Teaching teens about personal finances is one of the most important duties parents have.  According to a recent Charles Schwab survey titled Teens and Money only 30% of teens believe their parents/guardians are concerned with making sure they are learning the basics of personal finance.  64% of teens reported they would rather learn about money management through experience rather than in the classroom.  When parents take the time to teach their teens basic money management skills the education can prevent financial hardship down the road.  Side benefit: parents can learn something too!

Teach Value of Money
Weather your teen gets money from a job, or an allowance they should be able to make the connection between work and income.  It’s easy for teens to ask parents for money and then spend it thoughtlessly, but when they have earned the dollars through their own efforts they will have a better appreciation of it.

Teach Savings
One of the most valuable lessons to teach teens is how to save a portion of their income.  Get your teen into the habit of saving for purchases or investing.  This practice will teach discipline and the benefits of delayed gratification.

Teach Budgeting
Helping your teen calculate his expenses now will get him in the habit of tracking his expenses as an adult.  Allow your teen to be financially responsible for certain things in his life.  For example, gas, cell phone bill, entertainment, and clothing.  Only 14% of teens in the survey said they were involved in paying household bills.  Allowing teens to be involved in this area helps them see realistically how far money goes.

Teach about Credit and Debit Cards
Learning about the responsible use of a credit and debit cards can help teens build a strong credit history and learn to pay bills on time.  The ease of using a credit or debit card can be a financial disconnect for teens.  Fees, interest rate hikes, and overdraft charges are traps that teens need to learn how to avoid.  Credit card debt has caused financial ruin for many adults, but it does not have to be that way for your teenager.

Teach Investment Strategies
It does not take much money for teens to start investing.  If you are unfamiliar with investing strategies this is a great opportunity to learn together.  There are many, online and offline resources available to help start your teen with some simple investing that can pay off big later. 

Teach Confidence and Discipline
Teaching your teen about personal finances and money management now will build confidence and disciple.  Knowing the value of money, saving, budgeting, and investing is sure to put your child ahead of the class.

Tax loss harvesting is a technique used to improve the after tax return of your taxable investments. It’s an opportunity to get rid of investments that aren’t performing, especially if they are selling for less than you paid for them. Selling them may seem like declaring failure but saving on your taxes will offset the feeling.

Here’s how it works:

1) Sell a security at a loss and buy a similar security. Be aware that if you buy an identical security 30 days before or after the sale, the IRS will disallow it. The “Washday Rule,” as it’s called, is there to prevent investors from making trades to simply avoid taxes. You can buy a similar stock but not exactly the same one.

According to Tom Herman of the Wall Street Journal, you can use your capital

losses to soak up capital gains on a dollar for dollar basis.

2) If your losses exceed your gains or you have no gains at all, you can deduct as much as $3,000 ($1500 if you are married and file separately) from your salary and other ordinary income.

3) It doesn’t count if it’s only on paper, you actually have to sell the stock or security in order for it to count as a “loss.”

The practice of tax loss harvesting will save money because short term capital gains are taxed at a higher rate. Tax loss harvesting can net you up to 1 ½ percent when practiced regularly. While it doesn’t seem like much it can add up.

In order for this to be a viable strategy, only taxable securities can be used, not 401(k) or other tax sheltered plans. The cost of selling them off must also be considered. If the practice is used too often, you may lose what you hoped to have gained to transaction and trading fees. It’s best to implement the practice on a quarterly or yearly basis.

While there are benefits to tax loss harvesting it does give the investor pause. Should he upset the balance of his carefully constructed portfolio for short-term gain? How do you know if it’s worth converting an unrealized loss into an actual loss? Tax loss harvesting may be a good way to keep a stock that’s headed south from becoming a total loss, but consistent healthy returns are still the primary concern for any investor.

Since tax loss harvesting isn’t a widely used strategy you may want to speak up and discuss it with your financial planner.

