Finance doesn't have to be a dirty word

Finance.

It's a topic that most parents and kids don't discuss, at least not as often or as in depth as they should. And it's something many teens don't hear enough about in school.

When I was a kid, I remember saving pennies, dimes, nickels, and (oh, joy!) quarters. I'd roll them up and my Dad would take me to the bank to cash it in. Eventually, I had my own "bank" and made deposits in secret stash accounts within my home.

Once I reached high school, I made some cash with my own tutoring and babysitting gigs. I felt that I was pretty responsible with my money, budgeting enough for needs and wants, and eventually opened a checking and savings account to start putting away some $$ for college life.

Hey, I even took accounting as an elective!  Maybe I was genuinely interested in feeling more money conscious. Or maybe it was to avoid the homemaking class, because the idea of cooking, baking, and sewing made me cringe (still does sometimes). Whatever the case, it was in accounting that I learned about personal finance (assets, budgets, cash flow, etc.). It was not in my economics class or any math class, for that matter.

And not much has changed.

I went on to college to make my own financial mistakes and learn from them. And though I was pretty frugal compared to my friends and other college kids, I didn't know things.

I didn't know about credit, or how to pay back student loans, or the importance of an emergency savings. After graduation, I felt so ignorant to these things, as I'm sure a majority of students do.

So, as much as I hope our Money Rocks program will spread like wildfire into the schools and touch thousands of lives, I thought I'd also put together a few tips for the parent (or the teen) preparing for the future.

1. Have open conversations. Parents and teens need to talk about budgets. Look at how much the parent makes and the monthly expenses, then see how much is left at the end of each month. It's pretty eye-opening!
   
   
2. Open a bank account. Seriously, I wish I would have done it earlier than I did. It's important to have the experience handling both virtual money AND cash AND a debit card before going off to college. It's a great time to experience the feel of a plastic card in the hand, without the threat of going into credit card debt!
   
   
   
3. Make some money! Anyone at any age can earn money. Help neighbors with yard work, practice saving birthday money, babysit, wash cars, tutor, part-time job at a retail store, or come up with your own business idea! It's so much easier to save money when you don't have responsibilities and a ton of expenses to worry about.


4. Pay yourself first. 
   You'll hear our staff say this all the time. And it's a tip that REALLY works. Setting money aside early means more money later! Pick a percentage of what you want to put in savings, and stick to it.
   
   
   
5. Write down needs versus wants and think about goals! Time to prioritize how you want to spend money. Being specific and having a plan makes it easier to save money.
   
   
6. Give. I was taught to give 10% of my income to my church. So whether it's church or charity, it's important to invest in something selfless and meaningful.
   
   
7. Emergency fund - do it. Establish a separate savings account that's just for an emergency. That way when something big happens (car accident, for example), it's handled.
   
   
8. Think about retirement. Well, at least a Roth IRA! These can be used without penalty to help pay for a first home, to pay higher education expenses, and even to pay medical bills. And, guess what? If the account is open for at least five years, there are no penalties for using it before retirement. For a person under 18, a Roth IRA can be opened as a custodial account. There's usually no fee to open one, but there may be a minimum contribution requirement. Definitely check it out! 
   
   
9. Work your butt off in school. I know school can really be a drag and teachers just don't get it, but it's such a small speck in time. Bullied, having relationship issues, family hardship, etc.? Keep your head high, find a support system (outside of school), and be yourself. You will continue on and live an awesome life that only gets better! Believe me, I've been there.
   
   Work hard now, look to your future, and be smart with your money. Start looking for scholarships and grants early if you plan to go to college. Research student loan options and ask about repayment options BEFORE ever taking out a loan. OR look into an apprenticeship if you want to go straight into the workforce. Some businesses will even pay for you to go to school part-time while you work.

Finance. It's not a dirty word. Talk about it. And take some preventative steps to ensure a secure financial future! If you want some guidance, feel free to contact us for some financial coaching at 843.735.7802 or info@fsisc.org.

By Jenna Johnson, Marketing & Development Director

Bargains for a Happy Halloween

Halloween is expensive and although it is over, the immediate week after is perfect for taking advantage of steep discounts. Decorations and all other overpriced Halloween accessories are priced for cheap; which usually reflects the quality of Halloween-themed products.

Think about stocking up for the following year. With decorations and costumes already purchased you will have more time and money next Halloween for carving pumpkins and enjoying hayrides.

