Supply and Demand

I love Honey Crisp apples…but not the premium price. I love to visit family for holidays…but not high plane ticket costs. I love fresh vegetables but settle for canned during the winter months because the price of fresh produce during that time of the year can be expensive.

The Law of Supply and Demand greatly affects my shopping habits and attitude. I choose to see Supply and Demand as a game, in which winning equals a savings to my pocketbook.  When fruits and vegetables are in season, the demand is less than the plentiful supply…thus, prices are lower. That is the time I enjoy fresh fruits and vegetables; I also freeze sweet corn, and buy bushels of green beans and tomatoes from a local auction house to preserve.

Most seasonal variations, such as plentiful supplies of fruits and vegetables throughout the summer, are predictable.  I plan ahead and schedule time to take advantage of what each season has to offer; the result is good use of my time AND a savings to my grocery bill.

Occasionally, something unpredictable affects Supply and Demand and, therefore, prices.  I was recently looking at August 21 ticket prices to fly to Boise to visit family…shopping a full 5 months before the time of travel. Typically I can get a good ticket price when I make reservations early, so I shop early, knowing that prices will increase as the departure date comes near.  With five months to spare, it made no sense to me that ticket prices were very high on the days surrounding August 21.  A little research revealed that Boise is the location for optimal viewing of a solar eclipse on August 21. Flights and motel rooms are already fully booked by scientists and amateur astrophysicists.

If I book a flight around August 21, I would have to consider that a “loss” for me in the Game of Supply and Demand. I have a choice: I can either pay the higher price OR look for a different weekend to visit Boise.

As for Honey Crisps apples…I have not found a time where the price is in my preferred price range.  Do you have any suggestions?

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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Look for Money Smart Week Activities in Your Community April 22-29, 2917

Money Smart Week, started 15 years ago by the Federal Reserve Bank of Chicago, is designed as a public awareness campaign to help consumers better manage their personal finances. There are Money Smart Week programs in every state. Here in Iowa, more than 200 partner organizations have joined in the fun to promote financial education and to provide learning opportunities.  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.  Educational programs are offered for all ages, from preschoolers to seniors.  Activities like scout nights, shred events, essay and poster contests, geocache for college cash, piggy banks, books, kites, and chances to win prizes make the learning fun.  Educational program topics include establishing a budget, protecting financial information, raising money-smart kids, and more.

Check the website www.MoneySmartWeek.org for more details about activities in your communities.  Check your local library for a display as well as programming.  Spread the knowledge!

 

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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Social Security Matters – at any age

April is National Social Security Month.  It’s really fitting that they chose April, because April is also Financial Literacy Month.  And understanding your Social Security situation is an important part of Financial Literacy.

If you’re under 40, you may be surprised to consider that you need to pay attention to Social Security. (Even some people under 60 may be surprised at that idea!).  Now I’m not suggesting you need to fully understand Social Security – that’s a tall order.  But you do need to be aware of your own social security record and what it means.

The key your record is found at my Social Security.  Here you can activate your own on-line account so that you can log in any time; this lets you verify the accuracy of your earnings record, learn what you can expect in retirement or disability benefits, order a replacement social security card, and more.

Why it matters. On average, Social Security replaces approximately 40 percent of pre-retirement earnings. To enjoy a comfortable retirement, most people will also need income from other sources — like pensions, savings, and investments. Understanding your social security projections can help you make informed plans for your own retirement.

Throughout the month of April, the Social Security Administration will boost its outreach through traditional media and social media, including a Facebook Live Chat:

Social Security will participate in a Facebook Live Chat, hosted by USA.gov, on April 20, 2017, at 7:00 p.m. ET. The public may ask questions via livestream about the “5 Steps Toward Financial Security.”

To participate, follow USA.gov and Social Security on Facebook.

NOTE: some young adults may be skeptical, questioning whether Social Security will still be around by the time they retire.  While Social Security will likely change over the next 2-4 decades, you will not find any experts who believe it will disappear.  Understanding your situation under current law will help you understand policy changes as they are proposed and enacted.  No matter your age, it’s smart to activate your Social Security account and see what it tells you.

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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Hidden Fees

I’ve never purchased a cell phone plan with confidence that the price in the initial offer was going to be the bill I received at home. Some added costs can be explained by taxes or fees that support universal access, but others are hidden fees that you don’t learn about until the first bill arrives.