There are two ways to improve personal finances:  spend less or earn more. If only life were that simple. In the current economic environment, earning more is not an option for many. Indeed, earning less is a prospect being faced by those who had previously considered themselves to be in secure employment. Focus must therefore be on spending less.

A lot of individual spending is driven by habit. How many times do we walk around the supermarket and pick up the same items? Too tired perhaps after a day at work or looking after children to notice that alternate brands are better value. Habitual behaviour is triggered by an emotional response. Retailers are experts in the marketing techniques that are sure to press the ‘buy-now’ button in many of us.

By implementing some simple self improvement suggestions it is possible to reduce our susceptibility to these marketing ploys and become savvy shoppers with improved personal finances.

Where to start?

Notice what triggers spending for you. When are you most likely to spend money on the things you don’t absolutely need? Do you spend money when you are down, to cheer yourself up? Do you go shopping when you are excited and buzzing?

 Once you have identified your triggers, you can control them by managing your emotional responses. Without the increase in self awareness the triggers will prompt the spending before you even know what has happened.

Take some time. Look around and see where you have spent money. What was the trigger for the purchase? How could you have distracted yourself? What would be a good, alternate behaviour in the future?

What are your weaknesses? What temptation do you find it impossible to resist? Again, by increasing self awareness you can gain self control. What strategies can you come up with to strengthen your will when temptation rears its ugly head?  This does not mean you can never visit a casino again or buy another pair of shoes. It simply means that you will be in control. You will not be the victim of emotional spending. Set aside an allowance to spend on your passion and stick to that allowance. Bring some thought to how you are spending that money. You may even find that the compelling nature of the desire weakens once it is identified.

 Do not put yourself in impossible situations. Everyone will overspend if they shop when tired, hungry, stressed or depressed.

Give yourself some support. Do not go grocery shopping before your meal. Go afterwards. You will have more energy and you will not be hungry. Those impulse buys will be so much easier to resist. 

If you are feeling low, take action to improve your mood before opening your purse or wallet. Spending more money, especially money you cannot afford, is not going to improve your mood. It could even worsen it. Make a list of things that can cheer you up – think about dancing, music, good friends, upbeat films, exercise, sunshine, gratitude journals. Whatever works for you.  

Build up your own self-esteem. Be proud of yourself and what you have achieved. Remember the good stuff. Do not compare yourself to others. Do not compare what you have or do not have. Be thankful. Do not give in to peer pressure. Do what is right for you.

By increasing self awareness and focusing on self improvement you can also improve your personal finances. As an added bonus, you will notice improvements in many other areas of your life too.

Babies can inspire even the tightest fists to spring open, but it is important to know what is worth spending your hard earned money on and what can be skipped, borrowed or taken care of with a much cheaper alternative. As a new parent you’re not expected to know all of these details as instinctively as you’ll soon be able to differentiate between the many different meanings of your baby’s cries, but it pays to do some research.

The following is a list of tips to get you pointed in the right direction.

Budget for the Necessities… and Let Friends Gift the Frills
Your baby will need a safe comfortable place to sleep, bottles from which to be fed, clothes and of course a car seat and stroller. Everything else is more or less icing on the cake and you should always remember that the topping should not cost more than then whole cake. It is best to spend your money on a good crib and a stroller/car set combination that meets modern day safety standards than to go crazy on cute mobiles and nursery décor and then have to sacrifice on the big ticket items. Friends and family are notorious for getting all excited about welcoming babies and they run off individually and spend on things that are ‘nice-to-have’ so you can afford the ‘must-haves’.

Stay Away From Specialty Stores
Stores like Babies ‘R’ Us and other brand name chains are designed to squeeze every last penny out of your pocket by cleverly marketing lots of adorable gadgets and gizmos that you could find for less if you need them at all. Don’t get caught in their trap. If you don’t think you have the strength to resist a beautifully packaged diaper tower that you could buy at the grocery store for a quarter of the price, then don’t go in.

