The Simple Dollar
One of the most powerful things I’ve learned over the last few years is that older children and teenagers often learn the most powerful life lessons from experiences they can directly relate to.
The problem is that personal finance isn’t often directly relatable to their life. Quite often, parents and teachers rely on lectures and discussions to get the ideas across, but experiences are the things that many older children and teenagers really connect with. You can tell them about personal finance all day long, but without some experience, it often won’t sink in.
Here are some actual experiences your older children and teenagers can engage in to learn some of the basics of personal finance. I’ve been collecting these activities myself in order to help educate my children in personal finance literacy as they grow older.
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Give an allowance each week. You can start this effectively with children as young as four. We give our children an allowance of a rate of $0.50 per week per year. So, a seven year old gets $3.50 per week. Out of that allowance, they must donate at least 20% of it, they must invest at least 20% of it, and they must save at least 20% of it for a future goal, rounded up to the nearest quarter. ( Continue… )
Whenever I see advice on saving money on commuting fuel costs, the suggestions often revolve around completely giving up your car.
I’m as guilty of that as anyone else. It’s a great way to drastically trim your finances.
Let’s be honest, though: a lot of people simply aren’t going to give up their car. They have too much emotionally tied into the freedom of having an automobile to take them wherever and whenever they want.
So, with that in mind, here are fourteen pieces of advice that will each help you save on the fuel costs of your commute. Every single one of these tactics will improve either the efficiency of fuel consumption on your commute or will reduce the number of miles you put on your car. ( Continue… )
I often meet up with a good friend of mine that I’ll call Dave.
You rarely see Dave without his trusty bottle of Powerade at his side. He seems to thrive on the stuff. He’s as thin as a rail and doesn’t seem to eat too much, so I guess he uses it as some kind of special “Dave fuel.”
Anyway, I happened to glance at Dave’s Powerade bottle and I noticed that the label indicated that the flavor was supposed to be “orange,” while the substance inside was a brownish-yellow, as one might expect from a “lemon” flavored iced tea.
“That’s an awfully strange looking orange Powerade there, Dave,” I told him.
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“That’s because it’s not Powerade.” ( Continue… )
What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Catch-22 with home loan
2. Haircut value
3. Quality of school matters?
4. Making quadruple batches
5. The value of commute length
6. Uses for vegetable remains
7. Cash for emergency fund
8. Professional dress
9. Returning to the workforce
10. Move first?
I’ve had the privilege this week of eating lunch with a different lunch companion every single day.
This simple act has led to the formulation of a lot of great ideas, a lot of laughs, and a lot of stronger relationships.
Eating lunch with a friend or a person you want to know better doesn’t have to be expensive. Most of my lunches have been leftovers or peanut butter and jelly in a brown paper bag.
Even if it had been expensive, it would have been worth every penny for the great lunchtime conversations.
Q1: Catch-22 with home loan
I’m in a catch-22 position and I can’t figure out what to do. I am due with our first child this summer. Currently, my husband and I both work but I will stop receiving paychecks in August. I’m a teacher, and my ultimate plan is to start an in-home daycare/prechool to supplement our income while I stay home. The problem is, we live in a small apartment and I cannot do the daycare situation there. We need to have a house with space to do this.
( Continue… )
Let’s look at a “typical” mortgage. Right now, the average American mortgage is $235,000, so let’s use that as our baseline. The Seattle Times reports that, right now, the average 30 year fixed mortgage rate is 3.42%.
So, let’s use those numbers. We’ll look at a 30 year fixed mortgage at 3.42% that borrows $235,000.
Under those conditions, a person will be paying $1,044.79 per month for the next 360 months. That’s assuming they make the minimum payments on that mortgage over the entire term. They end up paying a total of $141,123.93 in interest over the course of the loan.
Now, what if a person adds just $1 as an extra payment each month for the entire loan? Each month, they pay $1,045.79. What changes?
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Well, the final payment drops to $419.19. By putting in just $1 extra each payment – a total of $359 – you save $626.60 on that last payment. ( Continue… )
Let’s get the scary truth out there: CNN estimates that half of all Americans are saving nothing for retirement.
Half of Americans aren’t saving a dime.
Why? There are a lot of reasons, but one big one, according to the study’s findings, is that people don’t know how retirement plans work. Another is the perception is that people can’t afford retirement savings. Still others include some of the statements I see in reader emails, often repeated.
Here are five simple facts about retirement savings. Each one of these hammers down on a myth I often hear about retirement savings. ( Continue… )
Where do you want to be a year from now?
Would you like to have some debts paid off? Maybe you dream of having finished an art project or a major home improvement project. Perhaps you dream of having a social circle to participate in.
We all have things we’d love to accomplish, things that are a bit more real than a daydream but still far away from reality. I certainly have a long list of those things.
Lately, I’ve been trying a new approach for these types of dreams and I’ve found that it works out really well, at least for me. In fact, I’ve had enough success with it that I feel like sharing it with you.
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I call it “The Year-Long Plot.” It’s pretty straightforward. All you do is plot out a detailed plan, week by week, of how you’ll move from where you’re at right now to the goal you want to achieve in one year. ( Continue… )
“The economy, as measured by gross domestic product, can be expected to grow at an annual rate of about 3 percent over the long term, and inflation of 2 percent would push nominal GDP growth to 5 percent, Buffett said. Stocks will probably rise at about that rate and dividend payments will boost total returns to 6 percent to 7 percent, he said.”
Let’s assume that Buffett is exactly right with his predictions. What does that mean for retirement savings?
First, we have to make a few assumptions. Let’s assume that you’re going to want to be able to withdraw 60% of your salary each year for 25 years out of your retirement savings when you retire, so we’ll use that as a target amount. ( Continue… )
We are emotional people. We react to situations with a wide range of emotions: joy, fear, anger, mirth.
On the other hand, money is about as non-emotional as you can get. Money is simply a method of exchange between goods and services.
The problem that most of us run into when it comes to personal finance is that we inject emotion into their financial choices.
People spend money on things that make them feel good. When we want something, we’re feeling an emotional pull toward an item.
RECOMMENDED: Can you manage your money? A personal finance quiz.
When we feel that emotional pull, we give the seller the upper hand. They have the power to set the price. We might shop around in some situations, but if it’s something like a house where there are limited options, we’re often carried along for the ride.
The most powerful tool we have for minimizing our spending is to remove emotion and raw impulse from the equation.
How can you do that? There are several techniques you can use, but they all boil down to a few things. ( Continue… )
There are a lot of tactics that work well in both the personal finance world and the business world. Cutting your spending works in both worlds if you do it in an intelligent way. Investing in resources that will last for a long time is a good tactic in both worlds.
However, there are things that work in business finance that don’t really work in personal finance.
The biggest one, from my perspective, is the concept of leverage. Leverage, for those unaware, refers to any technique that can be used to multiply gains – but, if it fails, it also multiplies losses. Examples of leverage include borrowing money and using derivatives.
Here’s an example of what I’m talking about. Let’s say you borrow $1,000 with the intent of putting it in the stock market. You put $1,000 of your own money with it and invest it in stocks. ( Continue… )