Saving money throughout life is a vital process to ensure financial stability and freedom. Children are very impressionable. I truly believe that many children pick up financial habits from their parents while they are very young. They observe shopping habits, eating out, and grocery buying experiences. I think it is important to instill good money skills into children while they are young. Here are some tips that you can use to teach small children about finances.

Allow your children the opportunity to have some money for themselves by providing them with an allowance. It doesn’t have to be a lot of money, and it probably would be a good idea to teach them the value of a dollar by making them work for it. It means more to them if they have worked hard to earn that money. I know some parents who make their children save a certain percentage so they realize how important it is to save.

Take children clothes shopping with you. They will begin to see how much money you spend on clothing and accessories. Teach them how important it is to buy items on sale or clearance. Make it into a game to find the best clothing for the lowest amount of money. Of course, if you are a label snob, you may have to change your ways to be able to teach children about good deals.

Start cooking more meals at home. Not only is it more healthful, but it saves money and teaches children how to cook. Explain to your kids the reasons you are cooking at home. When you do visit a restaurant, show the children the menu with the prices and the bill and explain to them how it works. They will enjoy being involved.

Let your children buy something with their allowance. If they want a game for their Playstation, start a piggy bank that they can put their money in to save for that particular item. Show them that they need to save the money first before they purchase an item. It will teach them patience and the value of a dollar.

All in all, small steps can make a large impact on a child’s future spending patterns. Teach them while they are young and they will most likely keep the same values when they are older.

Posted under Save Your Money

There has been a lot of talk lately on the news about people getting ripped off by illegitimate Credit Repair Agencies.  Personally, I wouldn’t even use one.  You can pretty much do all the work that they are going to do yourself by following a few simple steps. 

Call your credit card companies and ask them to lower your rate.  If they tell you they can’t, speak to a supervisor. 

A few years ago I called Capital One’s credit card company to cancel my credit card.  I had three and didn’t need that many.  While I was on the phone with them, they asked me why I was cancelling my card.  I informed them of my decision, and also told them the rate was too high.  They offered to lower the rate to 4.9%, so I decided to keep them for awhile longer.

Write down exactly how much you owe each debtor, the minimum payment, and how much extra you can pay towards it each month.  Put any “extra” money towards the highest interest rate loan. 

I know many people like the “debt snowball” approach, but I can’t say that I am the biggest fan of it.  I would hate to know I was throwing away so much money in interest each month when I could be saving money.  To me, it’s more important to save money on interest I am paying.  It’s all personal choice. 

Being careful with credit repair agencies and your money in general can be an easy process.  Guard your social security number, write out a budget, check your balances and rates, and work out your own plan.  Think smarter, not harder!

Posted under Pay Off Debt

One of the most frequently asked questions I get about money is: “Should I pay off X debt or save my money?” Before I give advice, there are a few questions I’ll ask.

Is the debt “good debt” or “bad debt”?

“Good debt” would be classified as home loans, student loans, 0% credit cards, etc. Either a loan that has a tax deductibility or no interest. “Bad debt” would be considered car loans, unsecured loans, and credit card debt that has a high interest rate.

What type of emergency fund do you have set up?

If you have a $0 emergency fund, of course I’m going to tell you to save it!

How is the economy at this moment?

Personally I feel that if the economy is bad, I’d rather save my money and have that cash available to pay for living expenses. If you pay off the debt instead, you may find yourself strapped for cash.

A few weeks ago, a friend asked me for some advice. She said that she and her husband took out a car loan and they were going to try to pay it off as soon as possible. Now, I asked her what kind of emergency fund they had. I also suggested that they think about the current state of the economy right now, and how horrible it is. She told me their current financial situation; her husband is employed, she’s a full time student with no income, they have two young children, and small savings. I asked her what the interest rate on the loan was. 6.25%, not too bad.

I then made the suggestion that instead of paying off that debt as soon as possible, that they put any money aside that they were going to put towards that loan and put it in a high yield online savings account. That way, if they ever became desperate for money, they’d have it there as their emergency fund.  If they’d used that money and paid on the loan they wouldn’t have anything.  Of course at the same time, they need to not scrimp on retirement, especially if the husband’s employer does a matching contribution.

I know that a lot of financial advisers recommend paying off debt first, but I think it’s very important to have that emergency fund as well.  Of course, if the debt that you have bothers you, and it’s better for your peace of mind to pay off that debt as fast as you can, then by all means throw your money towards that loan.  It’s all about what makes you comfortable.  Some people are comfortable with having $1,000 in savings, whereas others have to have $10,000 in savings, even if they have debt.  It’s all about a comfort level.  Do what you feel is right.

If you have a financial question you’d like my input on, please feel free to leave a comment!

Posted under Pay Off Debt, Save Your Money