Category Chapters

Jan 10 2015

5 Questions to Help You Get Your Financial Life in Order

“Rather than making resolutions . . . try answering the following five questions today, with a plan to answer them again when 2015 comes to a close.”

In this MarketWatch article, Chuck Jaffe poses the following 5 questions to help people gauge their financial health.

  1. What’s your net worth?
  2. How many times your current (or last) salary do you have in retirement savings?
  3. What’s your debt-payment burden?
  4. If you don’t see the next New Year, what would happen to your family financially?
  5. When reviewing your finances, what is the single thing that makes you feel the best? The worst?

In addition to the questions, Mr. Jaffe also provides information that can be used to improve a person’s answers  to each question with the goal of helping people manage their personal finances and improve their financial life.

For more information, click here.

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss each question with your students and explain how their answers can impact their personal financial decision making and financial security?
  • Ask students to answer one or more of the questions in this article as an assignment.

Discussion Questions

  1. Why is your net worth, salary, savings, and debt-payment burden important?
  2. What implications does the question “If you don’t see the next New Year, what would happen to your family financially?” have on your financial planning activities?
  3. When you look at your finances, what makes you feel good and what makes you feel bad? Based on your answer, what can you do to change your answers to this question?
Jan 7 2015

52-Week Money Challenge

Do you want to take the 52-Week Money Challenge? 

Before saying no, consider it is a simple way to accumulate $1,378 over the next year.  Before saying yes, realize that while it is easy to save small amounts at the beginning of the year, it becomes increasingly harder to save larger amounts at the end of the year on a weekly basis.   Take a look at the table below to see how your money accumulates each week.

 

image source

 

For more information, click here. 

Teaching Suggestions

You may want to use the information in this blog post and the original article to:

  • Stress that even small amounts of money over time can increase the amount available for savings or investing.
  • Discuss how monitoring your spending habits can “find” the money that can be used for savings and investing.
  • Talk about the need for financial discipline when managing, saving, and investing your money.

Discussion Questions

  1. In the above table, you begin by depositing $1 the first week, then each week, the amount you save increases. Where can you find the money needed to fund this type of savings program–especially toward the end of the year?
  2. Assuming you achieved the 52-week challenge and you now have $1,378 dollars in the bank. Would you leave it in the bank, pay your bills, or invest the money?  Justify your choice.
  3. After completing one 52-week challenge, would you take another money challenge? Why or Why Not?
Dec 31 2014

Health Insurance Marketplace Application Check List

When you apply for or renew your coverage in the Health Insurance Marketplace, you’ll need to provide information about you and your household, including income, and insurance coverage you currently have, and some additional information.

Use the checklist below to help you gather what you need to apply for coverage.  Open enrollment ends February 15, 2015.

  • Home and/or mailing addresses for everyone applying for coverage.
  • Social Security Numbers.
  • Document information for
  • Employer and income information for every member of your household (for example, from pay stubs or W-2 forms—Wage and Tax Statements)
  • Your best estimate of what your household income will be in 2015.
  • Policy numbers for any current health insurance plans covering members of your household.
  • A completed “Employer Coverage Tool” for every job-based plan you or someone in your household is eligible for. (You’ll need to fill out this form even for coverage you’re eligible for but don’t enroll in.)
  • Notices from current plan that include your plan ID, if you have or had bad health coverage in 2014.

For more information, go to:

https://marketplace.cms.gov/outreach-and-education/marketplace-application-checklist.pdf

Teaching Suggestions

  • Many states are expanding Medicaid to cover more people. Ask students to find out what Medicaid expansion might mean for them.
  • Why do some people qualify for an exemption from the fee based on income or other situation?

Discussion Questions

  1. Do most people who apply for health insurance through marketplace qualify for premium tax credit?
  2. What penalties are imposed on people who don’t have a coverage in 2015?
  3. Can you buy a plan outside the marketplace and still meet the health care law’s coverage requirement?
Dec 24 2014

Treasury’s myRA To Debut in Late 2014

New Retirement Savings Program Will Provide Safe, No-Fee Starter Accounts

According to the Federal Reserve Board’s recent publication, Report on the Economic Well-Being of U.S. Households in 2013, 31 percent of respondents in a national study reported having no retirement savings or pension, and more than half (54 percent) of those with income with incomes under $25,000 reported the same.  Compounding this lack of preparedness is the reality that many employees (35 percent) in the United States who work for private companies also lack access to an employer-sponsored retirement plan, according to the U.S. Bureau of Labor Statistics.  What’s more, access isn’t provided evenly across all wage-earners.  While 85 percent of those in the highest wage-earning quartile had access to retirement plans, only 38 percent of those in the lowest quartile had access in 2014.

