Chapter 2

Financial advice for singles

Posted on March 25, 2015 by Melissa Hart

Since they usually have fewer financial responsibilities, singles have a greater opportunity to save for a future family, advanced career training, or long-term financial security (retirement). Singles are also able to share their time (volunteering), talents (teaching others skills/knowledge they possess), and treasures (financial donations) to address local and global concerns related to education, hunger, safe water, health care, job training, and other social issues. Single people, as well as others, may take advantage of free community events, doing volunteer work, and using barter/exchange platforms to share recreational facilities, events, and experiences.

For additional information on financial advice for single, click here:

Teaching Suggestions

  • Have students talk with others who are involved in addressing various social concerns through volunteering and other community service activities.
  • Have students survey several people to determine various actions that might be considered for achieving financial goals.

Discussion Questions 

  1. How does your life situation affect your financial responsibilities and spending?
  2. What short-term and long-term financial goals are you planning for at this point in your life?
Categories: Chapter 2, Chapter 6, Financial Planning, Wise Shopping | Tags: , , | Leave a comment

The Seven Baby Steps (Dave Ramsey)

Posted on February 18, 2015 by Melissa Hart

“Get out of debt the same way you learned to walk–one step at a time.”

This article describes Dave Ramsey’s seven steps that anyone can take to get out of debt and begin to manage their personal finances.  These seven basic principles have been taught by Mr. Ramsey via radio, books, Financial Peace University, live events, and online.  Listed below are the seven steps discussed in this article.  Note:  You can get more information about each step by clicking on the “Learn More” tab.

  1. Begin by creating a $1,000 emergency fund.
  2. Pay off all debt using the debt snowball .
  3. Save 3 to 6 months of expenses in a savings account.
  4. Invest 15 percent of household income into Roth IRAs and pre-tax retirement accounts.
  5. Create a college funding plan for your children.
  6. Pay off your home mortgage early.
  7. Build wealth and give.

For more information, click here. 

Teaching Suggestions

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

  • Ask students visit the Dave Ramsey website.
  • Discuss some or all of the seven baby steps described in this article. Reminder:  Students can get more information by clicking on the “Learn More” tab.

Discussion Questions

  1. How can the seven baby steps help you manage your personal finances?
  2. Do the steps in this article make you want to change your priorities and what’s important in your life? Justify your answer.
Categories: Budget, Chapter 1, Chapter 2, Chapter 5, Debt, Financial Planning, Home Buying, Savings | Tags: , , , | Leave a comment

Newly Married with $52,000 of Debt

Posted on February 14, 2015 by Melissa Hart

My Wife and I Never Discussed Money Before Getting Married–and Ended Up with $52,000 of Debt

Prior to tallying up our debt, we’d talked about traveling internationally, starting a family, and, some day retiring comfortably. There was so much we wanted out of life, but . . .”

This is an excellent article that describes what can happen when a soon-to-be-married couple doesn’t talk about finances.  Fortunately, the two people in this article–Deacon and Kim Hayes–realized they had a problem and then took steps to get their finances back on track.

Specific steps this couple took can make a big difference over time.  Among the suggestions included in this article are:

  • Writing down all your assets, debts, income, and expenses.
  • Prepare a budget and review each item for opportunities to save money.
  • Replacing a newer, expensive car with an older car.
  • Selling unwanted or unneeded items online.
  • Using any extra money to repay debt.
  • Establishing an emergency fund.
  • Saving and investing a specific amount each month.

Consider This:  Deacon Hayes–the author of this article–became a financial planner and now shares his story with his clients.

For more information, Click Here. 

Teaching Suggestions

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

  • Discuss why engaged couples need to discuss their finances before they get married.
  • Stress how easy it is to get in debt and how hard and how much time it takes to get out of debt.

Discussion Questions

  1. Assume you are dating someone who seems to spend more than they make. In this situation, would you continue to date this person?  Explain your answer.
  2. One of the suggestions included in this article is that people write down their assets, debts, income, and expenses. How can this suggestion help a young-married couple plan their financial future?
  3. Assume you have credit card debts and an automobile loan that total $75,000. What specific steps can you take to reduce or eliminate your debt?
Categories: Budget, Chapter 1, Chapter 2, Chapter 5, Chapter_11, Debt, Financial Planning, Financial Planning Topics, Investments, Savings | Tags: , , , , , | Leave a comment

Wedding Costs and Marriage Success

Posted on February 7, 2015 by Melissa Hart

The average cost of a wedding is nearly $30,000 and the average engagement ring cost is about $5,500.  However, a high-cost wedding does not ensure a long-term marriage.  A study by two economists at Emory University concluded that “marriage duration is inversely associated with spending on the engagement ring and wedding ceremony“.

Other findings of the research included:

  • spending between $2,000 and $4,000 on an engagement ring was associated with a 1.3 times greater chance of divorce compared to spending between $500 and $2,000.
  • spending between $2,000 and $4,000 on the engagement ring was associated with two to three times the probability of reporting being stressed about wedding-related debt relative to spending between $500 and $2,000.
  • spending less than $1,000 on the wedding is associated with an 82 to 93 percent decrease in the chance of reporting being stressed about wedding-related debt relative to spending between $5,000 and $10,000. 

While money is important in marriage and life, being materialistic can result in relational difficulties.

For additional information on the wedding costs and marriage success, click here:

For the research paper, click here:

Teaching Suggestions

  • Have students research actions that may be taken to reduce wedding costs.
  • Have students interview people about their experiences related to planning a wedding. 

Discussion Questions 

  1. What financial difficulties might result from overspending for a wedding?
  2. How might a couple reduce weddings costs?
  3. Describe actions that might be taken to as alternatives for an expensive wedding.
Categories: Chapter 1, Chapter 2, Chapter 6, Debt, Financial Planning, Wise Shopping | Tags: , , | Leave a comment

What is your Personal Savings Rate?

Posted on January 31, 2015 by Melissa Hart

The average personal savings, as a percentage of income, in the United States, has averaged about five percent.  To calculate your own personal savings rate, take these steps:

  1.  Total your savings for the year, including non-retirement savings, personal retirement contributions, and employer retirement contributions. The amount could be negative if you took on more debt than the total of your savings.
  1. Determine your total income by adding your take-home pay (after subtracting income taxes) to the amount your employer contributed to your retirement account.
  1. Calculate the personal savings rate by dividing (1) by (2).

For additional information on personal savings rates, click here.

Also, to see information about savings rates and other statistics, click here.

Teaching Suggestions

  • Have students calculate their person savings rate.
  • Have students interview several people to determine actions that are commonly taken to increase a person’s savings rate. 

Discussion Questions 

  1. What actions might be taken to increase savings?
  2. Describe financial difficulties that may occur when a person has inadequate savings.
Categories: Chapter 2, Chapter 4, Financial Planning, Savings | Tags: , | Leave a comment

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

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