CPAs and financial advisers point out five “silent killers” that create barriers for the successful implementation of estate, retirement, and investment plans. These common mistakes are:
1. Unrealistic Expectations. A valid financial plan must be based on practical assumptions, such as an appropriate forecast of rate of return, inflation, and future cash flow needs
2. Emotional Decision Making. Feelings and personal sentiment must be identified and minimized when setting goals and planning financial projections.
3. Inflexibility. A useful financial plan must take into account unexpected events. Creation of an emergency fund and contingency plan is vital.
4. Inaction. Without a plan for action, the perfect financial plan is worthless. Common results of inaction can be not having appropriate of property and casualty insurance coverage, financial hardship of dependents due to inadequate life and disability coverage, failing to address how assets are to be distributed in an estate plan, and overlooking a tax strategy.
5. Unclear Values and Priorities. Being on the wrong path will result in an undesired financial destination. Reflection of areas of importance and priorities is fundamental for implementing a financial plan and achieving financial goals.
For additional information on financial planning silent killers, click here.
- Have students talk with others about barriers they have encountered in their financial decision making.
- Have students create situations that reflect each of the five situations. Ask them to suggest actions to overcome these difficulties.
- Explain which of these financial planning barriers you believe is the most dangerous.
- What are possible actions a person might take to avoid these financial planning barriers?
Mobile start-up companies and other organizations are working with financial institutions to assist consumers with apps and websites that address various financial tasks and concerns. These include:
- Albert (www.meetalbert.com) is a mobile app to guide your financial decisions with the assistance of various financial institutions.
- EARN (www.earn.org) is a national nonprofit to help low-income families create a habit of saving and break the cycle of financial instability.
- eCreditHero (www.getcredithero.com) is designed to fix errors that appear on an estimated 80 percent of the credit reports of Americans.
- Scratch (www.scratch.fi) helps borrowers to better understand, manage, and repay loans.
- WiseBanyan (www.wisebanyan.com) is a free financial advisor that suggests and manages investment plans for various financial goals, such as savings for retirement, creating an emergency fund, and buying a home.
For additional information on innovative financial planning apps, click here.
- Have students search for a website or app that would be of value of improved personal financial planning.
- Have students talk to others about the financial concerns they face. Ask students to propose an app or website that would address a personal finance concern.
- What personal financial planning areas provide people with the most difficulty?
- Describe potential apps or websites that might be created to assist people with their personal financial planning activities?
Based on an online survey of personal finance knowledge, 40 percent of Americans earn a grade of C or worse. Financially literate people possess a fundamental understanding of money management activities, and are able to apply them for their financial well being.
The Wallet Literacy survey is available to assess your financial literacy. This test covers a wide range of topics, including credit scores, paycheck deductions, emergency funds, car insurance, home buying, inflation, and investment risk. Respondents are encouraged to use a calculator and other resources when taking the survey.
For additional information on the financial literacy survey, click here.
- Have students take the financial literacy survey to determine the areas where additional learning is needed.
- Have students encourage others to take the survey, and then have students talk with them about their results.
- What items on the survey are topic areas for which most people need additional learning?
- How might people be encouraged to learning more about various personal finance topics?
Many people in our society are not able to save. They are barely able to cover their monthly expenses. However, there are some actions that can help you get on a path to saving.
In the first month, open an online bank account and deposit a minimum amount, such as $5. This is a very important first step. In month two, save $15 (or more) in your online savings account. One way to do this is with Paribus, an online tool that searches various retailers to determine if you are owed money for past purchases as a result of a price drop.
Your goal for month three is to work toward savings $100. This could be accomplished by signing up with market research companies to participate in providing opinions. Or, you could try selling old items online. By consistently using various ideas for earning extra money, you should be able to save $100 a month.
For additional information on starting a savings program, click here.
- Have students to talk various people to determine actions they take to reduce spending or earn extra money.
- Have students create a summary presentation describing actions that might be taken to increase a person’s savings.
