Many personal finance reports are published with advice that may not provide the best guidance. In an effort to avoid buzzwords and troubling phrases, consider these suggestions:
- determine who conducted the research; a company may sponsor a study that lacks the rigor of academic or government researchers.
- be wary of research that reports feelings or predictions rather than actual behaviors and actions of respondents.
- consider the number of people in the study and how the respondents were selected.
- avoid generalizations that about a certain age group, such as Millennials, Baby Boomers, or Generation X.
Don’t revise your money management activities based on some survey or research report. If your current actions are working, then you are on the correct path.
For additional information on avoiding personal finance nonsense, click here.
- Have students conduct online research to locate a recent personal finance study to evaluate the validity of the advice offered in the report.
- Have students create a video presentation reporting both valid and nonsense personal finance advice.
- What problems could occur if a person uses inappropriate financial advice?
- In addition to the suggestions in the article, what actions might a person take to determine the validity of personal finance advice?
While car ownership has been a cultural milestone in our society, this tradition is diminishing with a trend toward renting or borrowing rather than owning. This situation is partially related to fewer teenagers opting to obtain a driver’s license. Also, fewer young people are buying homes, giving preference to the flexibility of renting.
The owning of “stuff” is shifting toward “decluttering” and choosing instead to rent items as needed. A strong belief that overconsumption is putting our planet at risk is driving the rise of the sharing economy. In addition, there is a growing trust to value exchanging items with “real people” rather than buying from major companies.
In addition to Zipcar, which rents vehicles by the hour, other rental business models include:
- Ann Taylor’s Infinite Style service that allows a person, for a $95 monthly fee, to rent up to three garments at a time.
- SnapGoods rents cameras, power tools and home appliances, such as blenders.
- Frankfurt airport has a service that allows travelers to store winter coats when flying to warmer climates. Other businesses are considering a service to rent cold weather clothing to travelers arriving from tropical areas.
- Since about one-third of new vehicles are leased, Cadillac created the “Book By Cadillac” program allowing a person to exchange up to 18 vehicles a year.
The many empty stores in malls create opportunities for “swap meets” and “rental fairs” for various products, using these spaces to also build connections in the local community.
For additional information on renting instead of buying, click here.
- Have students locate examples of sharing economy businesses and rental companies in your community and online.
- Have students talk to others to obtain ideas for new types of rental businesses.
- What do you believe are the benefits and drawbacks of renting instead of owning?
- Describe actions that might be taken to determine needs and ideas for rental businesses in a community.
Categories: Chapter 6, Chapter 7, Debt, Economy, Home Buying, Purchasing Strategies, Wise Shopping
| Tags: car buying, car leasing, Home Buying, Renting vs. Buying, wise purchasing strategies |
It’s possible to add $500 or $1,000 to your savings with a simple action. Clark.com suggests using store receipts to save for the future. Many retailers display a “You Saved” amount on a receipt for items on sale and store discounts. By putting this amount in a savings account you can avoid spending the “saved” money on other items.
Collecting receipts in an envelope or box, or scanning them to an app, can also help analyze buying habits to make wiser purchases in the future and not make as many trips to the store. This action can result in an extra amount each month added to your savings. This money can be added to your emergency fund or retirement account.
For additional information on the receipt savings trick, click here.
- Have students locate examples of receipts that show “amount saved.”
- Have students talk to others to obtain ideas for methods for building a person’s savings account.
- What do you believe are the benefits and drawbacks of using this system?
- Describe other actions that might be taken to motivate you and others to build your savings?
Youngsters learn money management attitudes and behaviors by watching family members and others. To help guide their financial literacy development, involve children in the shopping process using these steps:
- Have children help in the creation of the shopping list. Sit down together with paper or an app to list what you need. Talk through your list with your kids noting items that are low on in the household as well as things bought regularly. Have children check cabinets and refrigerator to determine things they use.
- While making your list, talk about a budget. Explain the need to keep track of how much is spent on groceries so there is enough money for household expenses. Make clear that a grocery list helps make sure you don’t overspend.
- Talk while shopping to explain brands you prefer and how sale prices or coupons might affect purchases. Also communicate why you choose certain stores for your shopping. As you select items explain why you’re buying that one instead of a similar item. Older children can be asked to comparison shop among different brands.
- While shopping, refer back to your budget. This will help you decide to buy an item now or wait until a later time.
- Provide explanations of buying choices. To avoid surprises, estimate your total before going to the cash register. Also explain different payment methods, such as a debit card, which subtracts money from your bank account right away.
Discussion of various decision-making elements will help kids learn shopping and money management skills they will need. Thinking out loud can clarify what you’re doing and why when in the store, paying bills, or shopping online.
For additional information on teaching money skills to children, go to:
Grocery Shopping Tips
Money skills, by age.
- Have students visit stores and explain to friends why they buy certain items and brands.