For more information, go to:

www.treasurydirect.gov/readysavegrow; or www.myra.treasury.gov

Teaching Suggestions

  • Ask students if the myRA program is available to them whether they are full-time or part-time employees.
  • What are the eligibility requirements for myRA and what is the sign-up process?
  • Can employees who change jobs continue to add savings to an existing myRA account?

Discussion Questions

  1. Why must many individuals, especially those from low-and moderate income households, make reluctant but deliberate choices to meet short-term needs at the expense of long-term goals?
  2. Will the new myRA program be particularly attractive to low-and moderate income households?
  3. What are expected key features of the myRA programs?

 

Dec 20 2014

Stock Investing for Dummies

To make the most of your money and your choices, educate yourself on how to make stock investments confidently and intelligently . . .”

This article can be used to help reassure people who are afraid to make their first stock investment.  Specific topics in the article include

  1. The Ten Most Important Points about Stock Investing
  2. Checking Important Company Fundamentals Before Investing in a Stock
  3. Financial Measures to Consider before Investing in a Stock
  4. A Mandatory Reading List for Stock Investors
  5. Reassuring Points for Nervous Stock Investors

Information in each of the above topics is explained in a straight-forward and easy-to-understand format beginning investors can understand.  The last topic, Reassuring Points for Nervous Stock Investors is especially important for people reluctant to invest in stocks.

For more information go to http://www.dummies.com/how-to/content/stock-investing-for-dummies-cheat-sheet.html

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Reinforce the benefits of a long-term investment program. Be sure to point out that the value of quality stocks usually increases over a long period of time–a concept stressed in the text.
  • Stress the importance of evaluating a stock before investing your money.

Discussion Questions

  1. What are the benefits of a long-term investment program that includes not only stocks, but also mutual funds, bonds, and other investment alternatives?
  2. Why are people afraid to invest in stocks?
  3. What steps can you take to overcome the fear of investing in stocks?
Dec 17 2014

Plunging Crude Prices Hammer Energy Companies

“A decision by OPEC this week to maintain current levels of oil production is hammering major energy companies in the U.S. and abroad.”

This article explores the winners and losers of lower energy prices.  For consumers, lower energy and gas prices means increased discretionary funds for purchasing consumer goods including food, clothes, electronics, and presents for friends and relatives during the holiday season.  Also, both large and small retailers benefit because consumers have more money to spend.  And airlines, package delivery services, cruise lines, and other companies are spending less on fuel.

The disadvantages of lower energy and gasoline prices are already causing the stock prices of big oil companies including Chevron, ConocoPhillips, Exxon Mobil, Marathon Oil, and British Petroleum to decline.

For more information go to http://finance.yahoo.com/news/plunging-crude-prices-hammer-energy-companies-123639239–finance.html

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss the impact of the cost of energy and gasoline on a consumer’s budget.
  • Describe alternatives uses for the savings that result from lower energy and gasoline prices.

Discussion Questions

  1. What is the current price for a gallon of gasoline? How does this compare with the cost 6 months ago?  What impact does this have on your spending patterns and your personal budget?
  2. While you are saving money at the pump, the big question may be how you plan to use the savings. Are there alternatives to spending the money on clothes, entertainment, or holiday gifts?
  3. Now that the value of energy company stocks has declined, would you invest in a company like Exxon Mobil or Chevron? Explain your answer.
Dec 13 2014

Great Ways to Save

“Can running shoes save you money?  Yes – and we have six more ideas to help you save.”

Let’s begin with the answer to the above question.  As the article points out, buying running shoes can save you money because running reduces the risk of heart disease and stroke, lowers blood pressure, and can help prevent other health problems that can cause huge medical bills and even loss of employment or your life.

The above is just one of the suggestions in this article that describes ways to increase savings and provide additional money for investments by taking simple steps that you can make in your everyday life.  Additional suggestions (and the reasons behind the suggestions) include maxing out your savings, saving spare change, choice of gasoline for your car, getting the best value when choosing a hotel, encouraging your kids to save, and bundling communication bills.

For more information go to http://money.cnn.com/2005/06/02/pf/smartest_saving_0507/index.htm

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Stress the fact that savings can be easier than you think by taking advantage of everyday opportunities to increase the amount of money you save and invest.
  • Use the example in the article about how increasing the amount of money contributed to your 401(k) retirement account can significantly increase the amount available when you retire.
  • Note: This article is just one of a series of articles in the Money series “50 Smartest Things to Do With Your Money.”  You may want to (or have your students) visit this web site for other articles on money management.

