Tag Archives for " financial freedom "

As the world becomes more complicated, you have the responsibility to guide your children the best you can. One of the most trying subjects to teach your kids about is how to appropriately manage money.

More specifically, teenagers develop great interests in the almighty credit card. Credit cards are not to be taken lightly at any age, but especially during adolescence. How can you educate your teens about the use of credit cards? 

These strategies will help them learn to use credits cards responsibly:

1. Ask where the money will come from. Insist your teens know specifically where they’ll get the money to pay off the credit card charge before they charge anything. 
2. Encourage responsibility. Explain that your teens are responsible for paying their credit card bill on time. In addition, require them to pay off their credit card balance within 30 days. Discuss how interest charges and other fees work and that paying such fees is like giving away their money for nothing.
   • Take care to listen to how your teen takes part in this discussion. If you determine your teen requires more maturity or understanding of the information, avoid giving them a credit card and explain briefly how you arrived at your decision.
3. Consider starting with a limited balance credit card. Have your teenager save money until a certain amount accumulates, like $100.00. Then, accompany them to your banking institution or a store to obtain a pre-paid card for the $100.00.
   • Even though your teen paid for the card with their own money, it’s a good 1idea to tell them to make every effort to stretch out their use of the card. A benefit of this method is that your child saved the money upfront before actually charging items. 
   • They can, therefore, understand that the credit card balance is tangibly their own hard-earned money. The downside of this method is it may not teach your child the responsibility of charging only what they can pay off within the next month. 
4. Provide a credit card to replace weekly allowance. Consider converting their allowance to a monthly credit card balance. This method allows them to learn about credit card management. Consider this example:
   • You normally pay your teen $30 cash weekly allowance. When they turn 16, state you’ll now provide a credit card rather than the $30 cash weekly. Explain that they can charge up to $120 per month (4 weeks times $30 equals $120) as you'll pay up to that amount monthly to cover their credit card purchases.
   • Stress that if they charge over $120, they must come up with the difference to pay off any balance over the $120 when the statement arrives.
   • If they charge over $120 for the month and are unable to come up with the difference, they must surrender the credit card until they pay you the difference owed (even though you’ll go ahead and pay it off to avoid monthly fees).
   • Using this method to teach your teen how to handle credit cards is a helpful lesson in managing their money with limited funds. Your teen learns to limit spending to stay within their means.

Teaching teens how to handle credit cards is challenging.

The good news is that if you start early with your kids about how to earn, save and spend money, they’ll easily progress to understanding the above concepts with your help and guidance.

Praise your teens' efforts when they manage their finances and credit card issues well. You’ll build their confidence for the future when you teach them how to handle credit cards wisely

Most people view estate planning in the same way they view a root canal: Put it off until the pain is too great to ignore any longer. Also, those with little income or net worth believe that estate planning doesn't apply to their situation. But estate planning is much more than just the allocation of cash, real estate, and other assets. There are other things to consider, too.

There are many errors that occur again and again in estate planning. Avoiding these mistakes is half the battle.

Steer clear of these mistakes for a successful estate plan:

1. Procrastination. Estate planning is a little like completing a tax return. No one really wants to do it. But it's so important to push your reticence aside and get it done!
2. Not paying attention to the conflicts that exist within your beneficiaries and estate plan. For example, if your will declares that your husband receive your retirement account, but your ex-husband's name is still listed as the beneficiary, this could prove to be a big challenge.
3. Not using the unified credit to your advantage. This only applies to those with a significant net worth, but this mistake is made regularly. In most cases, assets pass to the surviving spouse. Up to $5,250,000 can be excluded from taxation.
   • If this isn't handled properly, though, the surviving spouse will only have their exclusion available when passing assets on to their heirs.
   • There are ways to potentially shelter this money from taxation in the future. One solution is a credit shelter trust.
4. Not having adequate life insurance. Life insurance can be a great estate-planning tool for the affluent, but life insurance is vital to those with low income as well.
   • Consider how your family will survive financially if you or your spouse were to die unexpectedly.
   • If you have significant wealth, you might consider using life insurance in conjunction with an irrevocable trust for tax purposes. An attorney that specializes in estate planning can make recommendations based on your unique situation and explain the details.
5. Creating a plan that lacks flexibility. Creating a plan with a little wiggle room will allow your heirs to take advantage of any new laws as well as use the assets in the most advantageous fashion.
6. Not gifting assets. Up to $14,000 can be gifted to each beneficiary per year without incurring a gift tax. This can be a great way of reducing the taxes imposed on your estate at the time of your death. You also have the chance to see how well your beneficiaries can manage your assets.
   • Additionally, you have the advantage of being able to witness someone enjoying your assets. You can't do that after you're gone!

Estate planning isn't the most enjoyable activity, but it is likely to be one of the most important things you do for your family.

Everyone should have a basic estate plan that spells out their wishes. This is important even if there are no children or assets. An attorney can be invaluable unless your estate is very simple. And even then, the $100+ it will cost to have an attorney take a look at your documents will be money well spent.

Financial independence is highly desirable. Yet, for some reason, it seems to elude many of us. You've likely tried your hand at many different approaches, yet none have been able to give you the anticipated results.

The good news is that financial independence can be achieved. By making certain adjustments to your life, you'll find yourself starting to build financial independence. So put aside your plan to work harder or put in longer hours and read on to find the answers you’ve been searching for

Following these steps will lead you to financial independence:

1. Eliminate the word “credit” from your vocabulary. Having a good credit score can open up opportunities for you. But living in the credit culture also puts you in a stressful situation.
   • If you’re seeking financial independence, start by doing away with credit
   • You probably have a few credit cards in your wallet. Get rid of them! If that makes you nervous, only keep one for emergencies. Just ensure the credit limit is somewhat in line with the amount of cash you’ve saved.
   • If you're unable to purchase something with cash, it probably means you can't afford it. Live within your means.
   • Avoid borrowing for frivolous expenditures. Those are usually the hardest loans to repay.
2.  Treat needs and wants differently. Take a look at your life. How many of the things you have or do can be considered necessities? If you're honest with yourself, you'll realize you're piling on unnecessary expenses focusing on your wants rather than your needs.
   • Making a list of the things you require for survival is a necessary step for financial independence.
   • Everything that didn’t make the list can easily be eliminated from your expenses each month. Why put that amount of burden on yourself? It's time to give your finances a break.
   • The things you do to maintain a calm existence can be added to your list of necessities. For example, your yoga class may be necessary because of the physical and emotional benefits. But you can reduce the monthly expense by purchasing a yoga DVD and working out at home.
3.  Tap into your skill set. Are you working in a field that you love and that maximizes your skills? If you think about it, you'll realize that you're most productive when you’re doing something you like or are good at.
   • Think about your current job. Is it bringing out the best in you? Or, can you earn more and increase your productivity in another field?
   • Perhaps you can pursue a transfer to another department at your current place of employment. Or maybe you want to move on to something completely different.
4. Save money at all costs. Even if it's a dollar at a time, put aside money for your savings account each month. Learning to save helps you develop an understanding of its importance.
   • One way to save is to request a salary deduction each month. That amount can go to an investment account, which limits your access.
   • Many companies have 401(K) or 403(B) accounts that can get you started with a savings plan. Look into what’s available at your place of employment.
5. After reading this, you'll likely realize it's much easier than you think to make some simple financial adjustments. Give yourself four weeks of this routine and then assess how it’s going. You'll feel encouraged by the positive results!