- Have students create a visual presentation (using computer software or a poster) to communicate learning experiences for teaching wise buying to others.
- What experiences did you have growing up that helped you learn financial literacy and wise money management skills?
- Describe other methods that might be used to teach shopping and money management skills to young people and others who might lack these abilities.
Believe it or not, you can buy a car from a vending machine. Carvana has created an eight-story high glass structure holding 30 cars. The online auto retailer opened its first vehicle vending machine in Nashville, Tennessee, and also has locations in Austin, Houston, and San Antonio, Texas. Payment, financing, and trade-ins are arranged online. Free delivery is offered in the areas served. However, buyers have the option of receiving an oversized Carvana coin to drop in a slot to automatically move the car to the delivery bay ready to drive.
For additional information on Carvana, click here.
- Have students search for a website or app related to car buying services that was not available a few years ago.
- Have students talk with others about their car buying experiences. Ask students to propose an app or website that would improve car buying activities.
- What benefits are associated with this type of motor vehicle buying process?
- Describe common mistakes people might make when buying a motor vehicle?
To save money and help improve the environment, 20SomethingFinance.com suggests that you:
- grow your own food and buy from local sources.
- replace meat in meals with beans and vegetables.
- bring your own containers to buy bulk items.
- use refillable drink bottles.
- ride a bike instead of driving.
- use a low-flow showerhead.
- sell items not being used; buy used items instead of new.
For additional information on saving the environment and money, click here.
- Have students ask people to describe environmental-saving actions commonly used.
- Have students create a promotional plan to create awareness of money-saving actions that are also environmental friendly.
- What are benefits and drawbacks of environmental-saving actions?
- What factors might be considered when taking actions that save money and improve the environment?
“Falling gas prices have put consumers in a good mood.”
According to a survey conducted by the National Association of Convenience Stores (NACS), more than 4 in 5 Americans indicate falling gas prices impact their feelings about the nation’s economy and as a result they will spend more during the upcoming holiday season. In fact, more than one in four consumers (26 percent) expect to increase their spending during the 2015 holiday season–a 7-point jump over the past month and the highest percentage this year. Also the survey finds that women are more optimistic than men. For retailers, this statistic is even more encouraging because women do more holiday shopping when compared to men.
For more information, click here.
You may want to use the information in this blog post and the original article to
- Discuss how holiday spending impacts a family’s budget.
- Describe methods that consumers can use to save the money and budget for holiday spending.
- Does the price of gasoline affect your spending on other items such as food, clothing, medicine, luxury items, and gifts?
- How can you avoid spending “too much” during the holiday season?
- What steps can you take to save the money needed for gifts and other holiday expenses?
“While our original $150,000–$170,000 price range would have put our housing costs at a manageable 30% of our total income, springing for a $200,000 loan shot that number up to just shy of 50%.“
For many people, a logical step after completing college is often purchasing a home and inching closer to the American dream. And yet, there are pitfalls to obtaining a home that can lead to financial stress and the inability to reach important short-term and long-term financial goals.
This article describes how one couple took all the right steps to prepare for a home purchase, but eventually decided to purchase a home that cost more than they planned to spend on housing. The reason was simple: They fell in love with a home that was too expensive when compared to their total income. The article continues to describe what happens next in their attempt to regain their financial health.
For more information, click here.
You may want to use the information in this blog post and the original article to
- Stress the necessity of preparing a realistic budget that reflects mortgage payments, insurance, taxes, repairs, etc when purchasing a home.
- Share the advantages and disadvantages of owning versus renting a home.
- Given your goals and lifestyle, how important is home ownership to you?
- What steps should you take to prepare for purchasing your dream home?
- Assume you have found your dream home and you can afford the payments, insurance, taxes, repairs, etc. What steps are necessary to negotiate the purchase and obtain financing?
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:
- 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.
- What actions have you taken to reduce spending and increase savings?
- Explain short-term and long-term benefits of reduced spending.
An increasing number of homebuyers are coming into the market. However, along with that trend, is an increasing number of financial regrets due to mistakes such as:
- considering that renting may still be a viable financial choice in some situations; for example, if you may be moving due to a job or other circumstances.
- with rising housing prices and higher mortgage rates, some buyers may not be competitive when bidding on a property.
- other debts (such as a high car loan) may limit the monthly payment a person can afford.
- putting too much faith in online property prices, which can give a false sense of true home values.
- skipping the home inspection can result in not being aware of subtle home defects.
- unrealistic expectations of the future appreciation of the home.
For additional information on mistakes made by homebuyers go to:
- Have students research suggestions for avoiding home buying mistakes.
- Ask students create an in-class presentation with suggestions for avoiding home buying mistakes.
- What actions might be taken to avoid these home buying mistakes?
- Describe other difficult situations that a person might encounter in process of buying a home.