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Thinking Aloud with Children

September 3rd, 2015

communicateAs my children have grown up, I’ve been pleased to see that they generally think things through – they consider various options fairly thoroughly, especially when it’s an important decision.  I don’t take full credit for that, but I like to think I contributed.  Thoughtful decision-making (about finances and other issues) is not an inborn capacity – it needs to be taught.  So how do we help our children build that skill?

One habit I developed with my kids was to never say “I can’t afford that.” 

Why?  Because it was usually a lie – I could afford a certain toy, or a certain pair of shoes, or… whatever.  Instead, I got in the habit of saying something like this: “I choose not to buy that $5 box of cereal, because I want to use my money to buy fruits and vegetables, which are more important.”  I didn’t necessarily use that exact phrase, but I worked to convey that I had thought about the trade-offs and was trying to spend my money on the things that were most important.  And sometimes I said “yes I will pay for that,” because it was important or valuable.

It was kind of like thinking out loud – sharing with my daughters the reasons why I made certain choices;  even sometimes letting them hear the argument  going on inside my head (“should I or shouldn’t I?”).  I think that was helpful to my children.  I kept it age appropriate – for example, I didn’t share with a 10-year-old child my uncertainty about which health insurance plan to sign up for.  But I did let them in on my thinking about daily spending decisions, and about larger decisions as they grew older.

What steps do you take to help your children learn to make thoughtful decisions?

~Barb

P.S.1 – Looking for ideas to help you build children’s money skills?  Check out Money as You Grow!

P.S. 2 – Here’s s link to a worksheet to help folks think through the pros and cons of decisions http://www.apsu.edu/sites/apsu.edu/files/counseling/Decisional_Balance_Worksheet.pdf  

 

 

 

Uncategorized

Figuring Take-Home Pay

September 1st, 2015

Calc - sm- shutterstock_73524163In a few months my daughter will start a new job in another state.  As she looks for a place to live, she’s being very cautious about what she can afford.  She wasn’t sure how social security, income taxes, insurance and retirement contributions would affect her income. She needed a realistic idea of take home pay before her first paycheck.

She could have generally estimated that tax withholdings would be about 25-30%, but that’s not very precise.  Instead she asked Mom, who happens to teach finance! I pointed her in the direction of NEFE’s (the National Endowment for Financial Education) ”Smart About Money” website. It is non-commercial and very trustworthy.  One of the site’s features is a set of calculators, including a take-home pay calculator 

A take-home pay calculator is useful to someone like my daughter, starting a whole new career.  But it’s also useful to people who are expecting other changes:

  • Income amount (getting a raise? moving from full-time to part-time?)
  • Marital status
  • Number of dependents
  • Contributions to retirement plan
  • Other changes in withholdings.

If you’re anticipating a change in your situation, remember that you don’t have to guess.  The take-home pay calculator from Smart About Money can give you a fairly reliable estimate of what to expect.

~Barb

P.S. this calculator is not state-specific; it appears to use an average or typical state income tax rate.  So if you’re moving to a state with very low or very high income tax rates, the results may be a little off.

 

Uncategorized

New Beginnings

August 28th, 2015

first day of kindergartenI’m enjoying all the new “first day” photos being shared on social media. From backpacks to shots of roommates in a new apartment, the transitions are great to celebrate. No doubt parents everywhere are feeling relief that the school supply list and registration fees are out of the way for another year.

It isn’t always easy to meet those initial costs of sending your children to school. It’s been my experience, as a former high school teacher, that getting a graduating senior enrolled in their school of choice can be costly. Financial aid and scholarships often arrive after a student is enrolled. Registration fees, deposits for rooms/apartments, and upfront costs of supplies have to be covered from your own resources.

Parents can plan ahead by considering the purchase of savings bonds, starting a 529 College Savings Plan, or establishing a Cloverdell Savings Account. The funds have tax advantages and create accessible dollars for the first financial hurdles of enrolling in post-secondary education. Encouraging a teen who has employment to think ahead and plan for those costs, as well as having your own “think ahead” plan can lessen some of the stress of celebrating a “first day.”

Joyce

Saving, Uncategorized

Is It A Need Or A Want?

June 16th, 2015

Girl laying on floor counting change by piggy bank

We have all heard it from our children, “I need this item.” As a parent, you may or may not see it as a need – you may see it as a want.  One good strategy for dealing with children’s “wants” is to have them save some of their own money to purchase the item.