Hidden fees are common with new car purchases, event tickets, resort/ airline reservations, banking services, cell phone/media plans and post-secondary education. They are a way to generate additional revenue. Studies of consumer spending show that consumers are more likely to buy an item or service that appears to cost $80 with $20 added later as compared to an item or service with an outright price of $100. Consumers stop looking for a lower price and the momentum of having made a selection and signed a contract, keeps us from backing out on the sale.

For some consumer products and services, states have passed legislation that caps additional fees and amounts that can be added after a sale. Unfortunately this doesn’t solve the problem. Consumer research has found they become sticky price additions: the seller tacks on the maximum allowed by law or leaves the fees in place regardless of whether the additional funds are necessary.

As a consumer the best action is to read before you sign the bottom line and exercise your option to walk away from the sale. The Federal Trade Commission regulates this area of consumer pricing. Filing a complaint can result in fines and fair disclosure of fees by merchants.

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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Fun Things To Do With Your Tax Refund

We are in the middle of tax season and you may be anticipating a chunk of cash back from Uncle Sam. You may have identified paying some bills, or making an investment.  You may want to try a few of these suggestions:

  • Donate to a charity, like a local animal shelter, homeless shelter, or another group you would like to donate some funds.
  • Update a room – furniture, paint, might be the way to go.
  • Pay off a car – If you have enough in your refund – you could free up some cash in the future by paying off your car payments early.
  • Take a trip – weekend getaway or a resort spa weekend.
  • Clear your Credit Card Debt – take your outstanding balance down to zero and start your financial freedom.
  • Tackle a Hobby – What to learn how to play golf, or ride a horse, cooking classes – develop a new hobby.
  • Help Someone Out – Gift some money to someone who is down on his or her luck.
  • Fill the Pantry – stock up on everyday necessities. Use some digital coupons to save even more.
  • Upgrade your Electronics – New cell phone, tablet, TV or laptop – look for refund sales at the store.
  • Tuck it away –put some cash in bank for a “rainy” day – The cushion will help you out.
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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Students at Risk for High Overdraft Fees

It’s not surprising to read that college students tend to have more bank overdrafts than the average consumer.  After all, they’re often managing money on their own for the first time.  Add to that the fact that they have limited resources, and that in many cases they receive their funds in one sum at the beginning of a semester, and then have to carefully stretch that money throughout several months. It takes a while to learn the skills required to manage effectively and avoid overdrafts.

A recent report from the Consumer Financial Protection Bureau identifies another risk to students: if their school spirit leads them to sign up for a debit card branded with the school logo or mascot, the fees they incur for each overdraft may be higher than average.  That’s right: just because the card is branded by your school does not mean it’s the best card for you.  Colleges do not always ensure competitive fee structures in the products included in their marketing agreements.

The risk for students is real: for students with limited resources, extra fees of even $100 – $200 can impact school success.  Students running short on money may skip purchasing key books, may work more hours and sacrifice study, or may simply become discouraged and quit.  Fortunately there is also good news – this report suggests clear strategies for minimizing the risk:

  1. Comparison shop when choosing banking services, just as when buying shoes or refrigerators.  Brand is not the only factor to consider.
  2. Provide guidance and support to college students to help them learn critical financial management skills and avoid costly lessons. Parents and other concerned adults can alert students to the need and monitor their financial well-being, with a goal of catching problems early. Students themselves, if made aware of the issue, can increase their financial vigilance.

This article from FINRA provides more information.

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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Start the Finance Conversation with your Aging Parents (part 2)

As an adult child who happens to be in the field of family finance, I knew it was necessary to start the conversation with my parents about their end-of-life wishes. I also needed to know where the essential papers were located in case of a crisis.

Essential papers include:

  • Insurance policies
  • Wills
  • Durable powers of attorney for finances and health care
  • Burial plans
  • Where the safety deposit box is, who has the right to open it, and the location of the key
  • Where the birth and marriage certificates are kept, along with…
    • Military service and Social Security records
    • Usernames/passwords to online accounts
    • Names of financial advisors
    • Retirement benefits
    • And investment and banking accounts

Whew! That is quite a list! It may take a while to have a conversation about and to gather all these items, but doing so helps adult children know their parents’ wishes and what is expected when you have to step into a decision making role.

