Posts for June 2011
You Can be Frugal and Green
By Annette Kingsbury
Everyone wants to be “green” these days, but there’s a common perception that environmentally friendly is expensive. It doesn’t have to be that way.
“I have always been frugal and it pairs well with being environmentally conscious,” says my friend Heather. She’s not just blowing smoke; a stay-at-home mom, she’s recently been searching for work after her husband lost his job. But she won’t give up her environmental bona fides.
“There are certain things I won’t compromise, like quality food,” she says. She’s cooking and baking more now from scratch and skipping unnecessary purchases. “Instead of gym membership this summer, we have county and state park passes and this will be a year for the beaches. We also plan some bike path adventures and regular attendance to the free park concerts,” she says.
So far, so good. But there’s much more a family can do to be frugal and green, especially when shopping for routine needs. Simplemom.net, a Web site whose goal is to make everyday life less expensive, suggests turning away from single use, disposable products. Things like paper plates and all the cleaning products so heavily advertised now, such as sheets used for dusting, scrubbing and mopping.
Disposable may be convenient, but it’s not cheap, and it’s certainly not green. When contemplating packaging, don’t settle for recyclable. Ask yourself: Was this made from recycled materials? Do I really need it? What would Grandma use?
Eating local is another way to be green, according to simple-green-frugal.blogspot.com. Not only is your food more nutritious because it’s picked at the right time, it also hasn’t been trucked hundreds of miles, using up gas and emitting greenhouse gases. Local farmers markets are a great way to open up your menu to whatever is in season and try something new. If you don’t know where your nearest farmers market is, check out localharvest.org. Then sit back and enjoy truly ripe fruits and vegetables at very competitive prices.
Copyright You Can be Frugal and Green © 2011. All rights reserved
How to Start a Nest Egg
By Annette Kingsbury
My dad has a cute little saying he uses to explain his philosophy of saving money: Pay yourself first.
It’s his simple explanation of how he and my mom, despite raising six kids, managed to save enough money to see themselves comfortably through 20 years of retirement (and counting). “Pay yourself first,” means that money goes into savings for the future first, before it goes into Mom’s or Dad’s (or the kids’) pockets.
Like many of his generation, my dad entered World War II as soon as he was old enough, then returned home after the war to get a job, start a family, and go to college on the GI bill. As soon he was eligible to get into his employer’s investment plan via payroll deduction, he did so.
“Mother and I talked about it once, and we never talked about it again,” he said. “I considered it an emergency fund.”
The fund was occasionally dipped into for major emergencies. But by and large it sat there and grew. Over the years Dad diversified his investments, but rarely took risks.
This philosophy has served him exceedingly well. Though he never could have imagined his employer, General Motors, going bankrupt, he saved enough in other solid investments to stay on an even financial keel.
As the oldest of those six children, I can tell you that it wasn’t always easy. We didn’t take vacations, but there was always food on the table. Though I didn’t know about Dad’s plan as a child, I grew up with an abiding sense of the value of hard work.
Today’s parents can set the same example for their kids, who are bombarded with all sorts of expensive, “must have” electronic gadgets du jour. No matter how your child earns money, teach her how to save it, if only as a stepping-stone to bigger and better down the road.
How to start a nest egg? Simply start.
Copyright How to Start a Nest Egg © 2011. All rights reserved
5 Money-Smart Shopping Tips
By Bob Masterson
Who doesn’t like to shop? Oh, I know there are guys out there that will say they hate shopping, but you catch them on the web surfing for a new Ipad or the latest and greatest gizmo. We’re a consumer society. That’s what we do…we buy stuff. But there’s smart shopping and not so smart shopping. Who wants to be a smart shopper? Well here are 5 tips to help you and your kids stretch your dollar:
1. Plan ahead. What? That’s crazy talk. No, seriously, impulse buying is the root of all shopping evil. By planning ahead, you have the opportunity over time to determine if what you’re planning to buy is something you really want. Ever hear of buyer’s remorse? We all go through it. Buying something and ten minutes or days later thinking to ourselves, “Why did I buy it?” Planning helps to avoid buyer’s remorse. The other great thing about planning ahead is it allows you to save. That’s a bonus. Have your kids set up a goal in FamilyMint and learn how much fun it is to plan, anticipate and achieve!