This strategy teaches children an important skill: Paying Yourself First, by saving some of their money for later needs. Short-term savings teaches your children that by waiting a little longer they are able to buy something they really want. Learning to save teaches children to appreciate delayed gratification. NOTE: Long term goals like saving for a car or college education can be difficult for small children.

Borrowing can be used when children run short of money; they can borrow from parents or siblings. Parents can help children learn how to borrow wisely by never loaning more money than the child can realistically repay (with interest if appropriate), and/or setting up a grace period in which there will be no interest. When children borrow, it is important that they repay the money in a timely manner; they learn the responsibility they take on when they borrow. Borrowing money can teach children the real cost of money.

Sharing money is a good lifetime habit. It teaches children that there are good feelings for both the giver and the receiver when they use their money to help others. Having money brings obligations such as taxes and charity donations. Be sure to encourage children to give other resources (such as their time and skills) as well as money.

~ Susan

Saving, Smart shopping, Uncategorized

Student debt stress?

June 10th, 2015

Picture1Over 40 million Americans are paying back student loans.  Owing money is frustrating enough, but it’s even worse when the loan company makes things more complicated.

Have you run into obstacles trying to pay back your student loans?  The Consumer Financial Protection Bureau (CFPB) wants to hear from you if you’ve experienced:

  • Surprise fees
  • Lost payments
  • Difficulty getting information from your loan servicer
  • Other roadblocks to repaying your loans

Submit your comments and tell your story today to help the CFPB improve student loan servicing for borrowers.  (comments can be submitted through July 13, 2015).  NOTE: your story will become part of public record, so tell your story without including any sensitive information such as your Social Security number or other information that identifies you. 

BONUS: to learn about options for paying back your student loans, check out the CFPB’s Repay Student Debt section.

~Barb

Uncategorized

Money Smart Week – April 18-25, 2015

April 21st, 2015

IMG_0039Money Smart Week, started 13 years ago by the Federal Reserve Bank of Chicago, is designed as a public awareness campaign to help consumers better manage their personal finances. Here in Iowa, more than 200 partner organizations have joined in the fun, promoting financial education with many interesting opportunities to learn. All Money Smart Week programs are free, and strictly educational (no marketing allowed).

ISU Extension and Outreach has been a MSW partner for many years. Programs are offered for audiences from preschoolers to seniors. From scout nights to shred days, essay and poster contests, geocache for college cash, piggy banks, books, and kites – in many cases, a chance to win a prize makes the learning even more fun. Educational program topics include: establishing a budget, protecting financial information, raising money-smart kids, and more.

Go to www.MoneySmartWeek.org for more details about activities in your area. Check out your local libraries for a display as well as programming. Spread the knowledge!
~Susan

Consumer Knowledge, Credit, Goals, Retirement, Saving, Uncategorized

Choosing Home Repair Professionals

April 14th, 2015

wrenchI had to call a plumber a couple weeks ago. That reminded me of one of the luckiest things I’ve ever done.  I’d like to say it was one of the smartest things I’ve ever done, but in truth it was just luck.  I’m sharing it with you, though, in hopes that it may encourage you to do something smart!

I was newly-divorced, new in town, and buying a home.  I’d been a homeowner before, but only as a married person, and I didn’t have much in the way of home repair skills or knowledge.  (I’ve developed some skill since, but it’s still a weak area).  The house I was buying did not have central air conditioning, and I knew I wanted that, so I built a little extra money into the mortgage to cover that cost, and I had the air conditioning installed within the first week of being in the house.

Getting that A/C installed was the luckiest thing I did that year.  Why?  Because a couple months later, when I needed an urgent home repair, I already had a relationship with a plumbing and heating professional and an electrician.  Dealing with home repairs was really stressful, and being able to call someone familiar made it so much easier.

The moral of this story is NOT that you should get central air installed when you move to a new town.  Instead, the moral is that it’s smart to do some research and make some contact with plumbers, electricians and other key professionals before you need them.

When I arranged to install the A/C, I got recommendations from co-workers, and I shopped around a little to decide what type of A/C unit to install and which firm to choose.  I was able to take my time doing advance research and getting suggestions from friends.  Without that experience, then the first time my toilet was clogged I would’ve been in a panic (we only had one toilet). I might have randomly turned to the phone book and called just anyone.

So one benefit was that I felt comfortable knowing I was calling someone I could trust.  There was another benefit too: the professionals I called also knew who I was — they knew they could trust me to pay the bill, and they knew I wouldn’t call them after hours unless it was really important.  Since I was already their customer, they had some loyalty and concern for my well-being.

