So Why Do Children Not Understand Money Concepts?

In a 2017, a T. Rowe Price survey, found parents are talking to their children about shopping, but are skipping conversations about household budgets, savings and financial goals. Close to 75% of survey respondents say they regularly have conversations with their children about money, but the focus is on spending—not the family’s current financial situation.

Are we sheltering our children from money? 

The survey found that many parents think they strongly encourage their children to talk about money, the children only agreed 19% of the time.  One in four parents discouraged their children from talking about money.

Children want to learn the financial basics – 34% want to know how banks and credit cards work; and 29% want to learn about managing money.

Protecting children from the financial challenges and decisions faced by adults may not be giving them an opportunity to form habits that can prevent financial stress when they are older. Understanding the source of money, choices involved with use, and it’s limitations form a basis that will impact attitudes and skills in management.

There are places to teach money management – the grocery store, or when paying everyday utility bills. Lessons taught by parents will reinforce and strengthen school based lessons in financial literacy. Basic skills become stronger when practiced. It can include balancing a checkbook, keeping spending records, comparing returns from savings to other investment options.

The T. Rowe Price survey shows that only half or fewer of parents have strong financial habits. One example – more parents save for a family vacation than have an up-to-date will.  One in ten do not save regularly for retirement, purchase life insurance or save for a family vacation.

Where does your family fall in the 10% or 90%?

Susan Taylor

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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Tax Refund? Plan Yearly

We generally budget by the month or by the week — we plan our spending in relation to our income, and that’s how we meet our regular expenses. It makes sense.

A tax refund is different, however. It’s a “bonus” that only comes once a year; it’s often the biggest single chunk of income we receive during the year. If you expect a sizeable tax refund, I suggest you consider the whole year as you plan how to use it. Here are a couple of ways you might do that:

  • In a typical year, are there some big expenses that throw a wrench into your financial routine? Perhaps your tax refund can help you be ready for those expenses. Examples: holidays, back-to-school time, car maintenance (planned and unplanned), summer weekends away,… it could be anything. Setting aside part of your refund to help cover those costs can be a great way to remove stress and unwanted drama from your financial life.
  • Tax refunds are often the way families make special purchases, such as furniture, a computer, or new appliances. Your refund can help you meet an important family goal. Again, though, it makes sense to consider the whole year before deciding. That might mean thinking ahead to all the possible special purchases you might want to make during the year, and prioritizing which of them is/are most important. An example from my imagination: I can imagine getting to summer and realizing you need a new lawn mower, and really wishing you had used your tax refund to buy a lawn mower! Thinking about the whole year can help you get the most value from any special purchases!

No one can foresee the future, and trying to plan for the year doesn’t guarantee you’ll think of everything that might come up. However, if you make an effort to consider the needs of the coming year, you are more likely to be satisfied in the long run!

What are your plans for your tax refund? We’d love for you to share!

 

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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America Saves Week Savings Tips Contest

America Saves Week 2018 begins on February 26th. During America Saves Week there will be six days of events to promote the theme of creating a habit of setting money aside for the future:

Monday, Feb. 26: Save with a plan

Tuesday, Feb. 27: Save the easy way….automatically

Wednesday, Feb. 28: Save for rainy days

Thursday, March 1: Save to retire

Friday, March 2: Save the extra

Saturday, March 3: Save as a family

This year a team of Extension professionals is sponsoring a contest with a chance to win one of three $100 Amazon gift cards. All you have to do is share your favorite savings strategies.

Write your advice on an electronic  index card. Match your strategy or tip to one of the America Saves themes. Post the picture on Twitter using the hashtag #ASWSSIC. You can enter up to 6 times, use a different theme with each entry.  Additional entry steps and the official entry form can be found at eXtension Index Card Contest. 

You have the entire month of February to promote your ideas and share what has helped you make savings a part of you financial management habits.  Following along will give you a chance to see what works for others and find new habits or behaviors to adopt. To further promote America Saves Week and good savings habits, Money Tips will feature a daily blog based on the savings themes. They will arrive in your mailbox Feb. 26th – March 3rd.

Joyce

Joyce Lash

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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Need it? Use it? Afford it?

Yep, that’s Glen with his golf cart: snow blade in the front; a 50# bag of sand in the back and chains on the wheels. Mark proudly boasts, “Had Dad been born today, he would have gone to college and been an engineer. He can invent and create anything!”

I used to wonder why people would buy a golf cart…it is expensive; it is used for a few short months; and it takes the exercise out of the sport.  However, if you were to drive through any of the small towns in my area, you are sure to see people driving golf carts to visit friends or to run home from the camp ground on the far side of town; one elderly woman enclosed her cart with plastic so she could drive it year round…without a drivers license.

Seeing Glen and his golf cart made me stop and think…how much of the stuff I own was purchased with a single purpose in mind and is underutilized? I reached out to a couple of my kids this weekend, asking if they wanted a few of these things that I no longer have time to use. It created a bit of concern, “Mom’s giving her stuff away…WHY?”

