Chapter 2

5 Questions to Help You Get Your Financial Life in Order

Posted on January 10, 2015 by Melissa Hart

“Rather than making resolutions . . . try answering the following five questions today, with a plan to answer them again when 2015 comes to a close.”

In this MarketWatch article, Chuck Jaffe poses the following 5 questions to help people gauge their financial health.

  1. What’s your net worth?
  2. How many times your current (or last) salary do you have in retirement savings?
  3. What’s your debt-payment burden?
  4. If you don’t see the next New Year, what would happen to your family financially?
  5. When reviewing your finances, what is the single thing that makes you feel the best? The worst?

In addition to the questions, Mr. Jaffe also provides information that can be used to improve a person’s answers  to each question with the goal of helping people manage their personal finances and improve their financial life.

For more information, click here.

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss each question with your students and explain how their answers can impact their personal financial decision making and financial security?
  • Ask students to answer one or more of the questions in this article as an assignment.

Discussion Questions

  1. Why is your net worth, salary, savings, and debt-payment burden important?
  2. What implications does the question “If you don’t see the next New Year, what would happen to your family financially?” have on your financial planning activities?
  3. When you look at your finances, what makes you feel good and what makes you feel bad? Based on your answer, what can you do to change your answers to this question?
Categories: Chapter 2, Chapter_11, Financial Planning, Savings, Uncategorized | Tags: , , | Leave a comment

Plunging Crude Prices Hammer Energy Companies

Posted on December 17, 2014 by Melissa Hart

“A decision by OPEC this week to maintain current levels of oil production is hammering major energy companies in the U.S. and abroad.”

This article explores the winners and losers of lower energy prices.  For consumers, lower energy and gas prices means increased discretionary funds for purchasing consumer goods including food, clothes, electronics, and presents for friends and relatives during the holiday season.  Also, both large and small retailers benefit because consumers have more money to spend.  And airlines, package delivery services, cruise lines, and other companies are spending less on fuel.

The disadvantages of lower energy and gasoline prices are already causing the stock prices of big oil companies including Chevron, ConocoPhillips, Exxon Mobil, Marathon Oil, and British Petroleum to decline.

For more information go to http://finance.yahoo.com/news/plunging-crude-prices-hammer-energy-companies-123639239–finance.html

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss the impact of the cost of energy and gasoline on a consumer’s budget.
  • Describe alternatives uses for the savings that result from lower energy and gasoline prices.

Discussion Questions

  1. What is the current price for a gallon of gasoline? How does this compare with the cost 6 months ago?  What impact does this have on your spending patterns and your personal budget?
  2. While you are saving money at the pump, the big question may be how you plan to use the savings. Are there alternatives to spending the money on clothes, entertainment, or holiday gifts?
  3. Now that the value of energy company stocks has declined, would you invest in a company like Exxon Mobil or Chevron? Explain your answer.
Categories: Chapter 2, Chapter 6, Chapter_12, Investments, Wise Shopping | Tags: , , , | Leave a comment

Great Ways to Save

Posted on December 13, 2014 by Melissa Hart

“Can running shoes save you money?  Yes – and we have six more ideas to help you save.”

Let’s begin with the answer to the above question.  As the article points out, buying running shoes can save you money because running reduces the risk of heart disease and stroke, lowers blood pressure, and can help prevent other health problems that can cause huge medical bills and even loss of employment or your life.

The above is just one of the suggestions in this article that describes ways to increase savings and provide additional money for investments by taking simple steps that you can make in your everyday life.  Additional suggestions (and the reasons behind the suggestions) include maxing out your savings, saving spare change, choice of gasoline for your car, getting the best value when choosing a hotel, encouraging your kids to save, and bundling communication bills.

For more information go to http://money.cnn.com/2005/06/02/pf/smartest_saving_0507/index.htm

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Stress the fact that savings can be easier than you think by taking advantage of everyday opportunities to increase the amount of money you save and invest.
  • Use the example in the article about how increasing the amount of money contributed to your 401(k) retirement account can significantly increase the amount available when you retire.
  • Note: This article is just one of a series of articles in the Money series “50 Smartest Things to Do With Your Money.”  You may want to (or have your students) visit this web site for other articles on money management.

