Tag Archives: Financial Literacy Month

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Financial Literacy Tips & Tricks from Money Management Superstar Rachel Fox

As Financial Literacy Month comes to a close, now is the time to start thinking about how you can take what you’ve learned and apply it to your  life. Not sure how to do that? Check out some tips and tricks to help ensure you’re making the most of your money from teen personal finance guru Rachel Fox of Fox on Stocks.

Saving is KEY

Establish killer credit as soon as possible

Build your budget

Feed your 401K early and often

4.26-blog

5 Ways to Use Your Tax Refund Wisely

Tax season gets a bum rap.

While tax day is often associated with having to pay the government, most people actually will receive a check compensating for money they’ve overpaid in taxes throughout the previous year. In 2015, the average refund was $2,893.

Adults usually direct this tax refund toward boring stuff like bills, but teens are free to spend this lump sum of money as they please, right? This is a free country, so technically, yes; but we suggest applying a bit of wisdom when it comes to your refund check.

But before you can start planning what you’ll do with your sweet, sweet cash, you should first know if filing a tax return is even necessary. Once you’ve got that straightened out, follow these five suggestions on how to use your tax refund wisely:

  1. Save for college

Nearly 70 percent of students are taking out loans to pay for college, and on average those loans amount to $33,000 per student. When you account for the interest, many people continue paying off student loans well into their thirties. By starting your own savings now, you could avoid or diminish the realities of this inconvenient, postgraduate truth. 

  1. Pay down debt

The average U.S. household carries $15,762 in credit card debt. While you shouldn’t have nearly that much as a teen, you’d be surprised how quickly it can pile up. If you have a credit card with even a small amount of debt, using your refund check to pay it off is a smart move. Not only does it help you prevent the dreaded black hole of debt, it also improves your credit score — win-win.

  1. Start an emergency fund

The definition of an emergency is a serious, unexpected situation, which is why you ought to plan for one ahead of time. If you don’t have money saved, the effects of a serious emergency (e.g., a medical emergency) can be compounded. Only 51 percent of Americans have enough cash in their emergency accounts to clear themselves of credit card debt. Be like the other 49 percent.

  1. Buy something useful

This may come as a shock, but when you move out of your parents’ house you lose the use of all their things. From food to paper towels, these are things you’ll need to budget for as an adult. Even more pressing is the fact that items you need like cars and computers tend to need repairs and you’ll have to cover the costs. Use your refund check now to upgrade any item you simply will be lost without.

  1. Invest

What’s the only thing better than having money? Making more money with it! Investing is no doubt complicated, but there are very safe ways to invest money. Not only will it boost your bank account, it will also prevent you from spending it frivolously.

For more info on jumpstarting a better tomorrow with your refund check, read this post from H&R Block Talk.

4.19-blog

Can You Pass This Financial Literacy Quiz?

Think you know everything about how to manage money successfully? For example, do you know the difference between different types of bank accounts? What about the fees associated with a credit card? Take this financial literacy quiz and prove it!

Q1: Uh oh, you forget to pay your cell phone bill and get a late notice. What kind of repercussions can you likely expect?

  • A. Your phone will be shut off
  • B. You’ll be charged a late fee
  • C. Your next bill will be double the price

Q2: Which type of account allows you to make an unlimited number of withdrawals without a fee?

  • A. Certificate of deposit
  • B. Checking account
  • C. Savings account

Q3: Your auto insurance plan has a $600 deductible. Driving home from work, you get into an accident and cause $800 worth of damage to your car and $1,500 to the other person’s car. How much of the cost do you have to cover?

  • A. $200
  • B. $1,700
  • C. $600

Q4: Which of the following is incorrect about using an ATM?

  • A. ATMs are usually open 24 hours a day.
  • B. You can get information about your account at an ATM machine.
  • C. You can get cash anywhere in the world without a fee.

Q5: What does APR stand for?