Discussion Questions

  1. Some people say that saving small amounts of money doesn’t really help accomplish their long-term financial goals. Do you agree or disagree?
  2. How can one of the suggestions in this article help you increase the amount you save or invest?
Dec 10 2014

Cardless ATMs

Bank customers may now access ATMs without a debit card. Using a smartphone app, both a cash code (an 8-digit number) and the PIN (4 digits) will be required for cash.   App customers may authorize another person from phone contacts to obtain money. The recipient will be sent a cash code to allow withdrawal of an approved amount.

Banks also offer a credit card “lock and limit” app to control security and spending.  This feature is used to block overseas transactions where the card isn’t present.  In addition, a small business app that can accept on-the-spot payments, create estimates and invoices immediately and help to manage cash flow.

For additional information on cardless ATMs go to:

http://www.theaustralian.com.au/technology/commbank-launches-cardless-atms/story-e6frgakx-1226900643013?nk=bef92ef2e3c07bd1787f1279b087e2b6

Teaching Suggestions

  • Have students research various mobile banking technology that might be used in the future.
  • Ask students to describe their experiences with various mobile banking apps.

 Discussion Questions 

  1. What are benefits of cardless ATMs for consumers and business?
  2. Describe potential problems with cardless ATMs.
  3. What other types of mobile banking apps might be developed in the future?
Dec 6 2014

Banking at the Post Office

Nearly 90 million people in the United States have no bank account or rely on expensive financial services from check-cashing services, payday loan companies, or pawnshops.  To help address this situation, the U.S. Postal Service is considering a program to provide financial services to the population that is underserved by traditional banks.

The USPS, which already offers money orders to customers, plans an expanded product line that would include reloadable prepaid debit cards, mobile transactions, domestic and international money transfers, a Bitcoin exchange, and possibly, small loans. As a result of their size, USPS loan rates would be lower than pawnshops or payday loan enterprises. Post office branches in low-income neighborhoods could provide services to customers in areas no longer served by traditional banks.

Opposition to this action will occur from the banking industry. However, compelling evidence is offered that many Americans lack trust in or access to banks.

While going to the post office for financial services may seem strange in the United States, about one billion people in 50 countries bank through postal system offices.  These include India, Pakistan, Japan, Brazil, Malawi, and Kenya.

For additional information on banking at the post office, go to:

http://www.economist.com/news/finance-and-economics/21601026-americas-postal-service-ponders-foray-financial-services-put-your-money

Click to access rarc-wp-14-007.pdf

Teaching Suggestions

  • Have students research the banking services offered by postal services in other countries.
  • Have students create interview questions that they might ask someone who does not use a traditional bank.

 Discussion Questions 

  1. What factors would influence the need for the postal service to consider offering financial services?
  2. Describe possible benefits and concerns associated with the U.S. Postal Service offering financial services.
  3. Other than the postal service, how might underserved and unserved banking consumers obtain financial services?
Dec 3 2014

Dangers of not teaching children about money management

Financial difficulties in a household can create anxiety for children. To minimize these apprehensions, parents should begin communicating about money at an early age to help children grow up to be financially literate adults.  Rather than allowing the youngsters to arrive at their own conclusions, a proactive approach can help the children avoid the mistakes of their parents. Without an open discussion, children will likely grow up lacking financial knowledge.

Suggested actions for developing good money habits among children are:

  • teach them to budget since this is the foundation of successful personal finance.
  • develop wise spending decisions for wise choices and avoiding impulse buying.
  • create an understanding of the rewards of work with a system of work-for-pay chores, which go beyond basic required chores, such as a clean room.
  • develop an appreciation for delayed gratification with saving for a goal.

For additional information on wise money management for children, go to:

http://www.bankrate.com/finance/smart-spending/the-danger-of-not-teaching-kids-about-cash.aspx?ec_id=cmct_02_comm_PF_mainlink

http://www.bankrate.com/finance/financial-literacy/4-money-lessons-for-children-to-master-1.aspx

 

Teaching Suggestions

  • Have students research various actions that might be taken to better involve children in family money management decisions.
  • Have students create interview questions that they might ask when trying to determine if parents are teaching their children wise money management habits.

 Discussion Questions 

  1. Describe various problems associated with not involving all household members in family money management activities.
  2. What actions would you take to teach young people about wise money management?