Tag Archives: Financial Planning

Aug 26 2015

Many Americans Have No Savings

About three in ten Americans have no emergency savings, according to a study conducted by Bankrate.com. This number has increased in recent years, mainly due to the lack of growth in household income. Without an emergency fund, people tend to encounter even greater financial difficulties. A person will often use high-interest debt to cover unexpected expenses. In addition to the 29 percent with no savings, another 21 percent have less than three months worth of expenses saved.

For additional information on emergency savings, click here.

Teaching Suggestions

  • Have students ask several people who their might cope with a financial emergency.
  • Have students create a plan for creating a emergency savings fund.

Discussion Questions 

  1. What are methods that might be used to cope with a financial emergency?
  2. How might a person be encouraged to create an emergency fund?
Aug 22 2015

Vital Financial Concepts To Teach Children

Learning at home is the starting point for teaching children about money. These eleven key personal concepts should be explained and experienced by children as they are growing up:

  1. Saving
  2. Budget
  3. Loan
  4. Debt
  5. Interest
  6. Credit card
  7. Taxes
  8. Investment
  9. Stock
  10. 401(k)
  11. Credit score

The age at which these concepts are taught will vary.

For additional information on teaching vital personal finance concepts to children, click here.

Teaching Suggestions

  • Have students describe how they learned about these concepts.
  • Have students conduct a survey among young consumers to determine their knowledge of these topics.

Discussion Questions 

  1. What additional personal finance concepts might be added to this list?
  2. What actions might parents take to teach these concepts to their children?
Aug 19 2015

Revising Dave Ramsey’s Baby Steps

Dave Ramsey has taught and encouraged millions to get out of debt and to achieve an improved financial situation through his “seven baby steps,” which are: (1) establish a $1,000 emergency fund; (2) pay off debt; (3) save three to six months of expenses; (4) invest 15 percent of income in pre-tax retirement funds; (5) plan for the funding of the college education of children; (6) pay off mortgage as soon as possible; (7) build wealth and give.

An alternative perspective to this approach might be:

  1. Create a larger initial emergency fund.
  2. Instead of paying off the smallest debts first, pay off the ones with the highest interest.
  3. A minimum of six months for expenses is needed, with twelve months more realistic.
  4. Take advantage of any 401k matching offered by employers.
  5. College may not be the right educational choice for everyone. Also, those who go to college should be responsible for a portion of education costs.
  6. Home ownership may not be appropriate for everyone. When buying a home, paying off a mortgage may be a higher priority than saving for college to reduce the amount of interest paid.
  7. Making money, saving money, and donating to charity should be the main focus.

For additional information on personal financial planning actions, click here.

Teaching Suggestions

  • Have students survey others regarding their use of these personal financial planning suggestions.
  • Have students obtain additional financial planning suggestions using online research.

Discussion Questions 

  1. What do you believe are the most important actions that should be taken regarding wise personal financial planning?
  2. How would you communicate these financial planning actions to others?
Aug 8 2015

Your Path To Success

What separates successful people from others?   While favorable timing, personal connections, wealth or other advantages can lead to success, a person must also possess various success-oriented attitudes, behaviors, and skills. Some of the actions that can lead to academic, career, and personal success include:

  • Display poise and confidence in your ability.
  • Assess existing skills and knowledge.
  • Set personal and career goals that align with your abilities.
  • Develop a habit on ongoing learning.
  • Take risks that allow you the opportunity to achieve at a higher level.
  • Persevere in your work efforts
  • Be prepared to face and go beyond obstacles.
  • Rejection and criticism can lead to future success.
  • Develop effective interpersonal skills. Your ability to interact, gain support of others, and develop trust is critical.

 For additional information about a success path, click here.

 

Teaching Suggestions

  • Have students ask people to describe their definition of “success.”
  • Have students obtain suggested actions for personal and career success using online research.

Discussion Questions 

  1. What are common mistakes people make in their personal financial planning and career planning activities?
  2. What actions do you plan to take to improve your personal and career success?
Jul 29 2015

Free Financial Coaches Give the Working Poor a Second Chance.

“. . . Financial coaching initiatives that target the working poor have sprung up in communities across the country.”

For low-income wage earners, the idea of paying hundreds of dollars for professional financial help can seem about as far-fetched as buying a winning lotto ticket.  And yet, help is available in a number of the nation’s larger cities including Chicago and New York.  In most cases, the financial coaches volunteer their time and have a background in personal finance or have received financial and investment training.  The participants receive specific suggestions geared to their individual situation that are designed to improve their credit score and help them build a sound financial future.  According to Richard Cordray, the director of the Consumer Financial Protection Bureau, “Having a trusted, well-informed financial coach can increase your odds of financial success.”

For more information, click here.
Note:  There is a short video that accompanies this article.

Teaching Suggestions

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

  • Point out that often low wage earners don’t have the money to pay a financial coach to help them manage their finances.
  • Describe different situations where the advice from a financial coach could make a difference in someone’s financial future. For example, a coach’s suggestions on how to improve someone’s credit score could lead to obtaining a credit card for emergencies or a short-term loan to bridge the gap between unemployment and employment.

Discussion Questions

  1. Assume you are unemployed and have exhausted your emergency fund.  You are behind on monthly payments including your rent and utilities.  What steps can you take to improve your financial situation?
  2. In the above situation, what suggestions do you think a financial coach could provide that would help you work through this difficult situation?
Jun 24 2015

Reduced Money Worries

To minimize money worries and achieve greater financial freedom, five steps are recommended:

1.  Budget – create a simple money plan to track income, expenses, and savings. Closely monitor small daily expenses, which can quickly add up to large amounts.