  • A. Annual Perpetual Rate
  • B. Annual Percentage Rate
  • C. Annuity Per Refund

Q6: How much should be in your emergency fund?

  • A. $1,000
  • B. Two months worth of rent or mortgage payments
  • C. Six months worth of living expenses

Q7: What is the recommended max percentage of your take-home income you should spend on monthly housing expenses?

  • A. 30 percent
  • B. 45 percent
  • C. 50 percent

Q8: You earn $8 an hour at your job at the mall and worked 11 hours this pay period. When you get your check, you notice it’s less than the $88 you expected. Why is that?

  • A. Your employer has the right to withhold money from your paycheck at will.
  • B. The store you work at is allowed to take money out at will.
  • C. State and federal taxes have been taken out of your paycheck.

Q9: Student loan borrowing is at an all-time high, and so is the default rate on making student loan payments. What kind of relief should you expect on your student loans if you file for bankruptcy?

  • A. Significant relief—all debts are wiped clean so you can have a fresh start.
  • B. Moderate relief—usually payments and amount owed are adjusted to match your ability to pay.
  • C. No relief—it’s extremely rare to get any relief for student loans from bankruptcy

Q10: What does a FICO score determine?

  • A. Your credit rating
  • B. Your interest rate
  • C. The fee you will be charged when taking out a loan

Check your answers below! How’d you do? Do you need to brush up on your financial literacy knowledge or do you have what it takes to have a successful financial future? Let us know in the comments section.

 

 

 

Answers:

  1. B
  2. B
  3. C
  4. C
  5. B
  6. C
  7. A
  8. C
  9. C
  10. A
4.14-blog

Financial Literacy Across the World

The United States is considered a global leader on numerous fronts, but when it comes to teenage financial literacy, we’re simply middle of the pack.

In fact, on a 2014 international financial literacy test, the mean score for American 15-year-old test takers was roughly 490. For context, that places us between Latvia on the upper end and Russia on the lower end. Shanghai teens performed the best with a mean score around 600.

So why doesn’t America’s greatness translate to teenage financial literacy? Well, the answer is simple: we aren’t teaching enough teens the basics.

According to the Council for Economic Education, the number of states that require high school students to take a course in personal finance has remained unchanged at 17 since 2014. To put it another way, less than half the American states are preparing their teens for real world money management.

Meanwhile, other countries across the globe are implementing mandates to require financial literacy coursework be taught in schools. The United Kingdom joined Australia and Singapore in 2014 as countries that include personal finance classes in official curriculum, and other countries like Canada and New Zealand are poised to make similar requirements in the near future.

Among the states that have mandated personal finance education courses, the students exhibit meaningful improvements. Three years following the course implementation in Georgia, Idaho and Texas, credit scores increased by 2 percent, 3 percent and 5 percent respectively.

Additionally, students who have received personal finance education are more likely to display financially responsibly behaviors like saving, budgeting and investing. The Council for Economic Education reports 93 percent of those who have taken a class save money vs. 84 percent of those who have not; 60 percent of those who have taken a class have a budget vs. 46 percent of those who have not; 32 percent of those who have taken a class have invested money vs. 17 percent of those who have not.

But perhaps an even more significant obstacle for teens to hurdle in the quest to obtain lifelong financial skills is that most parents don’t feel equipped to pass on sound financial knowledge, according to PBS.

4.7-blog

Teaching Teens Financial Literacy on National No Housework Day

If you add up all the housework parents do in a given year to maintain a happy, healthy and, most importantly, clean home, it’s safe to assume that on average every single day will involve a chore or two.

But not on April 7. Today is the one day that deviates from the mean because it’s National No Housework Day.

For one day, all the dishes should be left in the sink; all the laundry should stay soiled; all the beds should remain unmade. But this national holiday should be a valuable reminder for teens: housework piles up quickly when nobody tends to it.

So how can you turn this day into a teaching lesson?

