Tag Archives: spending

shutterstock_194758154_604 blog

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

4.12-blog

What Does Financial Literacy Mean To You?

Whether you’re 14 or 44, being financially literate is crucial at any age. We asked a group of parents and teens what being financially literate means to them and how they use this knowledge in their everyday lives!

I’ve heard of financial literacy, but I don’t know what it is. I don’t personally know much about finances, but I’d like to learn how to spend money wisely so I’m prepared for when I’m adult. — Brenna K., 14

I want to be educated on how to manage my money because I don’t think I’m quite there yet. I sometimes talk to my parents about money, but not enough. — Juliana C., 14

I had one personal finance class in high school, but it was optional. Being financially literate to me means that I’m able to understand my bills and exactly what I’m looking at when I get those bills. — Amanda O., 20

Being financially literate definitely means staying on top of my bills and making sure I have enough money to cover those, but also that I have enough money to go out and have a good time. — Ryan S., 20 

Overall, being financially literate helps you not incur credit card debt, knowing where to invest and save, and creating a budget. I talk to my kids about money, and they each have a credit card so they’re able to budget what they want to spend, and then pay it off at the end of the month to create credit. — Leslie G., 43 

I think budgeting is definitely the most important part of being financially literate. I like to save rather than spend my money. — Kaileigh E., 18 

It’s so important to be financially literate, and I personally need to get better at it. It’s important to make sure you know what you’re spending and if you’re spending it well. — Courtney E., 20

I need to make sure I keep my bank account in check and my checkbook balanced. My dad helps me out a lot and helps me understand my finances. — Emily D., 19 

My parents help me out a lot with my finances, but being financial literate means everything to me because you have to save your money. Being a student is hard and you have to pay for school and all that, but I think my parents help me out a lot. — Colleen O., 19

I’m not financially literate. I don’t take any personal finance classes, but I wish I did because I’d learn to spend my money better. Right now I spend it on crazy stuff that I probably shouldn’t, like toys. — Jacob F., 14 

I like to be aware of how I’m spending and saving my money. I check my bank account frequently and have certain apps that help me make sure I budget wisely. In the future, I want to make sure that I’m putting away 10 percent of my paycheck and saving for an emergency fund. — Charlotte H., 22 

In order to make sure I’ve got a grip on my finances, I make sure I save enough. That’s the point of financial literacy. — Johanna H., 31

I don’t think teens are very financially literate. There often isn’t any education in high school so we as teens aren’t as smart with our money as we should be. — Eric H., 12 

I think I’ve talked about it with my parents, but not at school. I’ve talked about money and how you should spend it in a smart way. — Katharina F., 16

What does being financially literate mean to YOU? How do you make sure you’re keeping track of your money? Let us know in the comments below.

3.24blog

Who’s a Bitcoin and Where Can I Facebook Him?

Have you ever heard your teens talking about Bitcoin and thought, “Oh, great—not another video game”?

If so, then you’ve been greatly misinformed. Yes, Bitcoin is a product of the Internet age and is used solely within the digital sphere, but it is not a video game. It’s also not a social media platform, mobile app or new dance craze.

Bitcoin is a form of digital currency—a.k.a. cryptocurrency—created and held electronically that operates independently of a central bank and its regulations. Being that it’s a decentralized currency free from the control of one institution or government, its value is derived from the relationship between its supply and demand.

This is all very confusing and quite abstract, we understand. But the simple truth is that teens can buy and use Bitcoin on the Internet to purchase just about anything. There are no age restrictions in place to purchase Bitcoins, and for a younger generation that operates almost exclusively on the Internet, it’s more than likely they’ll come across an opportunity to get involved with it.

So what should you, the parent, know about Bitcoin? We’ve distilled the info and packaged it into bite-sized pros and cons.

Pros:

  1. Allows teens to make purchases online

In most jurisdictions, an individual must be 18 years of age to make a purchase on online. That means your teen will either get a hold of your credit card with no restrictions (yikes!) or you’ll have to monitor each and every purchase (also yikes!). With Bitcoin, a teen can spend a specific amount and receive a corresponding amount of bitcoins in return, regardless of age. There’s no immediate risk of overspending.

  1. Teaches teens practical personal financial skills

Budgeting is engrained in this system. Teens have to decide what is worthy of their bitcoins. Additionally, all bitcoins are encrypted with the history of each and every purchase, meaning frivolous purchases will never be forgotten and hopefully can teach meaningful lessons. This system of spending also provides more independence, which might work well with some teens that resent being constantly monitored by parents.

  1. Encourages entrepreneurships

Teens can actually earn bitcoins using their skills—just like a job. The Internet isn’t as ageist as the real world, so if a 13 year old can do computer programming as good or better than a 35 year old, then they can be hired and paid in Bitcoin. Freelance writers, gamers and programmers are regularly being paid in Bitcoin for their services. The value of ability and competence is valued more highly in this space than experience/wisdom/degrees.

Cons:

  1. The dollar value of bitcoins is volatile

Fluctuation is the name of the game here. Within a two-year span, the price of Bitcoin went from under $100 to over $1,000. The current price of Bitcoin on the market as of this writing it $375. What this means in normal person terms: a bitcoin that bought you a DVD on Amazon yesterday won’t necessarily be able to buy you a piece of gum tomorrow. Additionally, there is only a finite amount available. This gets complex as well, but the basic fact is there will only ever be 21 million bitcoins in existence, with close to 15 million of them still unreleased to the general public.