If you miss the window for after-Halloween sales, there are plenty of other ways to save big. Purchase candy after other big holidays such as Easter or Valentine’s Day. Make the decorations yourself—this pairs as a great Halloween activity for kids.

Shop online to price compare and be sure to check reviews. Many reviews will not be great, but if it’s a cheap price, then you’re getting the expected value.

Avoid those Halloween-themed retailers that appear every October. Their items are almost always over-priced.

There are many ways to save money on costumes, which, once purchased for the whole family, can add up to a hefty price. Try to reuse or repurpose costumes from previous years. Swap costumes with friends or relatives. More and more funny costumes tend to be the simple but clever ones.

For more ideas, check out this list of easy, cheap, and humorous costumes: http://www.essortment.com/halloween-costume-ideas-50-funny-ideas-52248.html

Trick or treat!

Written by: Sarah Cornwall, Marketing Resources, at Family Services, Inc.

Americans Strongly Value Paying Down Debt Over Saving

Washington, DC – According to the August poll hosted on the National Foundation for Credit Counseling (NFCC) website, 89 percent of more than 2,900 respondents value paying down debt over saving money.

“People often debate which is more important, to be debt free or to have a robust savings account, and the answer is both,” said Gail Cunningham, spokesperson for the NFCC.  “As important as it is to handle debt responsibly, the truth of the matter is that the unplanned emergency is inevitable, and savvy consumers will recognize this and prepare for it.”  

January 1959 was the first month that the Bureau of Economic Analysis provided savings data.  According to that initial report, the personal savings rate in the United States at that point was 8.3 percent of disposable income, equating to the average person saving approximately one-month’s take-home income per year.

History has shown that the rate of savings increases during difficult economic times, as consumers begin to cut back on their purchases.  Correspondingly, savings typically decline during good economic times as is evidenced by the rate of savings falling below 1.0 percent before the last recession which began at the end of 2007.  Even though the savings rate has recently climbed to approximately 5 percent, it is far less than the savings in some years past.

Admittedly, it is difficult to save during times of inflation and job loss.  The fact of the matter is that each person only has a certain amount of disposable income, and when he or she has to pay more for everyday commodities, it cuts into the amount available for saving, making a bad situation even worse.

Making people feel more comfortable with their lack of savings has been access to credit, with some using credit not only as a convenience, but as a piggy bank.  “Credit replaced savings as the family’s safety net, with some arguing that savings was unnecessary since they could charge or borrow their way out of any unplanned event,” continued Cunningham.

Times are different now, and consumers know it, with the new normal for credit shaping up before our eyes.  Access to credit has diminished totally for some, while credit lines have been lowered for others, making reliance on credit as a rescue tool in an emergency not an option for many. 

Further, as the NFCC’s survey reflects, controlling debt has become paramount for consumers, with studies indicating that new purchases are more likely to be paid for with a debit card than credit, thus keeping personal debt at a manageable level and freeing up money for savings.

Consumers appear to have learned their lesson about over-spending.  Now they need to focus on the other side of the equation: saving.  The best use of the money that was previously going to pay off creditors is to begin or build up personal savings in the following five key areas:

Rainy day fund - covers the everyday life emergencies such as home or vehicle maintenance, insurance co-pays and deductibles, etc. 


Income replacement account - sustains you in the event of a job loss, major medical event, divorce, etc.


Downpayment for a mortgage – a significant downpayment will put you in a better buying position, as well as lower the amount you have to borrow


Known future expenses – plan in advance for upcoming major expenses such as education, vehicles, vacations, etc.


Retirement – start planning today to secure your tomorrow, as even small amounts of money invested over time can make the difference in how you live during your senior years

“In bad times, people save out of a fear of tomorrow, and in good times they spend as if there were no tomorrow,” said Cunningham.  “To turn this savings/spending cycle into financial stability, consumers should recognize the unarguable importance of savings and develop a systematic plan to meet their personal savings goals.”

If you need help getting started, reach out to your local NFCC Member Agency.  To be automatically connected to the Agency closest to you, dial (800) 388-2227, or to locate a counselor online go to www.DebtAdvice.org.  For assistance in Spanish, dial (800) 682-9832.

The August poll question and results are as follows:

Which is more important to you?

A.     Paying down debt = 89%

B.     Increasing savings = 11%

Note: The NFCC’s August Financial Literacy Opinion Index was conducted via the homepage of the NFCC Web site (www.DebtAdvice.org) from August 1 - 31, 2011 and was answered by 2,928 individuals.