My daughter is 18 years old this year, older than I was when she
was born. For years we lived on a very low income and barely
made ends meet.
She watched me work my way through college, studying hard, often
working more than one job to make ends meet. If you were to ask
her now if we had any money when she was young she would tell you
she didn’t really know. She never went to bed hungry and always
had clean clothes to wear. She always had toys to play with and
mom was always there for her when she needed her. That is what
she remembers.
My daughter is now applying for college herself, and wanted me to
read her college application. She had to write about herself and
her life, her relationships, etc. I was very surprised to read
what she thought about her childhood. We have lived through a
lot of tough times and there are a lot of negative stories she
could tell. What she described is how thankful she was for the
hardships she has endured and how she has become a strong woman
because of her life experiences. She credits me for her drive
and determination. She attributes her money management skills to
my example.
Her essay made me realize that it is not the experiences we go
through that shape us–it is how we handle those experiences.
When you are enduring financial hardships, if you make poor
decisions, your children will see your decisions and feel the
impact of those decisions. If you make good choices, your
children will learn from those choices also, regardless of your
financial circumstances. Every choice you make affects the people
your children will some day become. If your children see you
charging up your credit cards (regardless of how much money you
make), they will think that is normal and will learn those
spending habits from you. If you live on a low income and spend
your money wisely, your children will learn to manage their money
well.
You can not teach your children what you do not model. Your
children need to learn to budget their money, however much money
that is, to not accumulate debt, and to shop wisely. You can
teach them this from a very young age, with even their
allowances. Sit down and really take the time to decide what you
want your children to learn about money and start modeling those
behaviors for your children today.
30 MarSurviving Family Financial Hardship: My Story
23 FebWhich is better: term or permanent life insurance?
The biggest financial decision you are likely to make is buying a home, closely followed by less expensive must-haves like a vehicle. But the one deal you should aim to get right is the decision on life insurance. This is the difference between leaving your dependents with an adequate amount of cash to see them through the times of economic hardship after your income is lost, and leaving them with nothing. In this, the decision on term as against permanent insurance is the key. Put the wrong key in the lock and you open a door into real financial hardship. So what’s wrong with term insurance? Think of this as like a bet. If you die within the term, your dependents are the winners. If you prove healthy and live too long, you lose the premiums you paid and your dependents get nothing. Now, when it comes to permanent insurance, this builds up a cash value. The longer you have the policy in place, the more valuable it comes as the premiums you pay attract investment returns. During your own life, you can take some of this money back or borrow using the fund as collateral. When the sad day finally comes, the benefits are paid out to your dependents less whatever drawings or borrowings you have made.
From these short sentences, you will immediately suspect the other difference between the products. Term life insurance is the cheap option. It gives you security in the amount of the benefits for the number of years you select. If you buy one term policy after another, the premiums are higher each time because your life expectancy is less on each renewal. Permanent insurance premiums are higher because a percentage of what you pay is invested on your behalf to generate the cash value. So your fund receives the benefit of the interest, dividends and other returns the investments generate. This makes the total of the cash value the key factor. Do you want a higher rate of return on the premiums? This can be for your own benefit should there be an emergency during your life. Or it can build up over the years for your dependents. If the answer is yes, you must be prepared to pay more to start off the policy – the first year’s premiums often disappear into a black hole representing set-up costs and the selling agent’s commission. But the amount you pay stays the same throughout the lifetime of the policy. So, with inflation, what starts out a struggle slowly grows easier to pay.
The real problem is the uncertainty of the future. Who knows how inflation may affect different aspects of life. What may be cheap now, may be expensive tomorrow and vice versa. So here are a few simple rules. If all you want is cover over the next few years (no more than ten), get life insurance quotes for a term policy. Ten years is not a long enough period of time to build up a worthwhile cash value. Estimate what benefits might be needed, e.g. your daughter will need $50,000 to cover her college tuition fees, and the total will set the amount of the insurance. If you are looking at a period of at least twenty years, you should think seriously about permanent insurance. Again, get life insurance quotes but you should also take advice on the different types of policy available and create or review your estate plan. Between ten and twenty years is a gray area and whichever way you decide is not going to be wrong.