Discussion Questions

  1. Some people say that saving small amounts of money doesn’t really help accomplish their long-term financial goals. Do you agree or disagree?
  2. How can one of the suggestions in this article help you increase the amount you save or invest?
Categories: Chapter 2, Chapter_11, Investments, Opportunity Costs | Tags: , | Leave a comment

Dangers of not teaching children about money management

Posted on December 3, 2014 by Melissa Hart

Financial difficulties in a household can create anxiety for children. To minimize these apprehensions, parents should begin communicating about money at an early age to help children grow up to be financially literate adults.  Rather than allowing the youngsters to arrive at their own conclusions, a proactive approach can help the children avoid the mistakes of their parents. Without an open discussion, children will likely grow up lacking financial knowledge.

Suggested actions for developing good money habits among children are:

  • teach them to budget since this is the foundation of successful personal finance.
  • develop wise spending decisions for wise choices and avoiding impulse buying.
  • create an understanding of the rewards of work with a system of work-for-pay chores, which go beyond basic required chores, such as a clean room.
  • develop an appreciation for delayed gratification with saving for a goal.

For additional information on wise money management for children, go to:

http://www.bankrate.com/finance/smart-spending/the-danger-of-not-teaching-kids-about-cash.aspx?ec_id=cmct_02_comm_PF_mainlink

http://www.bankrate.com/finance/financial-literacy/4-money-lessons-for-children-to-master-1.aspx

 

Teaching Suggestions

  • Have students research various actions that might be taken to better involve children in family money management decisions.
  • Have students create interview questions that they might ask when trying to determine if parents are teaching their children wise money management habits.

 Discussion Questions 

  1. Describe various problems associated with not involving all household members in family money management activities.
  2. What actions would you take to teach young people about wise money management?
Categories: Chapter 1, Chapter 2, Financial Planning | Tags: , | Leave a comment

Trick yourself into saving

Posted on November 26, 2014 by Melissa Hart

Saving money can be automatic with some simple actions that would reduce your monthly spending.  Some actions, which can include lowering your monthly cash outflows by as much as $400, include:

 

  • Using a programmable thermostat which can be used to automatically raise and lower the temperature in your home, resulting in energy savings.
  • Increasing insurance deductibles for your home and auto insurance which will likely result in an annual savings of several hundred dollars.
  • Practicing less aggressive driving; using a constant speed can save money on fuel costs.
  • Seeking out ways to reduce your communication bills, such as using basic cable along with streaming video on your computer. Also, using a free texting app on your phone.
  • Using a refillable water bottle can save hundreds of dollars by not buying bottled water.

 

To ensure that you actually save this money, each month, have funds automatically moved into a savings account or investment program.
For additional information on saving, go to:

http://www.bankrate.com/finance/video/saving-money/trick-yourself-into-saving.aspx#ixzz3IKDG71pN

 Teaching Suggestions

  • Have students conduct online research to determine various actions to reduce spending and increase savings.
  • Have students interview several people to determine various actions that might be considered for reducing spending.

Discussion Questions 

  1. What actions have you taken to reduce spending and increase savings?
  2. Explain short-term and long-term benefits of reduced spending.
Categories: Car Insurance, Chapter 2, Chapter 6, Financial Planning, Health Insurance, insurance, Purchasing Strategies, Savings, Wise Shopping | Tags: , | Leave a comment

The Credit Card Mistake That’s Costing Millenials

Posted on September 17, 2014 by Melissa Hart

“A new survey from BMO Harris Bank shows consumers are confused on how credit card balances affect credit scores. . .”

While using a credit card is one of the easiest ways to build credit, there are plenty of misconceptions about how best to do that.  According to this survey

  • 39 percent of Millennials—people between ages 18 to 34—believe carrying a balance increases their credit scores. In fact, carrying a balance does not improve credit scores and can actually hurt scores.
  • 23 percent of those surveyed indicated that a person’s educational level affects his or her credit score. In fact, a credit score is based only on the information in your credit report, and educational level is not included in your credit report.
  • 27 percent of those surveyed thought checking their credit scores would lower their credit score. In fact, the opposite is true:  If you regularly check your credit scores, it’s likely you’ll make financial decisions that will improve your credit score.