2. Make a list. Well yes, this is the same as planning ahead. Good catch. Any time you run off to the store, make a list and stick to it! This will help you avoid the root of all shopping evil – impulse buying.
3. Compare prices. Whether it’s a big purchase or a small purchase, do your homework. In the grocery store, it’s easy…multiple brands of the same product are before you…it’s up to you to decide generic or brand name. You can do the same of course on the web. There are numerous resources out there that provide price and product comparisons and reviews. Just do a search for the product you wish to purchase. Referring back to (1), by planning ahead you have the time to do the research and get the very best price for what it is you want. Oh yeah, don’t be afraid to consider buying used. You can save a bundle. Just be sure it’s a reliable source you are purchasing from.
4. Don’t fall for sales tricks. Stores know our buying behaviors. They’ve spent millions studying it and refining their tactics to squeeze out every last dollar from you that they can. Why do you think they have loaded up their check out areas with stuff to buy? Because they have your attention and understand our nature to buy on impulse. I’m in the sporting goods store and I’m presented with candy and toys at the register. Why yes, a Snickers bar would hit the spot about now. Impulse purchases are the quickest way to a light wallet. Refer to (1) above.
5. Save the receipt. Even though you planned and made your list and compared prices, this doesn’t mean you won’t still change your mind after you have brought your purchase home. Or by chance, the very next day, the item you just purchased goes on clearance for half what you just paid for it. If you have kept your receipt it will be easy to return your purchase or get a price adjustment.
We’d love to hear all the ways you shop smartly.
Copyright Are you and your kids smart shoppers? © 2011. All rights reserved
The Personal Story of a FamilyMint Family
I met Dave & Jill Spieldenner last summer and we quickly found we shared a passion for kids and financial literacy. The Spieldenner’s have been coaches for organizations such as Crowne Financial and Veritas Financial. I found their personal story fascinating and the journey they’ve been on one to learn from. They’ve graciously agreed to share some of their story, perspective, and advice in the FamilyMint Blog and this is their first entry. – Jeff
Introduction to the Spieldenner F
amily
When Jeff Eusebio invited me to write on the FamilyMint blog, I immediately started to struggle with deciding which awesome tid-bit of wisdom I would share with my very first blog entry. What came after that was several months of writer’s block. The pressure was so great, and I had several starts with brilliant ideas that transformed into mediocrity that could not possibly represent my first blog entry. Today, I decided to do a simple introduction in order to break the ice.
My wife and I have been married for 13 years this August. Through most of our married life we have lived in Northwest Ohio, not too far from where we grew up and went to high school together. Our oldest son was born the October after our first wedding anniversary, and has been a rock of stability and justice within our family. He was followed by our second oldest a couple years later, who has always provided plenty of comic relief. Six years later, we adopted our little angel from China, and she has blessed our family with sweet giggles, tutus, nail polish and lots of pink. Finally our youngest son was born 2 months after we returned home from China, which made him and his sister always feel a lot like twins.
Having a family of 6 in today’s society means that being disciplined in managing family finances must be a priority. This realization, and ultimately a commitment to do something about it is what brought my family to FamilyMint. If you are reading this blog….your probably have a very similar story.
The event in our lives that is somewhat unique, and most significant in our journey of financial prudence was the adoption of our daughter. When we decided that the calling of adoption was in our future, we had a budget that was balanced (meaning we did not have any extra left over after paying our bills), a mountain of debt (in the form of school loans, car loans and a mortgage) and virtually no savings. We knew that the total cost of doing the adoption would be somewhere around twenty thousand dollars, so we had to make some changes and develop some discipline if we were going to be able to afford the adoption.
We started off by getting very serious about budgeting. We knew that we were going to have to start setting aside a few hundred dollars a month, and we had to have an accurate picture of our spending habits to identify a way to set aside this money. I consider myself fortunate to have the type of wife who is very good about logging our transactions on the computer, and she ultimately is the key to our budgeting success. We then became very frugal and eliminated any fixed expense that was not absolutely necessary, such as our newspaper subscription, cable, internet, eating out, etc…, which freed up enough cash for us to set aside $200 a month towards adoption.