Debate the Diaper Issue Objectively
Reusable diapers are better for the environment and they are hands down the cheaper option. The only issue really is if you are up for the challenge of washing the quantum amount of nappies your baby is bound to go through in a day. If you are good at getting organized though it’s possible to set up a workable system of change, soak and wash that keeps a stack of clean diapers always on hand. Your parents most likely did it. Think of the savings if you don’t have to buy a disposable diaper.

Breastfeed
Obviously this is a personal choice but breastfeeding is the doctor recommended course of action. It also eliminates the need for expensive feeding systems with special bottles and sterilization equipment, not to mention costly baby milk formulas.

Do Accept Hand-Me-Down Clothes
Sure you want your baby to have some things that were bought especially for them, but resist the temptation to have everything new and personalized with prints of his name on his shirts and bath towels and booties. Hand-me-down clothes can save you a lot of money on an item that your baby will out grow in a month or two anyway.

If you’re not careful you can spend a fortune before your baby has even spoken his first word. While having a new addition to the family is a reason to celebrate, there’s really no need to plunk down bundles of cash on things your little one will either outgrow or tire of long before it has had its fifteen minutes of fame. It may be wiser to tuck that money into a college fund instead… the time will come when you’ll be glad you did.

Is it the “Nanny State” trying to protect you from every little thing that might hurt you, or is it real? It depends on who you talk to, but the philosophy of “I’d rather know, than not know” is a good one to embrace.

Recently, an environmental group announced on their website, healthystuff.org, that toxicity levels which raise concerns are found in some common products like tennis balls for dogs, chew toys for cats and even some handbags made from plastic for women.  Often, the items that are the least expensive are found to have the highest toxicity levels – which shows sometimes we have to spend more for health and safety.

It appears that consumers are skittish about some of these things. Remember if you will that several years ago we had warnings concerning the amount of lead in paint that was found on children’s toys being imported from China.

While safety and concern is a good trait to exhibit, so is common sense in the choosing of products for you or your family. Even some independent experts on toxicity chemicals were not completely clear whether just the presence alone of them would make those products dangerous.

Where is The Concern?

Those with children and pets know the inherent risks of things going into the mouths on a daily basis. With no warning or pre-sales information, there is a risk to humans and pets.
It appears that there might come a time when legislation will be passed to force manufacturers to place labels on their products which show the chemicals that went into the production of the product and the percentage used. That would at least provide a measure of information on which parents and pet owner could make smart choices.

Choose Wisely

Until there is a labeling law in place, you are left to choose as best you can on your own. Using common sense is a start. Staying in touch with information sources like healthystuff.org can help. There are consumer groups who remain ever vigilant for buyers and users of products to help get the word out in the case of an exceptionally bad product.

In the meantime with the holidays around the corner, watch what you buy. Plastics found in toys have been around for years and do not appear to pose a health risk based on past history alone, but items that contain painted surfaces might have some risk to them.

Keeping your eyes opened and being careful about what you buy is wise. Talking with others about this topic does not hurt either. You might be able to help others in their attitudes about product safety as well.

Those who have found themselves out of a job and in need of income often look for anything that they can find from a job standpoint to bring in money. That is not a bad thing to do when money is scarce and bills are going unpaid.

However, if you are in a position to be able to consider this, it might be a good time to make a career change. Many people who feel trapped in their current career positions, may never make the effort to try something that they would rather do. But, as long as your financial situation is stable, this could be the best time to try.

Prepare Financially

Before considering such a move, examine the financial implications. If you will be experiencing a drop in income because of your choice, then you should have enough money set aside to finance your venture for a period of time. This will help you be able to give it a go without having to worry about money for expenses. Avoid raiding your 401k or other retirement funds.

Eyes Wide Open

Be sure that you set realistic expectations for yourself in your new career. You cannot expect to be at the top earning level when you just start out so, watching for opportunities to advance as openings come up. Or, if you are not able to advance because of the type of career, then set expectations accordingly. If you are taking a severe cut in pay, you might have to take a part-time job to make up the short fall. And, a reduction in expenses can help, too.

