Tuesday, 11 September 2007

Money Matters #2 - Valuable lessons to teach your children

I found this great article from Sunday's Investor: Valuable Lessons to teach your children, by Debra Cleveland. I don't really remember my Mum and Dad sitting me down and talking to me about how to manage money, but they were both good role models. I think I would like to be more transparent with our kids. The Geege and I have very different 'money backgrounds' and it would be good to teach the kids how we learnt to make it work together. Anyway, I digress...

The article includes ten lessons that can be summarised as follows:

1. Make it real - Let kids see the whole picture, not just spending money on a credit card in a shop. Sit them down when you are doing your bill paying, and show them how much it costs. Get them involved during the grocery shop to find the cheapest tin of tomatoes. Give them their pocket money in coins and use the good ol' piggy bank to 'save'.
2. Pocket money - Give kids pocket money so they can practise saving and spending. For teenagers, work out an allowance for clothes and entertainment to help them budget.
3. Save, save, save - Quarantine some of their pocket money, or when they start part-time work encourage them to get into a regular savings pattern (20% of earnings is good). It is a great habit to get into and they can enjoy the joys of compound interest!
4. Track spending - Help them learn that it is small spendings that can erode their savings. A 'money book' can help, where they write down everything they spend.
5. Plan purchases - The whole necessity vs luxury chestnut. If they absolutely still need it after two weeks, help them work out what they need to do to get it e.g. save up 5 weeks pocket money, how many days of work it equals. Then teach them how to shop around for the best price.
6. Set goals - Help your child calclate the cost of buying stuff and plan towards it. If they want a bike, take them to a bike store and price the one they want. Once you know how much it will cost, sit down with them and calculate how long it will take to save for the purchase. This will put the value of things into perspective (especially if they are 'earning' five dollars a week!)
7. Talk about the future - What money guide would be complete without a word on superannuation? This isn't directly suggesting that kids put money away for retirement but encourages parents to talk about long-term goals and 'set a good example'. By showing them separate accounts for holidays, private health insurance, one-offs that you have to save for, you can show them that without savings you have to borrow money.
8. Foster responsibility - Let older kids pay their way (I like this one!). If your teenagers insist on calling friends on their mobiles from your land line, make them pay for it! Putting bills on the fridge might help adult kids to see where the household money is going.
9. Show them shares - Once your kids have a few dollars in the bank, help them buy shares. Managed funds are great, but owning shares means they become interested in looking up their share price and follow the fortune of their companies. This doesn't encourage diversification (what guide would be complete without a word on diversification?) it could be a great, and fun lesson. Use an online broker to keep the trade costs down. Tax, I hear you scream, but not to worry says Debra, because can earn $1667 tax-free a year, which equates to an investment of roughly $30,000!
10. Explain credit - Should credit cards be renamed 'debt cards'? The big lesson here is that delaying payment of credit cards will lead to interest and the interest bill can eventually be higher than the original purchase amount. Be a good role model. Pay off your credit cards at the end of each month.

There is a lot of food for thought there for me. Many of the points are for older kids, but always good to be armed with knowledge and know what is ahead.

Friday, 7 September 2007

I think I may be addicted to Facebook

I seem to be losing a lot of time lately. One minute it is noon, the next 2pm. I have discovered Facebook and it seems that there is an awful lot of time wasting activities to be done there. The people that you find on that site! I have caught up with friends that I have lost track of (which makes me wonder whether they were really friends at all?) I chat to people. Look at photos. Play Scrabble. Philosophise about the world via such applications as Buddhist Thought of the day, the 8-ball and Ask a Question. It really is ridiculous, but I can't seem to stop myself. To make matters worse, today I also discovered Ebay (because I am looking for another high-chair) and that could become a problem too (because I have discovered the children's books area too)! When did I get to be such a computer nerd?

I am back at work. It hasn't been as bad as I expected (it rarely is) but I am not overly excited about things. There seems to be a new pecking order and a whole new team dynamic. I don't seem to fit in at the moment. I will have to bide my time until something new comes along, but in the meantime, I will just keep my head down, see my clients and make the most of the situation. Doo Dah has chosen this week to be sick again, so add some serious sleep deprivation to the mix and life is pretty hard at the moment.

Today is the APEC holiday. George W is in town making ridiculous speeches (eg. calling APEC, OPEC and the Australian troops the Austrian troops). The whole of Sydney has evacuated the city except Geege who is taking tourists around the place in a traffic-free dream. I hope noone decides to bomb the conference...

What I really SHOULD be doing on my day off is my Masters - finishing those last couple of assignments before I complete the degree. But it seems to be too hard to find the motivation to do that. And it's boring. And I don't seem to have any time because I am too busy with Facebook! But I had better go now because I have a couple of Ebay bids I need to check...
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