05 FebA Fresh Start for Family Finances
While 40% to 50% of us make New Years resolutions on January 1st. A ritual that has existed since ancient times approximately 60% to 80% of us have already broken them by the end of February, according to researchers.
It is still not too late, however, to reset the trajectory on your family finances, experts note.
1. Build a Budget
If you have not already done so, create a realistic budget.
Approximately 85% of your income should be set aside for necessities like housing, food, health care and clothing, according to the professionals at VISA USA.
This leaves 15% for entertainment and something many consumers completely neglect savings.
2. Distinguish Needs from Wants
Make sure you have a clear understanding of what you need in life versus what you want in life.
You need to pay for the antibiotics when the doctor diagnoses a respiratory infection. You dont need to buy the latest movie released on DVD to aid in your recovery.
You need to pay the rent or mortgage. You dont need to buy the lovely accent pillows that beckon to you from the interior design boutique.
Always separate the needs from the wants particularly if money is tight.
3. Monitor Your Spending
To see what you really spend each month, keep a running log of all purchases no matter how small for a full month. This will give you a visual display of where your money goes after you deposit your paycheck.
You may find that the $3 cup of coffee that starts each day adds up to $90 a month a pocketbook pincher that may prompt you to buy a pound of coffee beans at the local market and grind them yourself. That $90 blossoms into $1,080 in savings at the end of a year.
4. Create an Emergency Fund
Life is full of surprises both positive and negative. If you happen to lose your job or suffer an illness that temporarily sidelines you, you will need cash reserves to support you during the rough months.
In most cases, consumers who find themselves dealing with a financial hardship are unprepared and have not saved for unexpected situations, says Diane Giarratano, director of education for Novadebt, a U.S. financial management service agency, with multiple locations, that provides credit counseling, budgeting and financial education.
5. Educate Yourself
When you attended high school or college, you studied history, mathematics, language and science, but there was probably no course in basic money management.
If you need help in meeting a financial goal whether buying a home or reducing your debt take advantage of community resources.
Consumers should feel free to contact a good credit counseling agency to obtain free advice with regard to establishing a budget or to learn how to handle unexpected hardships, Giarratano says.
6. Dont Become a Victim
Identity theft has become an international epidemic, so be extremely cautious when giving out your credit card or personal identifying information. Monitor your credit card bills carefully for unauthorized charges, and immediately report suspicious activity to the issuing company.
Identity theft is often an inside job, warns Robert L. Siciliano, a personal security expert with Boston, Massachusetts based Safety Minute Seminars and author of The Safety Minute.
Lower level help desk workers and frontline call center employees often have access to all our personal information in their databases, he says. What are you doing to protect yourself? If you are not paying attention, you could be a victim, too.
And when a disaster strikes, such as the killer tsunamis in South Asia and East Africa and Hurricane Katrina in the US be wary of scammers from fake charities before reaching for your checkbook. Unfortunately, there will always be unscrupulous individuals who seize such opportunities to profit from others misfortune.
Avoid using your credit card to make contributions, advises James Walsh, author of You Cant Cheat An Honest Man. How Ponzi Schemes and Pyramid Frauds Work and Why They are More Common Than Ever.
Even though this can be a convenient way to proceed, many crooks are looking for credit card numbers, Walsh says. They will press strongly for immediate support. Dont rush.
Instead, initiate the call yourself, and select a reputable charity.
Go with recognized names, Walsh says. No organization is perfect, even the best meaning groups occasionally misallocate money or fall victim to abusive employees. But larger charitable groups like the Red Cross, the United Way and Catholic Charities have the mechanisms in place to audit their people and performance.
Charitable contributions are tax deductible, so keep good records of all donations including small cash gifts.
M.D. Robinson is the webmaster of several neat sites where you can find useful and Free information along with many how-to articles that cover a large variety of interesting topics. Visit, http://cool-tips.com/finance/
Written by: M.D. Robinson