- Describe attitudes and behaviors that might result in people not being able to save for the future.
- What are actions you have taken to reduce spending and to earn extra money for savings?
Many people grow up without learning how money works, which usually results in difficulties. Studies reveal that less than one-fourth of millennials have basic financial knowledge.
A vital starting point in the learning process is admitting that you don’t know. For example, most people do not know that credit scores show if a person has paid his or her bills on time and how much has been borrowed. Most people are not aware that credit reports often contain incorrect information, or how to check for errors.
Credit card rewards may seem like a good deal but only is you pay your bill on time every month. If you don’t, late fees and interest charges can more than outweigh any reward point benefits.
These are just two areas on which many young people, as well as others, lack a basic understanding. However, a wide variety of sources are available to add to your knowledge.
For additional information on learning how money works, click here.
- Have students conduct research to determine the financial knowledge among various age groups.
- Have students create a video presentation with suggestions for improving financial knowledge.
- Why are people often not informed on basic money topics?
- What are the most common topics that on which many people lack basic financial knowledge?
An estimated one-third of recently married couples are surprised by the financial situation of their spouse. A similar number (36 percent) are not aware of their partner’s spending habits. Based on a study by Experian Plc, only 40 percent knew the credit score of their partner.
Men more often hid money from spouses. About 20 percent of men had secret bank accounts about which their partners didn’t know; compared to 12 percent of women. Regarding the maximum amount that they would spend before consulting with their spouse, men replied $1,259; women said $383. Hidden financial information can have a significant adverse effect on the relationship of a newly married couple.
For additional information on newlywed finances, click here.
For additional information on the survey results, click here.
- Have students survey newly-married people about their disclosure of financial information to their spouse.
- Have students create a list of problems that might arise between newly-married people who do not inform their spouse about their personal financial information.
- What financial information would be most important for newly-married people to disclose to their spouses?
- How could a lack of disclosure of financial information to a spouse create relationship difficulties?
To save money and help improve the environment, 20SomethingFinance.com suggests that you:
- grow your own food and buy from local sources.
- replace meat in meals with beans and vegetables.
- bring your own containers to buy bulk items.
- use refillable drink bottles.
- ride a bike instead of driving.
- use a low-flow showerhead.
- sell items not being used; buy used items instead of new.
For additional information on saving the environment and money, click here.
- Have students ask people to describe environmental-saving actions commonly used.
- Have students create a promotional plan to create awareness of money-saving actions that are also environmental friendly.
- What are benefits and drawbacks of environmental-saving actions?
- What factors might be considered when taking actions that save money and improve the environment?
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.
- Have students ask several people who their might cope with a financial emergency.
- Have students create a plan for creating a emergency savings fund.
- What are methods that might be used to cope with a financial emergency?
- How might a person be encouraged to create an emergency fund?
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:
- Credit card
- 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.
- Have students describe how they learned about these concepts.
- Have students conduct a survey among young consumers to determine their knowledge of these topics.
- What additional personal finance concepts might be added to this list?
- What actions might parents take to teach these concepts to their children?
“So put aside that beach read for a few minutes and take this quiz to assess your financial SPF factor.”
While most people recognize SPF as standing for sunscreen, SPF–as defined in this article stands for Save, Protect, and Fund. After a brief explanation of each SPF financial term, the article asks 11 questions that someone can use to help gauge their financial knowledge and financial planning skills.
At the end of the quiz, you are also told how your answers stack up and then the article provides suggestions about how to improve not only your score, but also your ability to plan for your financial future and retirement.
For more information, click here.
You may want to use the information in this blog post and the original article to
- Stress the importance of effective financial planning over your lifetime.
- Begin a discussion about the benefits of long-term investments.
- Review time value of money calculations.
- How can financial planning help you obtain your goals and objectives?
- Why should you begin investing sooner rather than later?
- A common problem for some people is they don’t have the money they need to begin an investment program. Given your current circumstances, what steps can you take to “find” the money to start an investment program?