Monthly Archives: February 2016

Feb 27 2016

Newcomer Money Guides

While beneficiary, collateral, and fair market value are familiar to many, these terms can be especially confusing to those with limited English-language skills. In an attempt to assist various people, the Consumer Financial Protection Bureau has created the Newcomer’s Guides to Managing Money to provide recent immigrants with information about basic money decisions.  These guides offer brief suggestions to those who are new to the U.S. banking system.  The guides also include guidance for submitting and resolving problems with a financial product or service.

The Newcomer Guides include these topics:

  • Ways to receive your money, comparing cash, check, direct deposit, and debit cards.
  • Checklist for opening an account, to assist with starting a bank or credit union account.
  • Ways to pay your bills, providing guidance on whether to pay by check, debit card, credit card, or online.
  • Selecting financial products and services, providing assistance on deciding which financial services are right for various household situations.

Print copies of the guides can be ordered or downloaded. These publications are available to English and Spanish with additional languages to be offered in the future.

For additional information on money guides for newcomers:

Article #1
Article #2
Article #3

Teaching Suggestions

  • Have students ask people to create a list of financial planning terms that people find confusing.
  • Have students suggest methods to have people learn about confusing financial planning terms.

Discussion Questions 

  1. What financial problems might be encountered by people with limited English-language skills?
  2. What actions might be taken to assist various groups to better understand banking services and money management activities?
Feb 20 2016

Successful Financial Goals

Financial goals are communicated in many formats, and are good to have. However, too often, a goal is lacking the “why.”  While various financial planning actions are beneficial, quite often, little thought is given to the motivation behind a certain goal. Without this “why,” minimal internal motivation is likely to be present to see a goal to completion. The “why” of a financial goal will help you persevere when encountering challenges that could derail your achievement of a goal.

Not being able to answer the “why” may indicate that the goal is not worth your efforts. The “why” will also assure that a goal provides a higher level of satisfaction when it is achieved.  The process may require a series of “why” questions as you respond to the initial “why.”

Instead of being an afterthought, the “why” of your financial goals should be a driving force in creating and achieving these personal economic objectives. Be able to decide if a goal is a result of advertising, societal influences, or reflective thought about your personal financial situation. This action should result in meaningful goals rather than just efforts to accumulate more money or more stuff.

For additional information on financial goals, click here.

 

Teaching Suggestions

  • Have students talk to people to create examples of financial goals.
  • Have students ask a series of “why” questions to help other people to better focus their personal financial goals.

Discussion Questions 

  1. What are common motivations that influence personal financial goals?
  2. How might a person better understand the motivation behind personal financial goals?
Feb 13 2016

Robo Investment Advice

Automated investment services are expanding.  Many financial service companies are offering “robo advice,” in which investors complete an online questionnaire and a computer program generates and monitors a portfolio of funds.  Robo-advisers are also designed to automatically rebalance a portfolio based on changes in the market as well as any changes in the amounts allocated to certain investments.

With many investors already making their own trades online, investment companies believe that robo advisors have these additional benefits:

  • lower costs for obtaining advice and conducting transactions.
  • an ability to adjust the portfolio for tax purposes by selling shares that have declined to offset gains.
  • an easier investment approach for younger clients with less-complicated financial lives.

 

Some will be concerned about automated portfolio management.  Human advisors will still be available to address issues about mortgages, insurance, estate planning, retirement income, and other topics that robo-advisers are not yet equipped to answer.

For additional information on robo advice, click on the following articles:

Article #1
Article #2
Article #3

Teaching Suggestions

  • Have students ask people to describe the process they use to select investments.
  • Have students create a framework to analyze when using robo advice might be appropriate for an investor.

Discussion Questions 

  1. What are benefits and drawbacks of robo advice?
  2. What factors might be considered when using robo advice for investment decisions?

 

Feb 6 2016

The Gig Economy

Online selling, personal taxi services such as Uber, and renting a spare room to tourists, are examples of an increasing number of people generating or supplementing their incomes by trading goods and services online.  This trend is often replacing traditional employment.

Measurement of the “gig economy” (working outside a formal work environment with temporary, short-term employment by independent workers) is difficult.  Many situations are not reported in current labor statistics. In recent years, the fastest growth for self-employed workers has been in hairdressing, cleaning, and management consulting. While these services may be in the gig economy, this trend may also indicate growing formal self-employment in these fields.

Gig economy activities may start as temporary work due to a lay-off or a need to supplement household income. However, as time goes by, these self-employment positions can become a person’s ongoing employment status.

For additional information on the gig economy, click here.

Teaching Suggestions

  • Have students describe examples of the “gig economy.”
  • Have students explain the “gig economy” to others (including different generations) and get their reactions.

Discussion Questions

  1. What factors influenced the development of the gig economy?
  2. How might the gig economy affect a person’s financial planning activities?