Divide and Conquer

The saying “two heads are better than one” is a universally accepted truth, but for reasons unknown many parents dismiss it when it comes to family housework. A Chicago Tribune article reported 82 percent of parents did chores when they were kids, but only 28 percent ask their kids to do the same. By splitting all the cleanup duties in the wake of No Housework Day, your teen should understand that a united front against chores will make for a faster and easier process. Additionally, if you give your teen a specific role that they can continue to own long after No Housework Day, it will give them a clearly defined responsibility and lessen the need for micromanaging.

Pay to Play

The same article reported 13 percent of parents said their kids will only do chores if they’re paid. Even though this is a low number, these teens are working wisely within our capitalist system. Providing an allowance for completion of housework is something that parents should consider, especially if you ask your teen to do larger jobs that can be seasonal or bi-annual (think: cleaning the gutters). Creating a minor work environment will teach teens compensation is only rewarded with a job well done — a vital real world lesson.

Time is money management

Giving teens household duties they are expected to complete on time will provide a tangible time management system they can take to the next stage of their lives. If they want to see a movie, for example, they won’t be able to afford it without timely completion of their tasks. Three-quarters of the parent respondents agreed that chores make children “more responsible,” so the only thing holding back their development is a well-structured plan.

If you lead the way, parents, you’ll find a well-balanced distribution of household work will create more free time for you — perhaps even a semi-annual celebration of No Housework Day!

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Helping Teens Grow Into Successful Adults With Personal Finance Knowledge

Dr. Martin Luther King, Jr. once said, “Education must enable a man to become more efficient, to achieve with increasing facility the legitimate goals of his life.” The function of education, he argued, is vital for the betterment of students’ lives and society as a whole.

As we continue to focus on the need for personal finance education, specifically as April marks Financial Literacy Month, it’s important to recognize its role in forming a well-rounded student. Because teens who lack a basic understanding of personal finance will grow into adults who are not equipped with the tools to lead financially stable lives.

The Proof

A 2012 study of nearly 30,000 teenagers from 18 countries found more than 1 in 6 students in the United States failed to reach the baseline level of proficiency in financial literacy, according to the Paris-based Organisation for Economic Co-operation and Development. That places American students in the middle of the pack worldwide.

Moreover, a 2016 survey from the Council for Economic Education reports only seven U.S. states require high school testing of personal finance concepts, with stagnation in mandates for personal finance education. Additionally, the number of states that require completion of economics courses is on the decline over the past two years.

The Results

In a 2015 national survey we found 42 percent of teenagers said they are not “financially fit,” and 2 in 5 teens would give up their smartphones if it meant graduating college debt free. A similar study in 2014 revealed 83 percent of teenagers do not keep a budget.

The juxtaposition of these statistics is stark. Teenagers show concern for the future of their financial health but aren’t taking the proper basic measures to set themselves up for success. With the continually rising costs of college education and a shortage of financial skills, young adults are greeted with shock upon leaving the confines of college campuses.

Seventy percent of college graduates, according to debt.org, leave school with student loan debt that in 2014 averaged $33,000. In total, U.S. student debt is around $1.2 trillion, with $3,000 of debt accrued each second.

The Solution

It all starts with the basics: personal finance education. Whether at school or at home, students should have the opportunity to learn practical life skills, like balancing a checkbook, the importance of saving early and saving often, and how investments can benefit from growth over time.

“To be successful, most kids don’t need to learn about collateralized debt instruments, but they do need to know how to open a bank account, how much they need to save each month to reach their goals and, if they borrow this amount of money, how much money they will need to earn to pay it back,” said Nan Morrison, president and CEO of the Council for Economic Education. ”

The Council for Economic Education found students who learn these basic financial literacy skills are more likely to engage in financially responsible behavior such as saving, budgeting and investing, and have better average credit scores and lower debt delinquency.

These are the skills the younger generation must possess because before we know it, they will be the ones who have the money and run the country. Don’t we want them to run it properly?