The next time I move to a new town, I will remember the lucky lesson I  learned, and I will work to develop a relationship with key repair professionals before I have any urgent needs.

~Barb

Uncategorized

America Saves Week – Time to Start Saving

February 22nd, 2015

America Saves is a national campaign involving more than 1,000 non-profit, government, and corporate partners encouraging individuals and families to save money and build personal wealth. Consumer Federation of America is comprised of over 270 consumer education, advocacy, and cooperative organizations dedicated to advancing the consumer interest.

February 23 – 28, 2015 is “America Saves Week,” an annual opportunity for organizations to promote good saving behavior and a chance for individuals to assess their own saving status. Started in 2007, the Week 125183558is coordinated by America Saves and the American Savings Education Council. Thousands of organizations participate in the Week, reaching millions of people.

The 2014 Annual National Survey Assessing Household Savings (released during ASW) revealed that while most Americans are meeting immediate financial needs, they are worse off than several years ago.

  • Only one-third of Americans feel prepared for their long term financial future.
  • Only 68 percent reported that they are spending less than their income and saving the difference. It was 73 Percent in 2010.
  • Two-thirds of respondents (64%) said that they “have sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit.” It was 71 percent in 2010.
  • 76 percent said that they are reducing their consumer debt, or are consumer debt-free. It was 79 percent in 2010.

With encouragement and support, more Americans can be persuaded to:

  • Set a Goal.
  • Make a Plan.
  • Save Automatically.

Savings isn’t something you do once a year. It’s important to save, or to establish goals for saving, but the role that savings plays in helping us achieve our individual needs and goals, America Saves Week is a great time to revisit goals – and to start saving, or start saving more.

~Susan

 

Goals, Saving, Uncategorized

“Addicted” to Tax Refunds?

February 17th, 2015

Tax-cash-sm-15495-46DG-1804x2712Getting a large tax refund is common for moderate-income families, thanks to tax credits that are designed to provide a boost for families with children.  Many families use those tax refunds to make important purchases, or they save them for “periodic” expenses – predictable expenses that come once or twice a year, such as back-to-school costs, holiday costs, 6-month car insurance payments, or day care costs during the summer when children are out of school.

Those can be good things – smart ways to use a tax refund.  But what happens when the tax refund disappears?

  • The child tax credit disappears when children turn 17.
  • The Earned Income Credit disappears when children are out of school or turn 24, whichever comes first.
  • Even the benefit of claiming kids as dependents disappears, hopefully, at some point.

The “disappearing tax refund” does not mean that bills will disappear.  Holidays and six-month car insurance bills will still come.  If you have gotten in the habit of using your tax refund to cover those expenses, you may find yourself in a jam, unable to cover key expenses.

As our children grow older, it’s important that we reduce our dependence on big tax refunds, because we know they won’t continue forever.  One way to break that addiction is to begin a regular saving habit long before the tax refund fades away.  If you start small, saving $20/month at first, and gradually increasing the amount over a few years, you may find that it’s easier than you expected!

Of all possible addictions, the tax refund addiction is far from the worst.  Even so, taking steps now to gradually break the addiction can help you avoid suffering from withdrawal symptoms down the road.

~Barb

Uncategorized

Finance Education Online

January 6th, 2015

My Extension resolution for the new year is to expand learning opportunities online. Our audiences have plenty of activities on their calendars and this approach should provide another option to participate. Two programs are set to roll during the first few months of the year.

On January 19th, from 6-8 pm, Family Finance staff are offering the second presentation of our health insurance program, Smart Choice: Health Insurance. The class will take 2 hours of your time and includes vocabulary, definitions for different forms of policy coverage, a review of what personal factors should be used to select coverage, and information about changes brought about by the Affordable Care Act. Even if you have employer insurance the content will help you make a “smart choice”. Open enrollment continues until February 15th for everyone purchasing private coverage. As many participants have shared in our face to face presentations, “You usually don’t understand your coverage until you need to use it, and then it can be too late.”  To register for the class go to:  http://tinyurl.com/pvmceb7.

YMYFlogoOn the first Monday evening of each month beginning at 5:30 pm you can take a short 2 hour class which contains content from our Your Money Your Future program. During the online class time we’ll go over methods to track spending, discuss setting up a spending plan, and talk about working toward achieving financial goals.  Stop by your Extension office to pick up a registration brochure, the fee is $15. Or call the Cerro Gordo Extension office to find out how to register. 641-423-9844  Date choices include Feb 2, March 2, April 6, May 4, or June 1.

 Joyce

Uncategorized