Give Yourself Time

Set a realistic time-frame to make the new career work. Success does not happen overnight but you should not continue to drag out your attempt if there are clear signs that it isn’t going to work. Add to this the realization that economic forces sometimes have an influence on business success.

Obtain Advice

People who consider career changes are wise when they seek the advice and input from those who are already in the positions that they are seeking. If you can find a mentor or one who is willing to give you instruction on what to do and how to do it, then your chances for success will be greatly increased.

No Regrets

Whether you fail or whether you are a success, determine that you will have no regrets in your decision.

As the mortgage loan and housing industry is settling a bit in recent times, many mortgage holders are wondering when it is safe to apply for a refinancing deal in order to secure a lower interest rate than they currently have. Many are wondering when the right time is to make the move and are concerned that the slashing of credit across the nation will be a factor in the loan process. The reality about refinancing is there isn’t a perfect answer for every situation. It can make good financial sense to refinance but it will also cost money to do so. If you can not financially afford to refinance, you will not be saving money at all.

When To Refinance

If you have an adjustable rate mortgage that has increased to a higher rate, refinancing may be a good option for you. Adjustable rate mortgages can have an advantage when rates are down but when rates are up, it seems in general a fixed rate mortgage is a better option for the long term.

If you already have a fixed rate mortgage, meaning your rate over time never changes, you generally have the advantage in the stability of the rate. However, when rates do drop, a fixed-rate mortgage can be a drawback. If you consider your present fixed rate with the current rates on the market, you may want to consider refinancing if you are in the position to do so. If you are qualified and are able to lock in a lower fixed rate, your will end up saving money over the life of the loan.

What To Consider
As mentioned, refinancing a mortgage does not come without cost. In order to justify those costs, you will need to consider how long you plan on staying in the home. While you may be able to reduce your regular monthly payment by a few hundred dollars, the closing costs on the loan can be in the thousands. Can your break even over the life of the loan? If not, refinancing may not be the best option for you right now.

You also want to consider up front the amount of equity you have in your home. Since most lenders require at least 20% equity before you can refinance, you may not even be in a position to get a lower rate. Also, you may not be required to have the full 20% but consider that you will get the best deals with the higher percentage of equity you already have.

Finally, another consideration you will need to make before deciding if refinancing is for you involves the new terms of the loan. While you may have already made 10 years worth of payments on your mortgage, the new terms will likely incur another 30 year term, meaning you will have to start at the beginning again with the new loan. You can decide to switch from a 30 year loan down to a 15 year loan if the number of past payments made  makes that a possibility.

Many parents never think to teach their teens the basics about money before they leave the nest. Only teaching them to save their money won’t necessarily keep them safe from rip-offs or fine print. Sink or swim is not the best way to learn about contracts or bills, so parents should teach their kids about these sorts of things before they move out.

Here are a few examples of things your teens need to learn now as opposed to later.
Bills

It may seem like a simple thing, but learning how to reading and understand bills is an important skill that should be learned early. Another important thing is learning how to manage your money to pay your bills. Teach your teens how to set aside money each month specifically used to pay bills. A lot of people fall into the routine of paying bills with whatever they have left each month. This is the opposite of what you should be doing, and learning this ahead of time will teach your kids to keep their head above water.

Contracts

Signing a contract for insurance, accounts, or other things can be very dangerous. Let your teens sit down with you, and teach them how to read the fine print, and what sort of phrases to watch out for. People that haven’t learned this young may sign a contract without reading it, and put themselves in a lot of trouble. If you teach them ahead of time, it may save them, and even you, a lot of trouble in the long run.

Bank Practices

Teaching your kids about using the bank when they’re young will help them to develop healthy bank habits. Help them to understand loans, savings accounts, and different cards. Show them how to use a debit card, or a credit card. But also teach them about credit card debt. Many people think that credit cards are like an unlimited hole of money, which causes them to bury themselves in debt. On many occasions, this starts young. If you teach your kids to use credit wisely instead of frivolously spending money, they may continue to use these healthy credit habits long into their adult life.