We used a budgeting method known as envelopes. This means that we did not simply use a budget to track where our expenses were going, and compare that to the amount we planned to spend for the month. We distributed the money from my paycheck into virtual envelopes (very similar to the process FamilyMint uses to distribute allowance into goals), and when an envelope was empty, we would stop spending against that category until the next paycheck deposited more money into the envelope. If an envelope would go red (negative), we would have to take money from another envelope that was green (positive) to get the envelope back to zero. In one year, we went from living paycheck to paycheck, to actually having $800 in our checking account when we were cashing a paycheck. All along we continued to set aside $200 a month towards our adoption.
We also began focusing on reducing our unproductive debt, since we looked at those monthly payments as an opportunity to increase the amount of money we could set aside for the adoption. The first debt we were able to eliminate is our school loans. This meant that we could set aside an extra $150 per month towards our adoption. Then we paid off our minivan, and committed ourselves to driving it as long as we could, which allowed us to set aside another $300 per month. Before we knew it, we were setting aside $650 each month towards the adoption.
Though it did not feel fortunate at the time, the adoption that was supposed to take 9 months to complete ended up taking about 4 years. As our wait seemed to drag on, this was a “blessing in disguise”, as that delay in the process gave us more time to save. When the email finally arrived with the picture of our little Golden Flower (our daughter’s name in China), we had about $10,000 saved up, which was the amount we needed to finalize the process (we had already paid about $10,000 in fees over the 4 waiting years). Being able to finalize our adoption without incurring debt (and paying off all our other debt in the process) is more than we could have ever expected.
Looking back on that experience, I am so grateful that we were able to afford the adoption of our little girl, because she fits into our family so well! I am also very appreciative that this financial challenge has caused us to develop good spending and savings habits that will pay dividends to our family for many years to come.
Copyright The Personal Story of a FamilyMint Family © 2011. All rights reserved
Teaching Kids to Invest in Their Futures
By Jayne Berkaw
If you’re a regular visitor to our blog, you’ve had access to lots of information about helping your kids develop savings plans and the importance of setting short-and long-term financial goals. Most kids easily grasp that saving for the short term can result in new video games, desired toys, etc. Long-term saving for things like cars and college grow through interest payments, but this is also an opportunity to help your child (and maybe yourself) explore investing in the stock market.
Even adults can be put off by the complexities of the stock market, but with smart investing, the long-term rewards can be great, and getting started early helps build experience, confidence and financial savvy that will stand children well throughout life. The key in getting kids interested in stock investing is to follow the K.I.S.S. principle, Keep It Simple Sweetie.
First, help your child identify their long-term financial goals. Does Andy want to be a doctor? Then he might need to pay for medical school. Does Ali want to be race-car driver? Then she’ll need a car so she can learn to drive first. Investing can make those dreams come true when it is done safely and smartly. The safest stocks are of well established companies with good growth outlooks, and the smartest way to earn through stocks is to hang onto them for years and sell at a higher price than you bought.
Virtual Investing
Don’t even think about diving into real investing until you and your child do some virtual investing. A great online tool to do some virtual investing with is The Buffett Bucks Portfolio at the Secret Millionaires Club website. Here kids can learn about stocks, invest virtual dollars, track their progress and see how their investments rank against other young investors.
Talk with your kids about companies that might be of interest to them, those they have some familiarity with make investing more fun. McDonald’s (NYSE: MCD), Disney (NYSE: DIS), Coke (NYSE: KO), and Nike (NYSE: NKE) may be good picks, but it’s fun to think about all the possibilities, so do some brainstorming together. Look the companies up online and see what they’ve got to say, how they see the future, and if they’ve had any recent news that might impact their share price positively or negatively. There’s usually an Investors page that provides such information.
The Mandatory Risk and Reward Discussion
It’s kind of like the best tasting food is the worst for you. Drat! Nonetheless, kids need to know that there are various levels of risk involved in all stock investments and the better the chance for high reward from an investment, the more risk there is for losing money. So good research, strong companies and lots and lots of patience are necessary. Stock investing is for the long term, and there is no disputing that those that hang in there are winners in the long run. The whole point of getting kids interested is so they can be in it long term.
