Financial Planning

Learning How Money Works

Posted on December 24, 2016 by Melissa Hart

 Many people grow up without learning how money works, which usually results in difficulties.  Studies reveal that less than one-fourth of millennials have basic financial knowledge.

A vital starting point in the learning process is admitting that you don’t know.  For example, most people do not know that credit scores show if a person has paid his or her bills on time and how much has been borrowed.  Most people are not aware that credit reports often contain incorrect information, or how to check for errors.

Credit card rewards may seem like a good deal but only is you pay your bill on time every month.  If you don’t, late fees and interest charges can more than outweigh any reward point benefits.

These are just two areas on which many young people, as well as others, lack a basic understanding. However, a wide variety of sources are available to add to your knowledge.

For additional information on learning how money works, click here.

Teaching Suggestions

  • Have students conduct research to determine the financial knowledge among various age groups.
  • Have students create a video presentation with suggestions for improving financial knowledge.

Discussion Questions 

  1. Why are people often not informed on basic money topics?
  2. What are the most common topics that on which many people lack basic financial knowledge?
Categories: Chapter 1, Chapter 2, Financial Planning | Tags: , | Leave a comment

Financial Fears

Posted on November 19, 2016 by Melissa Hart

According to the Northwestern Mutual Planning and Progress Study on financial well-being, Americans have several worries.  Based on interviews with 2,646 adults, 85 percent of respondents reported financial anxiety in some form.  Approximately two-thirds of those surveyed indicated that financial anxiety negatively affected their health.  In addition, 36 percent of those responding had increasing levels of financial anxiety over the past three years.

In the study, the greatest financial fears were:

  1. Having an unplanned emergency
  2. Having unplanned medical expenses
  3. Having insufficient savings for retirement
  4. Outliving retirement savings
  5. Becoming a financial burden
  6. Not able to afford healthcare
  7. Loss of a job
  8. Identity theft
  9. Extended unemployment
  10. Death/loss of primary wage earner
  11. Having poor credit
  12. Having to file bankruptcy
  13. Being a victim of a financial scam

To address these concerns, the study recommends the following actions:

  • build an emergency fund for unplanned expenses
  • invest properly for retirement and long-term financial security
  • review your finances regularly to revise goals and savings activities

These actions can help to reduce the financial anxiety reported by a large portion of Americans.

For additional information on financial anxiety, go to:

Link #1

Link #2

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

Overhauling Debt Collection Market

Posted on November 5, 2016 by Melissa Hart

New Protections Would Limit Collector Contact and Help Ensure the Correct Debt is collected

The Consumer Financial Protection Bureau (CFPB) is considering to overhaul the debt collection market by capping collector contact attempts and by helping to ensure that companies collect the correct debt.  Under the proposals being considered, debt collectors would be required to have more and better information about the debt before they collect.  As they are collecting, companies would be required to limit communications, clearly disclose debt details, and make it easier to dispute the debt.  When responding to disputes, collectors would be prohibited from continuing to pursue debt without sufficient evidence.  These requirements and restrictions would follow the debt if it were sold or transferred.

For more information about the proposals under consideration, click here.

Teaching Suggestions

  • Ask students what federal laws already prohibit debt collectors from harassing, oppressing, or abusing consumers.
  • Ask students if they, their friends or relatives, have ever been harassed by creditors. If so, what were their experiences?

Discussion Questions

  1. Debt collection market generates more complaints to the Consumer Financial Protection Bureau than any other financial product or service. Why?
  2. What might be some common complaints against debt collectors seeking to collect debt from consumers?
Categories: Chapter 5, Debt, Financial Planning | Tags: , | Leave a comment

The 1-Page Financial Plan: 10 Tips for getting what you want from Life

Posted on October 22, 2016 by Melissa Hart

Carl Richards, author of The One Page Financial Plan, knows the financial mistakes–including the ones he has made–that people make.  Based on his experience as a financial planner, he provides 10 tips to help people get what they want from life.  Note:  An explanation and examples to illustrate each tip are provided in this article.  His tips are:

  1. Ask why money is important to you.
  2. Guess where you want to go.
  3. Know your starting point.
  4. Think of budgeting as a tool for awareness.
  5. Save as much as you reasonably can.
  6. Buy just enough insurance today.
  7. Remember that paying off debt can be a great investment.
  8. Invest like a scientist.
  9. Hire a real financial advisor.
  10. Behave for a really long time.