Don’t leave your kids to fend for themselves once they enter the financial realm. Chances are, if they’re given the right tools, they’ll make the right choices for many years to come.

Okay, we get it. A huge portion of the population has managed to survive to this point with virtually no money management skills. Now that the cat is out of the bag, there has been a spotlight shone on the lack of financial literacy and everyone is on the band wagon to manage their money better. Of course that is a good thing, however we are a nation that seems unable to live moderately. We either eat too much, spend too much, drink too much or work too much. With so much emphasis placed on eliminating debt and saving money, you can bet that some people will shift their priorities to the extreme. While some may say that you can never save “too much” money, it is important to remember to find balance in life.

How Much Is Too Much?

If you were to take a survey of 100 people and ask them how much money is too much, you would likely find that most people think you can never have too much money. As we all know money cannot buy happiness therefore it probably is possible to have too much money. After all, if you aren’t using it surely someone else could. In reality there are very few people in the world who have reached the “too much” level of wealth. Therefore the average person has a long way to go before they have to worry about exceeding their savings quota.

Get Started

The real challenge facing most Americans today is starting their savings. With many people losing thousands of dollars in the recent recession, rebuilding their savings could take years, effectively making the too much theory a moot point. If you do not already have a well padded emergency fund, retirement fund, rainy day fund and what could I possibly do with this money fund- then by all means do not worry about saving too much money at this point.

Why Balance Is Important

If you have ever known a person who compulsively saves you probably know what I’m about to say. For some people it is the act of saving money that is addictive versus accumulating wealth. That means that long after they have acquired enough money to last a lifetime, they continue to scrimp and save as if they were penniless. This type of obsessive saving can limit the quality of life and make it difficult for savers to part with their cash under any circumstances. Finding the balance between saving for your long term financial security and spending to enjoy the present is needed to find overall happiness. Remember you can’t take it with you, so you might as well enjoy it while you are here.

For those of you following the news, there have been whispers that the recession is over. Are the rumors true and we are finally out of the recession or is the economy just declining at a slower pace? In either event, it is almost a certainty that things will not go back to business as usual anytime soon. Hopefully we have all learned some lessons over the past year and a half; lessons that we should not soon forget even when the economy begins to improve. Here are a few things to keep in mind while the recession is fresh in our memories. 

• There are no guarantees in life. Whether it be your health, job or retirement account, no one is immune from changes. This point was driven home in recent months as people lost seemingly “secure” jobs, watched their savings dwindle and found themselves struggling to maintain day-to-day expenses.

• Exercise caution when using credit. One area that has seen big changes recently with more changes to come is the credit card industry. As we watched the housing market crash, banks fail and major corporations file for bankruptcy it was only a matter of time before the credit card industry was affected. Unfortunately many people have learned the hard way that the contract between creditor and card holder is binding only on the end of the card holder. For many, the terms and conditions have been arbitrarily changed to favor the credit card issuer, leaving the card holder “holding” the bag.

• Debt hampers your ability to reach financial goals. In the best of times, having a lot of debt prevents you from investing money in your future. When the economy takes a turn for the worse, it can make it impossible to pay both your debt obligations and other financial responsibilities. If you fall behind on your credit card or other loan payments you will quickly see your balances grow exponentially, making it even harder to get back on track when your finances improve.

• Those without savings will suffer. There are many people who make it a priority to save money for emergencies, retirement and other future needs. There is however a large percentage of the population that has little or no savings to fall back on during hard times. Without some form of “backup” plan, people who don’t have savings will find themselves facing a difficult time as the lending industry increases the standards for loaning money and using credit cards becomes less lucrative.

These are just a few of the lessons we have hopefully learned during the recession. Now is the time to put those lessons to use and make adjustments in the way we view and spend money. Even if the economy is on the road to recovery, there is bound to be another point in the future where things take a turn for the worse. If you were not prepared for this recession, take the steps necessary to improve your personal finances, putting yourself in a better position to weather the next storm.