Never Too Young to Prepare for the Future

Investing the time and effort to teach young people about money can pay big dividends in more ways than one. Teaching young people how money works can also present an opportunity to teach young people lessons about responsibility, planning for the future and other life lessons.

More and more young adults are falling into debt. In fact, more students drop out of college as a result of credit card debt than academic failure; they find themselves in debt and are unable to get jobs to pay that debt off.

From the latest electronic gadgets to high-priced clothing and accessories, teenagers are being seduced into buying items they can't afford. According to a study conducted by a major credit card company, 78 percent of parents say their high school student does not have a budget.

More than 83 percent of college students have at least one credit card, with an average balance of $2,300. Compounding the problem, the average college student receives an estimated 15 credit card solicitations per week.

One thing to consider is that different topics are best addressed at different ages. Here are some tips:

Age 3-5: Keep It Concrete.

Use cash around preschoolers-credit cards are too abstract. Let them collect coins in a clear container so they see the money. For starters, try showing a child that five pennies equal a nickel.

Age 6: Make Allowances.

Now is the perfect time to start a weekly allowance. Many kids begin with an allowance of about $5 a week until age 8. Some parents use a formula based on age. For example, an allowance of $6-a -week at age 6.

Age 9-10: Budget Time.

Introduce them to a basic household expense budget. Open a savings account for them if you haven't already.

Age 11: Take Stock.

Help them understand stock market basics-such as why prices go up or down. Teach them about compound interest.

Age 12: Responsibility Rules.

Extend their weekly allowance to twice a month. Have them begin earning money outside the home (babysitting, mowing lawns, etc.) Open a checking account for them.

Age 13-15: Take the Plunge.

Compile a list with your child of what you expect his or her allowance to cover (friends' birthday gifts, entertainment, etc.) and use that total when determining allowance. Introduce them to credit with a debit or prepaid card. A prepaid card is normally the first step.

Age 16-18: Future Focused.

If your child has a part-time job, discuss tax-related issues. Consider opening a Roth IRA for him or her.

Age 18+: Damage Control.

College freshmen are deluged with credit card offers. Even if you've introduced them to responsible use of credit, they may still come home maxed out. Emphasize the importance of a budget-and learning from your mistakes.

Now, a very important side note. These timelines are only a suggestion and every child, home, and situation are different. The most critical message you should take from this blog post is the time to start teaching your kids about finances is NOW! Your child will never look back and regret learning too much about finances. Our public school system is responsible for teaching our children about reading, writing, and arithmetic's; but as parents and role-models we have to teach them how to be functional, good, and happy members of society.

Brooke

Improving your Financial Fitness for the Summer

Getting Fit Checklist

- Running shoes

- Sunscreen

- Snazzy shades

- Diet plan that emphasizes fresh veggies and lean meats.

You have everything you need to stay healthy this summer. 

But what about your financial fitness? 



The arrival of summer not only means more active time outdoors, it often also means more opportunities to spend. Will you be taking a summer vacation? Maybe you're looking to move into a new house. And don't forget those energy bills you'll need to pay to keep your house cool and comfortable. Just as you take care of your physical health in preparation for summer fun, you need to pay attention to your financial well-being as well. And just as the key to losing weight is to eat fewer calories than you burn, financial health depends on your ability to earn and save more money than you spend. 



Here are three important steps to take toward financial fitness this summer: 


Build a budget: 

A balanced, nutritious diet is the foundation of good physical health and a balanced, smart budget is the cornerstone of financial health. If you've never had a budget before, it's time to create one. If your budgeting efforts have been sketchy in the past, it's time to buckle down.

Creating a budget is simple but detail oriented. Start by writing down on a sheet of paper every source of income you have in a month (your job, your spouse's salary, your investments, or my dad’s personal favorite eBay auctions, etc.). Next, list all your fixed expenses. These are ones that you can't skip paying, like rent or mortgage costs, insurance and so on. Then, list expenses that are flexible and could be trimmed, like entertainment, dining out, cable subscriptions, and so forth. If your total expenses exceed your income in a month, you need to put your spending on a diet. 



Flex your savings skills: 

Eating well and exercising daily are your investment in your future health. This helps you to stay well as you age or to help you fight off illness. You also need to build up some spending endurance, (set cash aside) in case of emergencies. Treat your monthly payment to your savings account like any other debt you can't skip!!!! Pay yourself that money before you spend it on flexible expenses or fun. (This is my favorite bill to pay, because it’s fun watching the bank account total grow and gives me a sense of accomplishment and empowered feeling!)

Give yourself a credit checkup: No financial fitness plan would be complete without a credit checkup. According to “Times,” a poor understanding of credit contributed to the real estate crash and the overall poor health of the economy. A credit checkup can help you better understand your overall financial health.

Your first step is to check your credit score and report online. Think of a credit score as an indicator of your overall financial health. A good score tells potential lenders that you know how to manage money and are likely to be a good credit risk. A lower score may be a symptom of poor financial health. Now, college students and high school seniors starting building credit now!! This is not limited to your parents. Rumors have it that some colleges and universities are going to start checking credit score before accepting any new students! Don’t let your credit stop you from having your dream job! Web sites like freecreditscore.com provide valuable credit monitoring tools to help you assess your credit health and how your financial health habits affect your credit. I know that medical errors can harm my patient’s health, and so can errors on your credit report. That's why checking your report regularly for errors or possible fraud is as important as monitoring your blood pressure if you have hypertension, checking your blood sugar if you're diabetic or watching your weight!

If you have any questions please feel free to ask me more about improving your credit score this summer. I provided a link to check your credit score below. This is free and will provide you a way to take a baseline to start with and will help you monitor your progression. Like I said in my last post, THIS INFORMATION IS FOR EVERYONE WHO HAS EVER EARNED A DOLLAR!!

Brooke

Let's Get Started!

Hello everyone!

I am so excited to get started on this blog, share my daily thoughts and present you with several different tips and ideas about finances.

I invite you to share this blog with your friends, children, grandparents; basically everyone who has ever earned a dollar.

I named this project “Financially Fit 4 the Future” because just like our physical fitness, financial fitness takes hard work, dedication, control, and exercise everyday! Financial fitness is a process and your problems won’t be fixed over night, but with time and achieving the small daily goals you set for yourself: THIS IS POSSBILE!

A little bit more about me:

I am currently a RN in an intensive care unit and I love my job! Now, I know that healthcare and finances don’t seem to go together, but in all honesty they are so closely intertwined. I see the affect of finances in my career everyday. From budget cuts to the tears patients cry because they are worried about paying for their care. I am motivated to do this because I don’t want American’s dreams, hopes, or lives to be crippled any longer by something we can prevent. We can control our financial fitness and find financial freedom. I am not a mother, but I am the oldest of five children and when I look at my younger siblings I want their lives to be more than they can dream and I want the same for you!

The average student who graduates from high school lacks basic skills in personal financial management. They are unable to balance a checkbook and have no insight into the basic survival principles involved with earning, spending, saving and investing. The average debt after college graduation has increased 50% in the last decade. It is critical for the youth of America to comprehend the importance of financial choices while they are young and start preparing for opportunities that will present themselves in the future. For the past 4 years, I have been actively educating youth and their parents about financial choices to create a generation that is “Financially Fit 4 the Future.”

Please share your comments, questions, or concerns. I would love to hear from you. Check frequently for updates and together we will improve our financial fitness!

Sincerely,

Brooke