I have Spring Fever. I have a goal of removing 50 bags of stuff from my home by Easter. If I don’t use it, don’t need it or can’t afford it…it is gone. By “can’t afford it,” I mean “do I really want to store it?” It costs money to store, insure, clean and maintain stuff.

How about you?  Spring is coming! Take a look at YOUR stuff. How much is it costing you to hang on to it?

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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Can You Change Your Behavior?

Now that the holiday bills are in, what do you think? Any worries or regrets? If so, how can you change your behavior to prevent worries or regrets next year?

This month, many folks have had mailboxes or autopay accounts full of holiday bills or credit card bills; I have a few myself.  But next year at this time it doesn’t have to be that way if we take action now.

Think about the amounts you spent on gifts, food, and other holiday-related expenses and add them up.  Divide the amount by 10 (months).  Suppose your total spending was $400. Then 400 ÷10 = $40; if you save $40 each month until November, you will have $400 available in November for next year’s holiday purchases.

Another approach could involve saving $20 per week; after a year you would have $1,040.  This could be a holiday fund or a vacation fund; the money could be used for other annual expenses too, like back-to-school costs or car registration. Think about your goals for this year and save accordingly.

People who plan to save excel in reaching their goals.

Susan Taylor

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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Keep your whole refund: File taxes for FREE!

Filing a tax return is an annual necessity for most Americans, and to a lot of people it feels complicated. That’s why they pay someone else to do the work for them.  It’s just like how I pay someone else to work on my car, because I don’t have the needed knowledge or skills.

Even if you are not highly skilled, however, it may be possible for  you to get your tax return filed for free! The IRS trains and certifies volunteer tax preparers through VITA (Volunteer Income Tax Assistance) and through AARP. Volunteers have to pass several tests in order to serve. If you have moderate or low income and if your return is fairly ordinary in complexity, you may be eligible to have those volunteers file your return for you.

To find a free tax site near you, call 211 or go to www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers and search by zip code! Most people can file through the VITA or AARP programs if they have income from a job, pension, social security, investments and other typical sources. The tax volunteers will also make sure you get the tax credits and deductions you are entitled to.

There are a few types of tax issues volunteers are not allowed to address, including: rental income; farm income; certain types of business income (if you need to use depreciation, or deduct business use of your home, or if you keep an inventory of products or supplies).

Another way to file your tax return for free is through IRS Free File. This lets you do it yourself on-line using user-friendly commercial software.  You don’t need to be a tax expert to do this, either!

Whether or not you expect a tax refund, if your tax situation is not too complicated, it’s smart to think twice before  you pay $150 – $400 to have someone else do your taxes for you!

What have been your most positive experiences with filing your tax return?

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Refund Advance? Resist the Temptation!

Tax season is coming up fast.  If you’re one of the millions of Americans who expect a hefty refund, you may be excited — impatient, even.

It’s important to have realistic expectations. If your refund includes the Earned Income Tax Credit OR the Additional Child Tax Credit, the earliest you’ll receive your refund is around February 27, even if you file on the earliest possible date in January. Congress passed a law two years ago requiring that those refunds not be processed until after February 15, to allow plenty of time for the IRS to gather and process the information it receives from employers around the nation.

The best way to get your tax refund quickly involves a few key steps:

  • File an accurate and complete return.  Don’t rush to file before you even have all the documents and information you need.
  • Be sure you claim only the dependents and credits you are entitled to.
  • File electronically. When paper returns are mailed in they take weeks longer.
  • Receive your refund via direct deposit.

What about refund loans? If you believe some advertising, or the sales pitches of some tax preparers, getting a refund advance is the easiest way to get your refund quickly. It may seem easy, but it’s actually risky.  If anything goes wrong with your refund, the loan will be due anyway, and how will you repay it?  If you can’t repay it on time, you’ll face additional fees and perhaps debt collection headaches.

A refund advance is a loan; the lender gives you money now, and you probably spend it. Then when your refund actually comes through, the loan is automatically repaid to the lender. But if the refund doesn’t come through as planned, the lender will turn to you for repayment, even if you no longer have the money.

What could go wrong with your refund? Actually, a lot could go wrong.

  • In some cases, people’s refunds are withheld in order to pay debts owed by the taxpayer — debts such as unpaid student loans, back child support, or other government debts.
  • In other cases, irregularity in paperwork can delay refunds. This might not mean that you don’t get your refund, but it might mean a delay, which could cause you some headaches with the lender.
  • One more situation when people don’t get the refund they expect occurs when there was an error in preparing their return. Perhaps you weren’t entitled to a particular credit, or perhaps you are not entitled to claim a dependent. You didn’t mean to cheat on your return, but due to an error somewhere in the process, your refund is less than expected.

