Finance Related Videos
Why it is Important to Teach Your Kids About Money
Do they know the fundamentals about saving? Do they understand how to figure out which is the best deal? Do you set a good example for them about handling money?
When I was HR Manager of a consulting company, we hired a college student to intern during the summer. He came to ask me about the FICA and Medicare deductions in his first paycheck. He politely told me he didn`t want this deducted anymore, and I had to keep from laughing. I started to explain to him that payroll taxes are not an option, but realized this was his first job and he had never been taught how much of his paycheck he would actually get to keep. He truly believed it all was his- no one had ever told him about Uncle Sam getting his cut first.
The statistics on college students who graduate with thousands of dollars of credit card debt are shocking. Turns out, as they signed up for classes in their freshman year, they also signed up for a credit card without understanding what it would really cost them in the long run. So before they even start earning a living or saving in a 401(k) plan, they have to pay off years of debt. It`s sad that they`re still paying for the pizza they ate two years ago.
It`s so important for kids, especially teenagers, to understand the concept of money and how it flows in and out of your hands throughout your lifetime. How to save it and how to spend it. Why is it important to give some back to others through charitable donations. If you don`t develop an understanding of money early in life, how can you possibly be able to manage it later on?
Parents have a responsibility to make sure their kids understand how money works before they go into the world to earn that first paycheck. Having this knowledge gives them the confidence to make smart money decisions as they navigate their way in life.
Personal Finance Is Your Responsibility
When it comes to finance, many people put an impractical blind eye to the fact that finances need to be managed. Personal finance is an ever-growing popular term for adults and teenagers alike, regardless of whether you are earning the money or not. After-all bills have to be paid, family members have to be fed and your lifestyle has to be maintained.
The biggest and most neglected step for many families is teaching their teens how to manage their money. Teenage finance is about educating teens on the value of money. Teach them how to save by showing them how to use their primitive form of book-keeping. This can often be incorporated through the child’s upbringing via
piggy-banks, savings accounts, and little chores in exchange for money.
Teenage finance is an important part of your personal finance because, too. When your children learn to save and use money wisely, you are subsequently saved from bailing them out of financial troubles in the future.
Personal Ethics and finance go hand-in-hand; if you have a good relationship with yourself, you will be able to save money. You won`t feel the urge to do things that go against your ethics like sign-up for a credit card using someone else`s name.
Personal finance involves taking a few steps toward safe-guarding your money. Your money spent should not exceed your money received. In order to prevent this from happening, you should make a crude balance sheet and use it to record all of your transactions.
Each month write down how much was received and how much was spent. Make a list of all the things the money was spent on, so you can keep track of your money.
You will be amazed at how much we spend on things that are not necessities.
Make a list and stick to it. Always try to get the best deal for your money and remember that cheaper does not necessarily mean lower quality.
After-all it is your money; managing your personal finances should be seen as a mandatory part of making money work for you.
Get Rich Slowly
Its fun to play with financial calculators and see what might happen.
Assume you have just graduated from college, are about 22 years old and I just started your first real job. If you put $100 a month in an IRA that grows at 10% a year, you will have about $865,000 at age 65. 10% a year compound growth is about what you should exect if the money was invested in a no-load S&P 500 Index Fund.
So for about $23 a week or $3.30 a day you would be close to being a millionaire.
If you contributed the full $4000 a year allowed right now to an IRA (rising to $5000 in 2008), you would have $2,600,000. For about $11.00 a day, you would have a small fortune.
If you didn`t want to take a chance with the stock market because it goes down sometimes, you would still have over $600,000 if you could get a 5% return.
If your grandmother leaves you $10,000 in her will and you invest it for the same 43 years at 10% without adding another cent, you`d also have over $600,000 if you placed it in a tax sheltered account.
Time and the power of compound interest are on your side. So if you`re in you twenties and want to get rich, do whatever you have to scrape together that IRA contribution. Every day you procrastinate is another day your money is not working for you.