For more information, click here. 

Teaching Suggestions

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

  • Illustrate how each tip provided in this article could affect an individual’s financial plan.
  • Encourage students to read the entire article to help determine what’s really important in their life.

Discussion Questions

  1. It’s often hard (or maybe close to impossible) to determine what you value and where you want to go in the next 20 to 30 years with perfect accuracy. Still, experts recommend that you establish a long-term financial plan.  What steps can you take to make sure your plan will meet your future needs?
  2. Why is it important to evaluate your plan on a regular basis and make changes if necessary?
Categories: Chapter 1, Chapter_14, Financial Planning, insurance, Retirement Planning | Tags: , , , | Leave a comment

How the Presidential Election Will Affect Your Investment Strategy

Posted on October 15, 2016 by Melissa Hart

“The sky is falling!  If my chosen candidate doesn’t win, the markets are doomed and so are my investments.”

In this article, Bijan Golkar points out that a presidential election can cause excitement or despair depending on if you are a Republican or a Democrat and who the major parties nominate for the highest and most powerful office in the world.

The article discusses market returns both before and after a presidential election year and some of the underlying reasons for market volatility.  Then the article stresses the importance of a person’s long-term goals and a plan for long-term growth as opposed to “emotional investing.”  Finally, the article discusses the pros and cons of our economy that could affect investment values.

For more information, click here. 

Teaching Suggestions

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

  • Discuss the importance of a long-term investment plan that will take advantage of the time value of money.
  • Describe some of the pitfalls of “emotional investing.”

Discussion Questions

  1. What are the typical characteristics of an emotional investor? Of a long-term investor?
  2. What are the advantages of a long-term investment program when compared to “emotional investing?”
Categories: Chapter 1, Chapter_11, Economy, Financial Planning, Investments, Savings | Tags: , , | Leave a comment

How to Find a Financial Advisor

Posted on October 8, 2016 by Melissa Hart

“Finding your next financial advisor is as easy as counting from one to five.  You just need to know where to look and what to ask.”

The information in this article is provided by the National Association of Personal Financial Advisors (NAPFA) and was developed to help people find a financial advisor.  Specific suggestions include

  1. Before beginning a search for a financial advisor, have a conversation with your loved ones to determine what is important, what you value, and what you want to accomplish.
  2. To develop a list of potential advisors, talk to friends and relatives and visit websites like http://www.napfa.org.
  3. Narrow your list to the top three contenders then do your homework. Visit company websites and read each advisors biographical sketch, check information available on the SEC website (www.sec.gov), and develop a list of questions that you want to ask when you meet each advisor.
  4. Request a meeting with each potential advisor. Ask questions to help assess your comfort level with each advisor.  For help, visit the NAPFA website (www.napfa.org) and click on “Tips and Tools.”
  5. Often the key to building a relationship with a financial advisor is communication. Review your relationship with a financial advisor over time.  Don’t just look at investment results, but also determine if the advisor (and her or his firm) is helping you achieve your important goals.

For more information, click here.

Teaching Suggestions

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

  • Remind students that it is better to start financial planning earlier rather than later in life.
  • Stress that even beginning investors or investors with little money can still use a financial advisor.
  • Encourage students to visit the National Association of Personal Financial Advisors website (www.napfa.org). There is a great deal of quality information available with a click of a mouse.

Discussion Questions

  1. Often, the first step when choosing a financial advisor begins before you actually meet a potential advisor. How can determining your goals and what you value help you start financial planning?
  2. While many investors think that financial advisors are only for the rich, beginning investing or investors with little money can benefit from professional help. What steps can you take to find the right financial advisor to help you obtain your goals?
Categories: Chapter 1, Chapter_11, Financial Planning, Retirement Planning | Tags: , | Leave a comment

Eight Measurements of Financial Health

Posted on September 10, 2016 by Melissa Hart

The Center for Financial Services Innovation has identified eight indicators to measure financial health. These measurements can serve as a framework for guiding individuals and financial service providers toward an improved quality of life for consumers.

The eight indicators of financial health, presented in four categories, are:

SPEND

  1. Difference between income and expenses
  2. Percent of bills that are paid on time and in full

SAVE

  1. Number of months of living expenses in liquid account balances
  2. Amount of one’s long-term savings, assets, and investments

BORROW

  1. Debt-to-income ratio
  2. Credit score or credit quality tier

PLAN

  1. Type and extent of insurance coverage
  2. Behaviors that demonstrate future financial orientation

For additional information on financial health indicators, click here.