For more information go to http://finance.yahoo.com/news/credit-card-mistake-thats-costing-103040745.html

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss why a credit score is important.
  • Stress the importance of “managing” credit card debt.

Discussion Questions

  1. What affect will your credit score have on the finance charges you pay for credit purchases?
  2. How can your credit score affect your ability to purchase a home or an automobile?
  3. Assume you have a low credit score and have been turned down for a home mortgage. What steps can you take to increase your credit score?
Categories: Chapter 2, Chapter 5, Chapter_11, Credit Cards, Credit Mistakes, Credit Scores | Tags: , , , | Leave a comment

Six Bank Fees to Avoid

Posted on September 6, 2014 by Melissa Hart

Each year, it seems that banks are reporting ever higher profits.  How do they make so much money?  By charging customers service fees!

Here is a list of six fees that you should avoid:

  1. ATM Fees-It’s important to know where ATM’s are located that are in your network. This will help you avoid a charge to use another bank’s ATM.
  2. Account Fees-Check the fine print. Is there a fee if your balance falls below a certain limit? The limit fees are monthly and can really add up.
  3. Overdraft Fees-Know how much money that you have to spend. Budget wisely and make sure that you have a cushion in your checking account, in case of unexpected expenses.
  4. Fancy Checks-How cute! How much do those Frozen Personalized checks cost? The reality is that the checks and the shipping costs can be very expensive. There are numerous options to acquire cheaper checks (Sam’s club, BJ’s, Costco, Walmart).  One more thing to consider:  checks are used much less frequently today, so, that box of Frozen checks might last a really long time, make sure you like the design.
  5. Credit Reports-You can get a copy of your credit report for free from AnnualCreditReport.com, so, don’t pay for one.
  6. Loan Interest– As an incentive, banks offer a discount by utilizing more than one of their services. You might get a lower rate, if you agree to direct deposit, in exchange for a reduced interest rate on your loan.

Bottom Line: Do your homework when it comes to bank fees.  There are many ways to avoid spending money on unnecessary fees.

For more information:  http://www.wisebread.com/are-you-paying-these-6-unfair-banking-fees

Teaching points:

  • Discuss these six fees with your students. Survey how many have paid at least one of these fees.
  • Have students research at least two local banks and report back on the account fees that each bank charges.

Discussion items:

  1. Do you believe that any one demographic pays more fees than another? Why?
  2. What are some other ways that people can avoid these fees?
Categories: Bank Fees, Chapter 2, Chapter 4 | Tags: , , | Leave a comment

Managing someone else’s money

Posted on July 5, 2014 by Melissa Hart

Millions of people serve as fiduciaries, someone who manages money or property for another person who is unable to do so. This responsibility provides caring assistance while also protecting the person from potential scams and fraud.  Many older Americans experience declining capacity to handle finances, which can make them vulnerable.  The main responsibilities of a fiduciary are to: (1) act in the person’s best interest, (2) manage money and property carefully, (3) keep money and property separate from own, and (4) maintain good records.

The Consumer Financial Protection Bureau (CFPB) recently published four guides to help financial caregivers, particularly those who handle the finances of older Americans.  These guides are designed for those who serve as agents with power of attorney, a court-appointed guardian, a trustee or as a government fiduciary, such as a Social Security payee.

The guides will assist financial caregivers as they: (1) plan and implement their duties, (2) attempt to avoid scams and financial exploitation, and what to do if the person is a victim, and (3) require additional information; the guides tell where to go for help.

For additional information on a managing someone else’s money, go to:

http://www.consumerfinance.gov/managing-someone-elses-money

Click to access 201306_cfpb_msoa-participant-guide.pdf

Teaching Suggestions

  • Have students talk to someone who manages money on behalf of someone else.  Obtain information about the activities and concerns they have encountered.
  • Prepare a list of actions that might be taken to avoid scams targeted at older consumers and other vulnerable audiences.

Discussion Questions   

  1. What are situations that might require a person to manage the money of another person?
  2. What are examples of frauds and scams aimed at older consumers?
  3. How might a person avoid frauds and scams?
Categories: Chapter 2, Chapter 6, Chapter_14, Financial Planning, Frauds and Scams, Trusts | Tags: , , , , | Leave a comment

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