When You Are Ready to Buy
When you and your child are ready to make a purchase, depending on your state laws, you can set up a custodial account under the Uniform Gifts to Minors Act or Uniform Transfer to Minors Act (minors can’t own stock in their own names). It’s easily done through investment brokers, who may be independent, discount, or affiliated with your bank or credit union. Then you and/or you child can contribute to the account and you can choose, buy and keep track of your stocks together. Just be sure to:
- Buy stocks of established, strong companies
- Reinforce that establishing and maintaining long-term savings comes before stock investing
- Keep the money invested small at first
- Use savings accounts for short-term needs like video games, movies, etc.
Stock investing opens up a whole new vista of financial literacy for your kids (and maybe for you!), so even if you decide not to invest, at least check it out.
Copyright Teaching Kids to Invest in Their Futures © 2011 FamilyMint. All rights reserved
Explaining the Basics of Stocks and the Stock Market to Your Kids
By Jayne Berkaw
I had it in my head that I wanted to blog about getting kids interested in stock investing, so I wrote that blog and then my husband read it and said, “This is good, but you haven’t talked about teaching them what stock is.” Arrghh@#$%! Why does the man have to be so sensible!! Sooooo…here are some suggestions for explaining the basics of stock and the stock market simply to your kids.
What is Stock?
Companies need money to help them grow. They use it for all kinds for things like buying materials to make their products, developing new products, building plants and hiring people to work at their companies. To do this, they often split ownership of their companies into smaller “shares” that they sell to the public. The shares are also called “stock.”
Why Do People Buy Stock?
Shareholders, as stock buyers are known, hope to buy shares at a low point, hold on to them for a while and finally sell them at a high point. This is one way people make money from stock ownership. Generally, shareholders have an interest in the company’s products or services and its prospects for growth. If your kids are nuts about PS3, they might be interested in knowing that Sony Corporation (NYSE: SNE) makes that system, and that Sony is a “public” company that is owned by its shareholders.
So when you buy shares of Sony, and its profits go up because lots of people are buying PS3 systems, the value of your shares may also go up. Once again, the forces of supply and demand are at work. Plus, sometimes companies give some of their profits to shareholders with cash payments called dividends – this is the other way to make money from stock ownership. (Sony doesn’t pay dividends at this time.)
Which Came First, the Stock or the Stock Market?
Well, geez, I don’t actually know, but I’m guessing there was stock before the stock market got itself organized. Anyhow, the stock market is where shares of stock are bought and sold, called trading. There are stock markets in a number of countries in the world, but in the U.S. a lot of stock is traded at the New York Stock Exchange and through the Internet, mostly on the NASDAQ, but at other sites as well.
Now let’s take a brief video tour of the New York Stock Exchange trading floor.
The main point is that through trading, the price of a company’s shares fluctuates every day, so the value of your shares also goes up and down. That’s what makes it important to view stock ownership from a long-term perspective. This is something you and your child can watch together and discuss over time (see my next blog…).
Why Should My Kids Care About Stock?
Financial markets are a driving force in our world, so having a basic understanding of how they work is essential to becoming truly money-smart kids. If it weren’t for the stock market, companies would be limited in developing products and services that help improve our lives; such things as life-saving medicines, energy-saving wind power, enjoyable movies and games, etc.
That’s the altruistic side of it. The other side is that it’s an excellent way to make your own savings grow so you can afford those long-term goals like college, cars and houses. Through involvement in sports, music and community involvement projects, we try to teach our kids about good sportsmanship, team play, responsible citizenship, etc. Getting grounded in handling and growing money should absolutely be part of that discussion because it too is essential to mature adulthood.
The Mandatory Risk and Reward Discussion
It’s disclaimer time (I’ll be repeating this in my next blog too). Kids need to know that there are various levels of risk involved in all stock investments and the better the chance for high reward from an investment, the more risk there is for losing money. So good research, strong companies and lots and lots of patience are necessary.
There’s a ton of information online about all of this. Just search “explain the stock market to your kids.”
Copyright Explaining the Basics of Stocks and the Stock Market to Your Kids © 2011 FamilyMint. All rights reserved