May 17th, 2010
Financial Advice For Graduates That All Of Us Could Use
Graduates will be walking off their college campuses this spring and right into the “real world,” where national unemployment has inched back up to nearly 10% again, the average college debt upon graduating is $20,000, and our economy’s recovery is still fragile and unstable. In fact, this situation of job uncertainty, heavy debt, and financial insecurity is pretty familiar to most Americans.
This is great financial advice from blogs and articles intended for “the college grad”, but also as relevant to the rest of us and our own financial life.
April 7th, 2010
Revamped Federal Loan Program Is Good News For College Students
College students get a break from Uncle Sam with a revamped federal student loan program to kick-off July 1st. As part of the historical healthcare bill passed in March, the program will streamline the federally-backed loan program and aid borrowers to make higher education more affordable for low-income families.
Whereas federal student loans have previously provided by both private lenders and the federal government, all federal student loans will now be funded direct by the government’s Direct Loan program. This removes the $61 billion student loan program that subsidized loans from private lenders, meaning the banking industry will feel these changes the most in billions of dollars lost in federal subsidies and kickbacks. The Direct Loan program has a smoother origination process, decreasing borrowers’ confusion over loans by streamlining the loan process and standardizing it across schools: your school determines the amount you are eligible for, sends you the master promissory note, and you sign it.
February 10th, 2010
Consumers Without Credit Can Get Kwedit Instead!
New start-up Kwedit aims to give credit-less consumers the opportunity to buy virtual goods at social gaming websites with a “play now, pay later” platform using alternative ways to purchase without using credit or debit cards. Under the “Kwedit Promise,” users log-on a social gaming site like Farmville and receive digital content, such as virtual acreage or farming tools, and pledge to pay back later.
Kwedit runs on the same principles as real-world credit; users can buy online and pay later. The differences between real-life credit and virtual Kwedit are the payment process and the consequences of responsible Kwedit use. Users can pay back Kwedit via mailing cash or check, pay at a 7-Eleven, or have another person pay with a credit card; this is particularly useful for young teenage consumers without a credit card to make online purchases with.
January 28th, 2009
Financial Literacy For Children
As parents take a look at the current economic crisis, many are wondering about what kind of future their children will be facing. While there are no financial guarantees in this world, parents can give their children a boost in the right direction by providing them with sound financial guidance and education now, while they are still young. There are several programs being promoted right now to increase financial literacy in children, and parents can put several techniques to use to start teaching their children the value of a dollar right now.
1. Start when they are young, but not too young.
Very young children are probably not ready to handle the basic concepts of financial management, so it is best to wait until they are old enough to start receiving an allowance. By the time a child is around seven to eight years old, they should be able to start on the basics of proper money management and understanding how the system works.
2. Start small but lay the groundwork well.
Once a child is old enough, you can start teaching them some basic skills with their allowance. Help them to understand that performing work earns them money. If they don’t do it well, or if they don’t do it all, then they don’t get any money for that week. It is best to set up an allowance system that is actually based on real chores, rather than just given to the child. Otherwise, you are missing out on an opportunity to teach your child about the value of hard work.
3. Treat their allowance like a paycheck.
Expanding on the point above, if you treat your child’s allowance like a paycheck, this will give them a good foundation that will carry them throughout the rest of their lives. Set up a system where they will be paid a certain amount of money for doing certain tasks. Help them to understand that if they don’t get the job done, they won’t get their allowance. This simple message will get across loud and clear.
4. Teach them to spend and how to save.
Now that your child has an allowance, it’s time to teach how to spend it and how to put some aside. Try to work on getting them to put half of their money aside each week. For the other half, take them to a dollar store and have them pick out whatever they want. Then, put back the things that they cannot afford. This will teach them the value of a dollar and just how far it will and won’t go. If they want something they cannot afford, focus on teaching them about putting aside money until they can afford it.
5. Keep reinforcing these lessons.
Until the child reaches their teenage years, you can keep reinforcing these lesson. Once they get to around thirteen or fourteen, you can start to introduce more complicated lessons. For now however, getting the basics down about earning, spending and saving, will provide them with the knowledge they need to get started on a prosperous future.
