, South America, Eastern Europe).

Do you want to learn more about money and teach your children about money so they can be prepared to tackle their financial future?  Visit Money Lessons for Life to learn more about innovative financial literacy programs for schools, non-traditional money education DVDs and individual money coaching.

Bad Economy = Good Time to Teach Your Children About Money

The last 12 months we’ve experienced:

·        Huge decreases in home prices

·        Huge increases in oil and gasoline prices (now oil prices are much lower than a few months ago, but still way above historical price levels)

·       A huge credit crunch (very hard for people and companies to borrow money)

·        Huge stock market declines (U.S. and worldwide)

 

These are very difficult economic times.  So, why is this a good time to start teaching your children about money?  And, where do you start?

 

Whether your children are preteens, teens, college students or adults, they are exposed in some way to the current economic conditions and they deserve to understand what’s going on and how they can prepare for economic surprises in their future. 

 

Let’s start with SAVING as it is truly the key to surviving tough financial times.  The most important money lesson that your children and you need to learn is no matter how much you are saving it’s not enough!  Repeat after me, and then write this down and repeat it once a day or once a week until it really sticks in your head:

·        Save Early

·        Save Often

·        Save as much as you can and then,

·        Save some more

 

But, why?  Why should your children (and you) save your money?

There are several reasons, but let’s focus on one for now.  You’ve probably heard that you should save your money for a rainy day or you should have 3 or 6 months of salary saved in case you unexpectedly loose your job.

• Our current economic situation is living proof that people who have enough money saved in their “Rainy Day Fund” will be able to weather the current economic storm.
• For those that have really done a good job saving, they can even take advantage of opportunities such as buying stocks, real estate and other investments at drastically reduced prices!
• Even if you haven’t saved as much money as you should have, you can take this opportunity to make sure that your children learn the importance of saving to prepare for their future. 

Most Americans spend, spend, spend and then, IF there is any money left over, they may save it.  But, more often than not, without blinking an eye, when it comes to saving versus spending, we use one of our favorite excuses such as:

1.  This is a bad month (car repairs, home repairs, medical bills)

2.  You only live once, so go ahead and splurge on that flat screen TV, designer clothing or shoes, high tech cell phone, or even a new car.

3.  I don’t make enough money to save any money

4.  I hate being cheap or having other people think I am being cheap.

 

Do any of these sound familiar to you?  Of course they do.  It’s part of our culture to spend, spend, spend.  That philosophy is reinforced every day with advertising all around us.  You have to be very strong and determined in order to start changing your habits when it comes to money.  NO MORE EXCUSES!  🙂

 

Your “homework” until we meet again is to sit down with your children and review how much they are spending and saving.  You may want to share some household expenses that you pay and how much money you are saving everything month.  Then, together you can make suggestions about how to save more and spend less.  Write your answers down and make a monthly goal, so that you can measure your progress over the next 6 months.

 

For more money education, visit http://www.moneylessonsforlife.com  Money Lessons for Life teaches children, teens and adults about money with School Assemblies, Classroom Workshops, Money Field Trips, DVDs and Individual Money Coaching.

 

Teach Your Children About Money & Learn from Today’s Money Mistakes

Troubles from Wall Street to Main Street…

How’s the value of your real estate lately?  How about the value of your 401K, IRA and other retirement accounts?  Are you spending a lot more money on gas, food, insurance?

Although markets normally experience ups and downs, the economic troubles our country has been facing for about a year now have been largely been caused by “financial experts”, elected officials at all levels of government and the general population.  Easy money (extremely low interest rates) have fueled excessive overspending and foolish investing.  The good news is downturns actually present many opportunities IF you are financially fit enough to take advantage of them.  Even if you’re currently struggling with big money challenges, it’s a great time to teach your children about money, so they don’t make the same mistakes. 

For starters, teach your children these simple but crucial money concepts:

1.  Only buy what you can afford to pay for today, not tomorrow.  The first question is, do you really need it?  Wait a few days and ask yourself if you still “need it”.  Then, ask if can you really afford it now?  Do you have any outstanding credit card debt that should be paid off?  Have you saved enough money this week for your children’s college fund, vacation, holiday shopping and your retirement?

2.  Save early, save often, save as much as you can and then save more!  This concept is hard to adopt when we are consistently tempted with advertising offers and social pressure to buy, buy, buy!  But, you must set savings goals and you must have the discipline to stick to or better yet to exceed your goals.

3.  Buy Low, Sell High.  If you follow the first two principles, you will have lots of extra money available to invest in assets (stocks, bonds, real estate, gold and others) at bargain basement prices.  This is how many people build significant wealth.  If you and your family are not well positioned now, start preparing for your future and your children’s future NOW.  I guarantee our economy will bounce back and yes, several years from now it will also “crash” again.

For more money tips and a new innovative DVD that teaches kids, teens and adults about money check out:  http://www.moneylessonsforlife.com