2. Reduce – avoid buying unnecessary and unfulfilling items that pile up and collect dust. Make a conscious choice to reduce your consumption and unneeded spending.

3. Recognize – avoid debt to purchase things that you believe will impress others.

4. Educate – learn as much as you can about wise money management and personal financial planning.

5.  Get started – take action today to spend less, save, and learn more about wise money choices. Your habits will not change overnight, but a small step toward financial security can occur immediately. Consistent action will make a difference.

For additional information on reducing money worries, click here.

 

Teaching Suggestions

  • Have students create a list of common causes of money worries.
  • Have students prepare a drama with suggested actions for reduced money worries.

Discussion Questions 

  1. What are common actions that can help reduce money worries?
  2. Why do people consistently behave in a manner that creates money worries?
Jun 17 2015

Personal Finance Stress Test

To avoid financial disaster, several measurements are available for assessing a person’s personal financial stress:

  1.  The Debt-to-Income Ratio is obtained by dividing your debts by pretax earnings.  Generally this number should be less than 28 percent, without your mortgage, or 36 percent, including your mortgage payment.
  2.  Discretionary Expenses involve spending for items other than fixed obligations and variable nondiscretionary items, such as food and utilities. Purely discretionary expenses may involve recreation and vacations.  An analysis of these categories will allow you to delay, reduce, or eliminate various expenses to avoid financial difficulties.
  3. Emergency Savings should be able to cover three to nine months of living expenses. These funds should be readily available in savings or other easily liquidated accounts. Greater financial greater obligations will require a larger emergency fund.
  1. Additional Income involving wages or tips from a part-time job or selling personal possessions can provide a cushion in times of financial difficulty.
  1. Total Assets, both liquid and non-liquid, will reduce your vulnerability to financial turmoil.

For additional information on the personal finance stress test, click here.

Teaching Suggestions

  • Have students calculate one or more of these measurements for their life situation.
  • Have students prepare a short creative video with a summary of these measurements.

Discussion Questions 

  1. Why is liquidity important for reduced financial stress?
  2. What actions would you recommend to for a person to reduce their personal financial stress?
May 20 2015

Financial Literacy Month

April was Financial Literacy Month; however, every month should involve efforts to better understand personal financial planning principles and practices. The website 360 Degrees of Financial Literacy offers a wide range of tools and information to help people develop money management skills at every stage of life.

Other resources to provide financial planning assistance include the:

Teaching Suggestions

  • Have students talk ask people to describe their definition of “financial literacy.”
  • Have students obtain financial literacy suggestions using online research.

Discussion Questions 

  1. What are the common elements of financial literacy?
  2. How might a person improve their financial literacy?
Mar 25 2015

Financial advice for singles

Since they usually have fewer financial responsibilities, singles have a greater opportunity to save for a future family, advanced career training, or long-term financial security (retirement). Singles are also able to share their time (volunteering), talents (teaching others skills/knowledge they possess), and treasures (financial donations) to address local and global concerns related to education, hunger, safe water, health care, job training, and other social issues. Single people, as well as others, may take advantage of free community events, doing volunteer work, and using barter/exchange platforms to share recreational facilities, events, and experiences.

For additional information on financial advice for single, click here:

Teaching Suggestions

  • Have students talk with others who are involved in addressing various social concerns through volunteering and other community service activities.
  • Have students survey several people to determine various actions that might be considered for achieving financial goals.

Discussion Questions 

  1. How does your life situation affect your financial responsibilities and spending?
  2. What short-term and long-term financial goals are you planning for at this point in your life?
Feb 14 2015

Newly Married with $52,000 of Debt

My Wife and I Never Discussed Money Before Getting Married–and Ended Up with $52,000 of Debt

Prior to tallying up our debt, we’d talked about traveling internationally, starting a family, and, some day retiring comfortably. There was so much we wanted out of life, but . . .”

This is an excellent article that describes what can happen when a soon-to-be-married couple doesn’t talk about finances.  Fortunately, the two people in this article–Deacon and Kim Hayes–realized they had a problem and then took steps to get their finances back on track.

Specific steps this couple took can make a big difference over time.  Among the suggestions included in this article are:

  • Writing down all your assets, debts, income, and expenses.
  • Prepare a budget and review each item for opportunities to save money.
  • Replacing a newer, expensive car with an older car.
  • Selling unwanted or unneeded items online.
  • Using any extra money to repay debt.
  • Establishing an emergency fund.
  • Saving and investing a specific amount each month.

Consider This:  Deacon Hayes–the author of this article–became a financial planner and now shares his story with his clients.

For more information, Click Here. 

Teaching Suggestions

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

  • Discuss why engaged couples need to discuss their finances before they get married.
  • Stress how easy it is to get in debt and how hard and how much time it takes to get out of debt.

Discussion Questions

  1. Assume you are dating someone who seems to spend more than they make. In this situation, would you continue to date this person?  Explain your answer.
  2. One of the suggestions included in this article is that people write down their assets, debts, income, and expenses. How can this suggestion help a young-married couple plan their financial future?
  3. Assume you have credit card debts and an automobile loan that total $75,000. What specific steps can you take to reduce or eliminate your debt?