Bank Accounts Everyone Should Have

While a savings account and a checking account provide the foundation for managing finances, several other accounts should be considered.  Since all most people don’t put all their financial documents in one drawer, all your money shouldn’t be in one account. The various recommended accounts include:

  • Emergency savings for funds when you face financial difficulties that cannot be resolved in others ways. An amount equal to 6 to 12 months of living expenses is often recommended.  Consider storing these funds in an “out of sight, out of mind” location, such as with an online bank account.
  • Regular savings for short-term needs, such as home repairs, vacation, auto maintenance, or new furniture. Be sure to have a goal and plan for these funds.
  • Household checking account for paying current bills. All income is deposited in this account with automatic transfers for regular bills and amounts to various savings accounts. Extra funds in this account can go to the regular savings fund.
  • Spouse checking accounts to pay expenses for which each person has responsibility as well as work-related costs.
  • Health savings account (HSA) for tax-free payments of medical-related expenses. HSAs are especially of value with high-deductible insurance plans.
  • The extra fund involves the “fun money” leftover after all bills are paid, savings is under control, and all accounts have a balance at an appropriate level. This money is the reward for spending wisely.

If all your accounts are at the same financial institution, using the online dashboard will allow you monitor your balances.  Or, if you use different banks, websites or apps such as Mint.com can be used to view your overall financial situation.

For additional information on needed bank accounts, click here.

Teaching Suggestions

  • Have students design a personal plan for the various bank accounts they will use to to monitor their spending and saving.
  • Have students talk to others about methods used to monitor spending and to maintain an appropriate level of saving.

Discussion Questions 

  1. What are the benefits and drawbacks of the system discussed in this article?
  2. Describe actions to monitor spending and saving using online banking and apps.

 

Categories: Chapter 1, Chapter 2, Chapter 4, Financial Planning, Savings | Tags: , , | Leave a comment

The “Bank of Mom and Dad” for Mortgages

Which source of home-buying finances has “millions of satisfied customers, has never asked for a bailout, and really cares about its borrowers”?  It’s the the “Bank of Mom and Dad.”

Parents and relatives are a common source of funds when buying a home.  With a difficult housing market, this financial assistance for young homebuyers is often necessary.  According to a study by Legal & General, the “Bank of Mom and Dad” is the seventh largest source of home-buying funds. The top six were Wells Fargo, JP Morgan Chase, Quicken Loans, Bank of America, U.S. Bancorp, and Freedom Mortgage.

The downside of this trend is that many parents are postponing, and even endangering, their retirement years to provide financial assistance to their children. Before accepting funds from family members, consider these factors:

  • Assess the current and future financial impact for family members involved.
  • Evaluate the tax situation and costs that might be involved.
  • Determine potential implications for other family members.
  • Consider other sources and possibilities, such as making it a loan rather than a gift’ also investigate government or private programs available to lower-income or first-time home buyers.

 For additional information on family assistance for home buying, go to:

Link #1

Link #2

Teaching Suggestions

  • Have students create a video presentation to demonstrate the positive and negative aspects of parents providing funds to their children for buying a home.
  • Have students conduct research online and with financial institutions to determine programs that are available to lower-income or first-time home buyers.

Discussion Questions 

  1. How might providing funds to children for buying a home affect the financial and personal situation of parents and other family members?
  2. Describe actions to take before parents provide funds to their children for buying a home.
Categories: Chapter 9, Home Buying | Tags: , | Leave a comment

Non-Financial Goals to Save Money

While many savings, investment, and retirement plans are available to achieve financial goals, other actions are possible to achieve personal ambitions. Financial advisors and counselors also recommend these actions:

  • Learn a new skill, which can result in time away from shopping or expanding your career and income potential.
  • Invest in friendships that does not involve a major monetary requirement as many free and low-cost activities are available.
  • Participate in a reading challenge at your local library or through a community organization.
  • Create art by getting involved with writing, photography, drawing, or sculpture through a community-based group.

Many activities are available to invest your time and energy without spending much money.

For additional information on non-financial goals, click here.

Teaching Suggestions

  • Have students list free and low-cost activities that can enhance personal and career development.
  • Have students talk to others for additional suggestions for free and cost-cost personal and career development activities.

Discussion Questions 

  1. What factors might a person consider when selecting an activity to enhance personal and career development?
  2. Describe personal development activities that could result in enhanced career and income potential.
Categories: Career, Chapter 1, Skills Development, _Appendix B | Tags: , | Leave a comment

What is FinTech?

Technology impacts every aspect of personal finance. FinTech (financial technology) involves apps, software, and other innovations for banking and financial activities, which includes PayPal, Venmo, and cryptocurrencies, such as Bitcoin. FinTech companies use online activities, mobile devices, software, apps, and cloud services to for financial transactions. Over 1.5 billion people around the world do not have access to formal banking. FinTech can provide these unbanked people with financial services through easy-to-use technology.