To start today, sign up for a Finances of Caregiving series near you. Or call your county ISU extension office and ask for the publication “Legal Issues in Later Life.” You could use it to start a family conversation. Whatever you do, get the conversation started today.

Guest Blogger: Sandra McKinnon, Human Sciences Specialist

 

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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Start the Finance Conversation with your Aging Parents (part 1)

It is wise to plan ahead and anticipate situations our aging parents may face. As an adult child, it may be emotionally difficult to talk to our parents about death, disability, chronic illness and incapacity, but making financial decisions before a crisis has benefits:

  • There is less emotion
  • Disagreements among siblings may be reduced
  • You are not making decisions in the middle of financial upheaval

It’s a good idea to start the conversation before our parents are 60 years old. If you are an aging parent, start the conversation now with your adult children.

Three ways to start the conversation:

  • Raise the issue when an event occurs: a neighbor or friend is in the nursing home or has been hospitalized.
  • Share your own wishes and then ask your family what they want.
  • Organize a family meeting

Ideally, in a family meeting, everyone in the immediate family participates, even if joining in by phone or online. It is important to respect your parents’ privacy. Parents can decide how much detail they want to share but the goal is to know their wishes and where the essential papers are should a crisis arise.

Guest Blogger: Sandra McKinnon, Human Sciences Specialist, Family Finance

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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What’s America Saves Week?

You might wonder “What is that?” America Saves Week is coordinated by America Saves and the American Savings Education Council.  Started in 2007, the week is an annual opportunity for organizations to promote good savings behavior and a chance for individuals to assess their own saving status.  Typically, thousands of organizations participate in the week, reaching millions of people.

The 2016 annual America Saves Week survey  assessing national household savings revealed:

  • Just two out of every five U.S. households report good or excellent progress in meeting their savings needs.
  • Fifty-two% are saving enough for a retirement with a desirable standard of living.
  • Only 43 percent have automatic savings outside of work.
  • More men (74 %) report saving progress than woman (67 %).
  • Those with a savings plan with specific goals (55 %) are making much more savings progress than those without a plan (23 %). Try saving at work: it is one of the most effective ways for people to save automatically. There are at least three ways you can promote automatic savings.

So, what can you do to start saving?

  • Try saving a portion of your pay automatically into a separate savings account through direct deposit.
  • Open or add to work-sponsored retirement accounts.
  • If your employer doesn’t offer a retirement plan, consider opening a myRA account.

myRA (my Retirement Account) is a new retirement savings program that helps you take control over your future. It is simple, safe and affordable retirement account created by the United States Department of the Treasury for the millions of Americans who face barriers to saving for retirement. https://myra.gov/how-it-works/

 

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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The Match: Is it enough?

If your employer matches your contributions to a retirement plan, then it is smart to contribute at least that much.  For example, if your employer matches your contributions up to 3%, then it’s smart to contribute at least 3% of your income. If you don’t, you’re turning down part of your paycheck.

Does that mean that if you’re maximizing your employer match, you’re saving enough for retirement? Not necessarily.

Your employer’s decision about how much they’ll match is not based on how much investment is needed to keep you secure. That decision is up to you.

Only you can decide how much to save toward your future.  Only you can decide to give up certain spending now, in order to have a more secure lifestyle in the future.  Our earlier post describes tools for assessing your progress toward a secure retirement.

Employers who offer a match typically match employee contributions up to 3-5% of income.  If it is a dollar-for-dollar match, then making full use of a 3% match means a total of 6% of your income is being put toward retirement (3% from you plus 3% from your employer).

Based on typical life expectancy and investment returns, experts now estimate that lifelong savings of approximately 15% of income is needed in order to provide retirement income equivalent to pre-retirement income. Of course, workers who will have other sources of retirement income (such as rental income or a traditional pension like IPERS) can achieve full income replacement with lower savings rates.  On the flip side, some workers may decide they don’t need full income replacement, and will be satisfied with a lower retirement income; a lower savings rate may work for those workers as well.

Bottom line? Planning for a secure retirement is up to you. Don’t rely on your employer’s match to determine how much you will save!

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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