However, most people in their twenties need the money for more important things, like new cars and HDTV`s. You also have school loans to pay, children to raise and the new mortgage to pay off. But if you prioritize your life and stick to a budget, $11.00 a day is doable, although you might have to scrimp here and there.
Consider that most people are spending their lives paying the freight for borrowing other people`s money. If you save and invest, other people are paying you to use your money. It`s a lot more fun to see your money working to help you get rich than
having to work yourself.
Think about the effect expenditures have on your financial future. If you bought a late model used car instead of new one, you would probably save $10,000 or more depending on the model. That $10,000 as noted above, would grow to almost $600,000 by the time you`re 65 if invested in tax sheltered accounts.
Now look at it from the opposite angle, the extra money you spend on that new car you yearn for and must have now, will cost you $600,000 by the time you`re 65
and the car has long since been recycled into tin cans.
I`d probably buy the car too, but it`s useful to consider the consequences.
It gets harder to get rich slowly as you get older. If you wait until you`re 32 and put away $4000 at 10%, you would have about $975,000, still a respectable amount.
At 42, you`d only be able to accumulate approximately $350,000. If you`re 50 and
can start putting $5000 away today, you`ll have around $175,000 at age 65.
Everyone knows that Social Security is not going to allow for a comfortable retirement. Even if the plan can continue to pay out forever, which is questionable right now, the money you receive will be far from generous and is subject to taxation. And you might have a good pension plan at work now, but will you be able to hold your current job to
retirement?
If you have a Roth IRA, you can withdraw the money tax free after age 59
Find Out More Info About Financial Planning For Retirement
Financial planning for retirement is one of the most important investment decisions you will ever make in your life, and not a decision that you make once and then forget about. It’s something you do and re-evaluate about once a year.
Important decisions in financial planning for retirement are balancing risk and reward. All investments carry some element of risk, in general, the higher the potential return rate, the greater the risk element, which is the fundamental dynamics of the investment – Investors are making a small stake in a perspective that are spending money on both pay a dividend or interest, or appreciate in value.
There are two investment tools that you should seriously consider financial planning for retirement. The first is a 401 (k) plan, which has several advantages for taxes, and has employer matching funds. The exact benefits of a 401 (k) Plan are subject to a separate article. The second is his home. As you build equity in your home, and pay the mortgage, monthly charges will be reduced, and may drop to nothing more than the escrow payments in property taxes. As housing costs account for almost 30% of the monthly nut for most Americans, this is a significant benefit as they retire, so by all means work in your mortgage payment.
When it comes to investing money to build a retirement income, take into account both inflation (the purchasing power of a dollar anywhere in half every 18 years to 25 years in the U.S.), and the rule of compound interest ( 72 divided by the interest rate that booking gives the number of years before its initial investment in doubles). The actual inflation rate in the United States is somewhere around 3 to 4% per year.
Now, back to the risks and rewards. When you’re young always allocate as much as you can to raise funds by employers in its maximum value and, as much more than you can get. When you’re young, you can afford to have a bit more risky (and higher returns on investments) as stocks and mutual fund portfolios.
As you get older, you want your investments to transition to bond with guaranteed payments over time, but lower interest rates. A market reversal that is a minor inconvenience when you’re twenty-seven could be a major disaster at sixty. In general, a good general rule is that in sixty years of age, who want 70% of their retirement income on bonds with 20% in growth funds and 10% return of funds reaching. For every five years in the sixties, move 5% of its revenue bonds to fund long-range return, and for every ten years in the sixties, the growth funds to spend 5% growth aggressive portfolio. So, at age 30, would be about 40% of their retirement investments in bonds and 35% in growth funds and 25% in long-range funds and their investments would gradually more conservative over time.
No matter how old you are right now – retirement investing is an issue to think about at any time. For the general info about investment, also about retirement investment strategy in particular – visit thisblog.
And if you need stock market news, go to this site.