The main categories of FinTech for consumers are:

  • Crowdfunding, such as Kickstarter and GoFundMe, which allows individuals or businesses to go directly to potential investors for funding.
  • Blockchain and cryptocurrency, such as Bitcoin, with improved verification for financial transactions.
  • Mobile payments through a smartphone.
  • Insurance coverages provided by online start-ups.
  • Robo-advising provides portfolio investment recommendations and allocations based on algorithms. For stock-trading, investors buy and sell stocks using apps such as Robinhood and Acorns.
  • Budgeting apps, such as Mint and You Need a Budget (YNAB), monitor and plan spending.

For additional information on FinTech, click here.

Teaching Suggestions

  • Have students talk to several people to obtain information about their experiences with FinTech products.
  • Have students create an app prototype for a proposed FinTech product to help people make better financial decisions.

Discussion Questions 

  1. What might financial literacy and money management activities be improved with FinTech?
  2. Describe concerns that might be associated with expanded used of FinTech.
Categories: Chapter 1, Chapter 4, Financial Planning, Financial Services | Tags: , , | Leave a comment

National Social Security Month

In April, the Social Security Administration celebrated National Social Security Month, and highlighted the agency’s mission and purpose.

The agency is constantly expanding its online services to give you freedom and control in how you wish to explore it.

For example, you can go online to:

  1. Find out if you qualify for benefits;
  2. Use benefit planners to help you better understand your Social Security protection;
  3. Estimate your future retirement benefits to help you plan for your financial future;
  4. Retire online, or apply for Medicare quickly and easily; and
  5. Open your personal my Social Security to help you stay in control of your Social Security record.

If you currently receive benefits, you can:

  1. Change your address and phone number;
  2. Get a benefit verification letter to prove you receive Social Security benefits, Supplemental Security Income (SSI), or Medicare;
  3. Start deposits or change your direct deposit information at any time;
  4. Get a replacement Medicare card; and
  5. Get a replacement Benefit Statement (SSA-1099 or SSA-1042S) for tax purposes

For more information, click here.

Teaching Suggestions

  • Ask students if they have a Social Security account. If not, encourage them to establish their account, regardless of their age.
  • Make students understand that Social Security is not just for people over 65. The program provides benefits to retirees, survivors, and disabled persons.

Discussion Questions

  1. Why is it important to open a mySocial Security account, even if you are in your teens?
  2. What are the pros and cons of collecting Social Security at age 62? Under what circumstances would you choose to collect benefits before full retirement age?
Categories: Chapter_14, Retirement Planning, Savings | Tags: , , | Leave a comment

Monitor Your Earnings

You work hard for your money. You’re saving and planning for a secure retirement. Now you need to make sure you’re going to get all the money you deserve. Regularly reviewing your Social Security earnings record can really pay off, especially when every dollar counts in retirement.  If an employer did not properly report just one year of your work earnings to Social Security, your future benefit payments from Social Security could be nearly $100 per month less than they should be. Over the course of a lifetime, that could cost you tens of thousands of dollars in retirement or other benefits to which you are entitled.

It’s ultimately the responsibility of your employers — past and present — to provide accurate earnings information to Social Security so you get credit for the contributions you’ve made through payroll taxes. But you can inform Social Security of any errors or omissions. You’re the only person who can look at your lifetime earnings record and verify that it’s complete and correct.

So, what’s the easiest and most efficient way to validate your earnings record?

  • Visit Social Security websiteto set up or sign in to your own my Social Security account;
  • Under the “My Home” tab, select “Earnings Record” to view your online Social Security Statement and taxed Social Security earnings;
  • Carefully review each year of listed earnings and use your own records, such as W-2s and tax returns, to confirm them;
  • Keep in mind that earnings from this current year and last year may not be listed yet; and
  • Notify Social Security Administration right away if you spot errors by calling 1-800-772-1213.

For More information, click here.

Teaching Suggestions

  • Ask your students if they regularly monitor their earnings with Social Security Administration. If they don’t, encourage them to review their earnings every year.
  • Help students understand that because of longer expectancies, the full retirement age is being increased in gradual steps until it reaches 67.

Discussion Questions

  1. What can you do if an employer did not properly report your earnings to Social Security?
  2. Why is it important to create a mySocial Security account if you are 18 or older and have a Social Security number, valid e-mail, and U.S. mail address?
Categories: Chapter_14, Retirement Planning | Tags: , | Leave a comment

Personal Finance Hacks

Hacks – skills and shortcuts – are used in many life settings.  For personal finance, here are some tips that can help stop money leakages:

  • Only use credit cards with financial advantages, such as cashback; always pay off credit card balances on time.
  • Making weekly payments, instead of monthly, helps to save interest and reduces the amount owed faster.
  • Pay off loans/debts with the highest interest rates first.
  • You might consider paying off a debt with another loan if the new loan has a much lower interest rate.
  • When shopping online, leave the item in the cart for several days or weeks; the price may be lower or you may decide you don’t really need the item.
  • Consider bulk purchases with friends to qualify for free shipping.
  • Take advantage of seasonal sales.
  • Unsubscribe from email offers.
  • Avoid household clutter to save time and money.
  • Cook your own meals; online videos and recipes offer fast, easy meals.
  • Talk to others for investment advice.

For additional information on personal finance hacks, click here.