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January 14th, 2009
Teaching Your Kids About Credit
Young children simply do not grasp the concept of credit cards, but they are paying attention to their parents and watching how mom and dad are using a cute little plastic card in place of cash. When a child does not understand the concepts that go hand in hand with paying with plastic, they may get the wrong idea: A little plastic card spits out money like magic, giving the adults money any time they want it without any repercussions. It is absolutely vital that you nip these beliefs in the bud as quickly as you can, because as a parent, YOU are responsible for teaching your children about money, financial planning, and credit.
The concept that money coming out of the ATM actually comes from a bank account that has to be earned and fed into by working is one that many young children simply cannot understand without assistance. Likewise, it will be just as hard for them to understand that when you swipe your credit card at the grocer or another store, that you will eventually be getting a bill demanding that the money be paid back through hard work at your job.
Life these days has such an overwhelming electronic aspect to it, that children are having difficulty grasping the complexities behind how ATM machines, internet banking, credit cards and other financial concepts actually work, even when you explain them in the simplest possible terms. However, there are methods out there for teaching your children how to understand credit cards and what they have to offer. If your children learn to understand these concepts, and if they learn how to be monetarily responsible at a young age, then your children will grow up to be more fiscally responsible than if you do not teach them young.
- Make the learning process fun.
Teach your children about numbers and math and finances by showing them how to comparison shop and showing them how the grocery shopping process works. Explain as you go what is happening, including how you are paying for the groceries, and how much they cost. The more you make it fun by turning grocery shopping into an enjoyable learning experience, the more your child will want to learn about the process.
- Give your children an allowance.
If you give your child his or her own money for spending or saving, your child will begin to feel a real sense of responsibility for that money. This is true even if the allowance is small. Giving your child ideas on how he or she can spend or save that money will help inspire ideas for money management. Teach your child how to spend half and save half, and teach him or her benefits of saving money and how it can add up for bigger, better purchases in the future.
- Squelch the “I want it now!” mentality.
Teach your child to save, rather than giving in to his or her “I want it now!” demands, and your child will grow up with a much better sense of the benefits of saving rather than getting everything he or she wants right away (such as with credit cards).
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November 27th, 2008
Educating Children on The Importance of Credit Scores
There are a lot of things that you need to educate your children about as they grow. Teaching them about money, and more importantly, the value of their credit score, is an important part of preparing them for their adult life. This is one of the most important lessons that we could ever pass on to our children, yet it is a lesson that is often neglected. If we teach our children about credit and money, we can help them to build responsible habits and behaviors for spending that will last them a lifetime and keep them from falling into debt before they ever have a chance to build a good credit history. Here are five tips for educating children on the importance of credit scores, credit reports and good spending habits.
1 – Start small by teaching young children about money management through their interactions with you.
Teach them by utilizing daily errand activities as small impromptu lessons about money and budgeting. Give your children pretend money, encouraging them to play store games. There are also numerous books that you can buy that are designed to teach children about money very early.
2 – Give a weekly allowance as a way to teach your children about spending responsibly and budgeting.
Pick a reasonable amount of money and give it to them in small denominations like $1 and $5 bills rather than a $20 dollar bill. Encourage your children to save a portion of their allowance every week by calculating the amount that could be saved in a month or in a year. Older children can benefit from opening a savings account which will educate them about deposits and withdrawals.
3 – Explain the difference to your children between wants and needs.
Encouraging your children to save and earn for something that they really want is a good way to teach healthy spending based on delayed gratification. Help your child keep accurate track of their money by giving them a chart and piggy bank incentives like $5 for every $20 that they save.
4 – When your child grows into a teen, you may consider giving them a prepaid credit card or access to a parent’s credit card.
This is a convenient way for you to introduce them to credit, but it might end up leading to startling monthly bills if your teenager is not careful. You should sit down with your teenager every month and show them how their spending is affecting your credit score so that they will understand how theirs would be affected.
5 – Students who have credit cards in college can find it difficult to handle their money because of the pressure that they have to spend on a limited income.
You need to teach your children early about responsible credit card use, debt and late payments and fines. Check their balances with them to help make sure that they stay on budget and take the time to go over their credit score and reports often to help them stay on track at all times even while away at college.
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