Refund advance loans are advertised as no fee/ no interest loans. The catch, however, is that you are required to file your return through the tax service where you obtain the loan; their fees are often much higher than fees charged by a non-lending tax service. What’s more, if you qualify for free tax preparation, then there would be no reason to pay any fee at all.

Resist the refund advance, and be secure in your plans for using your refund!

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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A Smooth Running Home

My job provides me opportunities to expand the financial management skills of people of all ages and stages of life: basic money management, investing, how to pay for long-term care. I find that people are most willing to come to a class and get the most out of a class when it is a teachable moment for the individual. I think the reality that “you don’t know what you don’t know” often prevents people from participating in financial programs. Wouldn’t it be nice to have a crystal ball that showed you what financial challenges you are soon to face so you could sign up for classes and check out self-help books to better prepare yourself BEFORE the challenge strikes.  THE TIME TO DIG THE WELL IS BEFORE YOU ARE THIRSTY.

I participated in a discussion this weekend with professionals and volunteers who work with couples preparing for marriage. Again…a skill building program that should be full with a waiting list. Failed relationships (especially when children are involved) carry high and long-term financial and emotional costs. Among the reasons stated by couples as to why they won’t sign up for a relationship-strengthening program is MONEY and TIME – both very important assets that are in limited supply. Yet, if you stop and think about it…taking the time (and money) to strengthen relationships could save you a lot of time and money and heart ache in the long run.

It is easier and cheaper to prevent disaster than to clean up and fix disasters. Check out our web pages for programs and publications to keep your home running smoothly… https://www.extension.iastate.edu/humansciences/, https://www.extension.iastate.edu/humansciences/relationships and https://store.extension.iastate.edu/Topic/Finances

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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Tax Cuts and Jobs Act

I’m pretty sure the new Tax Cuts and Jobs Act signed into law at the end of 2017 will make financial planning interesting in 2018.  Business owners have the most to gain from the changes. The impact on you and me is a little less clear. Many of the the long term financial benefits are only “could happens” or “in theory this should happen” speculations. All changes to personal financial record keeping are short term; they are currently set to expire in 2025.

A few highlights:

  • 1095 forms that report proof of coverage for health insurance when you file your 2017 returns won’t be required by your tax professional. They can accept other proof of coverage. Employers and insurers have been given an extension allowing the forms to be send as late as March.
  • If you had personal property taxes assessed at the end of 2017 (including 2018 taxes) and the amount combined with state and local income taxes exceeded $10,000, it made sense to pay ahead of your normal due date. When you file your 2018 taxes, the deduction for state & local income taxes plus personal property taxes (combined total) will be capped at $10,000.
  • 2018 is the last year you will be required to carry health insurance.  When you file your 2017 and 2018 tax returns, you may have a shared responsibility payment assessed if you don’t have adequate coverage, but no payments will be assessed when you file your 2019 return.
  • Beginning in 2018, there will be no benefit in compiling information about safe deposit box payments, fees for tax preparation, non-reimbursed employment expenses, hobby expenses, investment fees and expenses, legal fees and moving expenses (unless you are in the military), because they will not be deductible.
  • If you home school your K-12 children or send them to private school you could gain some tax advantages by passing the money through a 529 plan. The funds contributed will reduce your state taxes.
  • Beginning in 2018 you will only be able to claim a theft or personal casualty loss if there has been a disaster declared by the President.
  • Your tax software will undergo a major rewrite!

Other changes are less certain:

  • Your paycheck might go up. New tax withholding tables, based on the lower tax rates, should arrive at your place of employment in the first quarter of the year.
  • States may or may not align their tax laws to changes in Federal laws.
  • Funding for federally supported programs will change as Congress takes steps to balance the books when tax revenues decline.

If you work with a tax professional, it might be wise to ask for guidance about how your personal taxes are likely to change, make some temporary adjustments and stay tuned until 2025 when they will likely change again.

Joyce

 

 

 

Joyce Lash

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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Improving Your Financial Well-Being

As we move from holiday cheer to a New Year, be realistic with what you would like to accomplish in the New Year.  We have shared about SMART Goals – make your goal: specific, measurable, attainable, realistic and timed.  Be honest with yourself and try to make little changes to your routine.

Sticking to resolutions isn’t easy. One source suggests that after the first week, only 75% of individuals are keeping up with their planned changes.  A month later only 64% continue., and by six months later only 46% are continuing to implement their resolution.

Your mindset is a key when it comes to making changes for the better. Here are some ideas: meditate once a day; express gratitude; volunteer and help others; and see the blessings in your life.

 

Here are some ideas for new years resolutions that could be helpful to you:

  • Learn something new – a language, or something about finances.  Visit your local library for resources.
  • Save small. Even small amounts add up, and can allow you to reach a goal – something that you want to purchase or a trip you want to take.
  • File your taxes early this year if possible to reduce risk of identity theft in filing taxes.

Plan now for a  new year’s resolution that will help you succeed in improving your financial well-being!

Susan Taylor

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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