 

Teaching Suggestions

  • Have students ask people to describe what is meant by “financial health.”
  • Have students create a list of actions that might be taken to achieve financial health.

 Discussion Questions 

  1. What are additional factors that might be considered when measuring a person’s financial health?
  2. What actions are you taking to achieve financial health?
Categories: Chapter 1, Financial Planning | Tags: , , | Leave a comment

Pokémon Go Can Cost You

Posted on August 20, 2016 by Melissa Hart

Pokémon Go has resulted in a loss of money and other concerns.  In this popular game, users interact virtually with Pokémon characters placed in real world settings. The app is free to download, however there are in-app purchasing opportunities. Players are encouraged to pay for hints and tips for a competitive advantage.

In addition to financial losses, the Pokémon Go app has been used to lure robbery victims.  Other players have been robbed of their phones.  Police departments caution players to be aware of their surroundings.

Be warned that “free isn’t the same as no cost.”  Users may pay in the form of data use, legal confrontations, injuries, and reduced work productivity.  Higher insurance costs can also occur when playing the game while driving, which might result in an auto accident. Social concerns include disturbing church services and other occasions with players capturing creatures during the events.

For additional information on the cost of Pokémon Go, click here.

Teaching Suggestions

  • Have students suggest ways that an app game might be used for improved learning or assisting others in need.
  • Have students describe safety precautions when playing Pokémon Go.

Discussion Questions 

  1. Why are people attracted to the game, often with a personal or financial cost?
  2. What actions might be taken to avoid the financial and personal dangers of the game?
Categories: Chapter 2, Chapter 6, Financial Planning, Wise Shopping | Tags: , | Leave a comment

Finances for Newlyweds

Posted on June 18, 2016 by Melissa Hart

An estimated one-third of recently married couples are surprised by the financial situation of their spouse.  A similar number (36 percent) are not aware of their partner’s spending habits.  Based on a study by Experian Plc, only 40 percent knew the credit score of their partner.

Men more often hid money from spouses.  About 20 percent of men had secret bank accounts about which their partners didn’t know; compared to 12 percent of women. Regarding the maximum amount that they would spend before consulting with their spouse, men replied $1,259; women said $383.   Hidden financial information can have a significant adverse effect on the relationship of a newly married couple.

For additional information on newlywed finances, click here.

For additional information on the survey results, click here.

Teaching Suggestions

  • Have students survey newly-married people about their disclosure of financial information to their spouse.
  • Have students create a list of problems that might arise between newly-married people who do not inform their spouse about their personal financial information.

Discussion Questions 

  1. What financial information would be most important for newly-married people to disclose to their spouses?
  2. How could a lack of disclosure of financial information to a spouse create relationship difficulties?
Categories: Budget, Chapter 1, Chapter 2, Financial Planning | Tags: , , | Leave a comment

Tips and tricks for Impulse purchases

Posted on April 9, 2016 by Melissa Hart

You are in line at your local grocery store and all the snacks, candy, and cheap gadgets are beckoning to be picked up and added to your shopping bag.  You are shopping on-line and you only need to spend $8 more to get free shipping.  How do you avoid falling prey to impulse buying?  How are marketers reducing friction to get you to buy more stuff?  As a consumer, factoring in additional transaction costs will help you avoid making impulse purchases.

The following article provides way to help you avoid adding impulse purchases, such as:

  1. Carrying cash.
  2. Making it a struggle to get out your credit card.
  3. No more one-click purchasing.
  4. No more e-tailer memberships.
  5. Having an accountability buddy.

Teaching Suggestions

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

  • Stress the importance of carefully watching your spending.
  • Have the students record all purchases for one week and see how much money is spent by the class in total on impulse purchases.
  • Stress the importance of having a budget and sticking to it.

Discussion Questions

  1.  Ask students to recall a time when they were able to resist the urge to make impulse purchases. What were some techniques that they used?
  2. Poll students about e-tailer memberships, such as Amazon. Why did they choose to acquire the membership?  Free shipping? On-demand viewing options.
Categories: Budget, Chapter 6, Financial Planning, Wise Shopping | Tags: , | Leave a comment

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