Teaching Suggestions

  • Have students tell their personal experience with tech, travel, or personal finance hacks.
  • Have students create a video to dramatize various personal finance hacks.

Discussion Questions 

  1. How would you decide if a personal hack will be of value to you?
  2. Describe actions that might be used to communicate personal finance hacks to others.
Categories: Chapter 1, Chapter 3, Chapter 6, Chapter 7, Chapter 8, Financial Planning, Wise Shopping | Tags: , | Leave a comment

Avoid Tax Refund Advances

Each year, more than 1.5 million taxpayers obtain refund anticipation loans (RALs).  This year, the number may be higher as a result of the government shutdown.  While, RALs provide faster access to your money, they come with high fees and should only be used as a last resort.  These “cash advances” are a potential for scams; before using these loans, take these actions:

  • Assess the cost. While some national tax chains promote this service as a “free” cash advance, fees may apply for applying for the advance, checking your credit, and transferring the money to you. Costs for your refund advance check range from $29 to $65.  If your refund is on a prepaid debit card, there will likely be additional fees.
  • Beware of loan terms based on timing. Additional charges may occur if your refund is delayed.
  • Compare other options. Seek less expensive, small-dollar, short-term loans from a community bank or credit union, or a zero-percent credit card. A $35 charge to defer a $350 tax preparation fee for two weeks has an APR of 174 percent.
  • To avoid late fees for bills, contact your creditors. Utility companies and medical providers may offer no-cost extensions or no-cost payment plans.

Always be sure you are doing business with a reputable tax preparer. Check credentials and references. Avoid tax preparers who charge fees based your refund amount, or who deposit your refund in their bank account. Another fraudulent activity is filing false information to increase the amount of the refund.

For additional information on tax refund advances, click here.

Teaching Suggestions

  • Have students search online for costs for refund anticipation loans.
  • Have students prepare a video presentation on avoiding refund anticipation loans.

Discussion Questions 

  1. What advice would you give a person planning to obtain a refund anticipation loan?
  2. How might community organizations and government agencies assist people who are considering a refund anticipation loan?
Categories: Chapter 3, Chapter 4, Chapter 6, Financial Services, Frauds and Scams, Taxes | Tags: , , | Leave a comment

Deceptive Stem Cell Therapy

People spend billions of dollars each year on health-related products and treatments that don’t deliver. People who buy them are cheated out of their money, their time, and even their health.

The Federal Trade Commission (FTC) reports  that California-based Regenerative Medical Group, Telehealth Medical Group, and Dr. Bryn Jarald Henderson, the founder of both companies, sold false hope at high prices.

These companies and Dr. Henderson used social media and websites to promote stem cell therapy for all kinds of health issues affecting older adults and children. Supposedly, it could treat and cure diseases and health conditions such as Parkinson’s disease, autism, dementia, depression, multiple sclerosis, cerebral palsy, traumatic brain injury, heart disease, macular degeneration, chronic kidney disease, osteoarthritis, and stroke. Dr. Gunderson  charged up to $15,000 for their initial stem cell therapy and up to $8,000 for follow-up treatments.

But, according to the FTC, these claims were not backed up by any scientific studies and, in fact, no studies have established that stem cells cure, treat, or reduce the severity of diseases or health conditions in humans. With the exception of a few FDA-approved treatments, stem cell therapy is still largely experimental.

Are you — or someone you know — thinking about stem cell therapy?  If so,

  • Be skeptical about amazing health claims.
  • Don’t trust a website just because it looks professional, uses medical terms, or has success stories from “real people.”
  • Talk to your health care professional before you consider any medical treatment.

For more information, click here.

Teaching Suggestions

  •  Help students understand that health information, whether online or in print, should come from a trusted source.
  • Let students make a list of the richest and most reliable sources of health information and share it with the class.

Discussion Questions

  1. Why is it important to seek a second or even third opinion from a qualified health care provider before trying experimental medical procedures?
  2. What can the FTC and other federal/state governmental agencies do to prevent such businesses to make deceptive treatments.
Categories: Chapter 9, Frauds and Scams, Health Insurance | Tags: , , | Leave a comment

Motivation for Saving

While you might think that saving for college, retirement, or buying home are the reasons Americans save, according to a recent survey, travel was reported as the top priority.  In a study of 2,500 adult Americans representing varied demographic, geographic, economic, and social groups, 45 percent of respondents set aside money for traveling.  This was especially true among younger respondents, who prefer travel experiences over savings to buy a home.

After travel, the main priorities for saving by Americans are:

  • for an emergency fund (37 percent)
  • for retirement (30 percent)
  • to buy a house (21 percent)
  • to buy a car, truck or motorcycle (20 percent)

For additional information on saving priorities, check out these two resources:

Article #1

Article #2

Teaching Suggestions

  • Have students conduct a survey among people they know to determine the main reasons for saving.
  • Have students talk to others to obtain ideas for building a person’s savings account.

 Discussion Questions 

  1. What do you believe are reasons people prefer saving for travel over other financial goals?
  2. Describe other actions that might be taken to motivate people to build their savings?
Categories: Chapter 2, Chapter 4, Financing a Home, Savings | Tags: , , | Leave a comment

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