  1. Only 2 percent of merchants currently accept Bitcoin

That 2 percent equates to 160,000 digital merchants, so there are places to use Bitcoin. It’s frustrating, but don’t expect to be able to use it everywhere. Additionally, if more merchants don’t begin adopting Bitcoin payment, the overall value could potentially take a hit.

  1. Can be used for not-so-reputable dealings

While some see and use Bitcoin as a way to fund some shady dealings, the big picture view is that they’re better used as an investment tool. Some analysts have made optimistic predictions that by 2025 one Bitcoin will be worth $17,473. That would provide a handsome return to current Bitcoin owners.

However, your teen can still use Bitcoin for smaller payment transactions. It’s a fun foray into money management that could give them insight into an emerging form of currency that could very well become commonplace in our society.

3.29-blog

5 Tips for “Spring Cleaning” Your Finances

When you hear the word “spring,” uttered for the first time after months of dreary winter, what kinds of images are conjured up in your head?

Warmth. Sun. Birds. Flowers. Cleaning?

It may not be the most alluring aspect of the new season, but according to the American Cleaning Institute, 72 percent of people will likely engage in some sort of spring-cleaning this year. So if cleaning is top of mind when you think of spring, you’re not alone.

But don’t limit spring-cleaning to only your home. This is also the perfect chance to give your finances a nice tidying up. Here are five financial spring-cleaning tips that will give your finances a fresh new shine for the rest of the year:

  1. Form a realistic plan for getting out of debt

Without a strategy, you could suffer from the fiscal strain of debt for years. Apply a simple plan for your debt, and you’ll be able to mark a date on your calendar when you’re free from the shackles. Start by spending less than the amount you earn each month, and then decide on an amount you’ll put toward debt each month and stick to it.

  1. Do your math before taking out a loan

Whether you’re planning for your teen’s education or considering furthering your own, loans are often part of the equation. Make sure you understand the commitment before accepting a loan or you’ll be in for a rude awakening. A $100,000 loan at 6.8% interest will demand monthly payments of $1,100 for the next 10 years.

  1. Save for retirement

And do it now! The sooner you start putting in money for your golden years, the shinier those years will be. Once you’re retired, you won’t have a source of income to support yourself. Seems obvious, but then again so does saving now for retirement, yet plenty of people neglect to do so.

  1. Make a budget

Putting your plan on paper in the form of a budget will help make the first three tips easier. If you don’t know where to start on a budget, follow the 50/20/30 rule: 50 percent to essential expenses, which includes housing, transportation, utilities and groceries; 20% to financial priorities, which are retirement, savings and debt (in that order); 30% to lifestyle items, which are gifts, travel, dining out, shopping and everything else.

  1. Check (and understand) your credit report and credit score

A good indicator of how tidy you’re keeping your finances is your credit report and credit score. They will determine if you’re eligible for big savings when you make major purchases like a car or house (anywhere from thousands to hundreds of thousands in some cases). Additionally, make sure there aren’t any mistakes on these documents as that can have serious effects on your credit and your ability to borrow money.

3.22BLOG

If the Easter Bunny Were an Accountant: The Importance of a Nest Egg

When you were a small child, did you ever stumble upon the grand prize during an Easter egg hunt? While all the other children were frantically searching for eggs with a couple of measly jelly beans inside, you had found the winner—the egg with the best candy bar, a toy or even some sweet, sweet Easter cash.

Let’s say you found the egg that was stuffed with dollar bills. Did you go out and spend it immediately or did you put it toward your savings? If you wisely put it in the piggy bank, then that Easter egg was actually the start of your nest egg. Let’s talk about the importance of this kind of egg.

What’s a nest egg?

A nest egg is a term that refers to a sum of saved money that is earmarked for larger investments in the future (think: car, education, house). Although this may seem like more of an adult concern, the sooner you begin to save, the better off you’ll be. The adult you will thank the teenage you.

Why is this nest egg so important?

A recent report claims that 63% of Americans don’t even have $1,000 set aside in emergency savings. Yikes! That means in the event of an emergency over half of the country will go into debt in the aftermath. Moreover, the Federal Reserve reports that the median balance of retirement accounts held by Americans who are saving for retirement totals less than $60,000. Retirement accounts are in essence the ultimate nest egg, and the average American only has about one year of salary (according to nationwide averages) to last them all the years after they retire.

When should this nest egg hatch?

Our recommendation is to build up your nest egg so there’s at least $1,000 in it at all times. That means even if you’ve just spent $1,000 on an emergency, there should be an additional $1,000 in case of the dreaded back-to-back emergency situation. As a teen, you can start with just one nest egg and then divvy it up into a retirement fund when the time comes. It’s helpful to know that the average person retiring at age 65 with $103,000 in retirement savings would only be able to withdraw $343 per month. That’s hardly enough to live on.

If you’re interested in how much you should save in order to have the retirement nest egg you’d like, use this retirement calculator to quickly crunch some numbers and get a basic picture. But for now, enjoy those jellybeans and happy Easter egg hunting!

studentsBLOGSIZE

How The H&R Block Budget Challenge Is Helping Teachers Teach Financial Literacy—Straight From Teachers

Educators all over the country are using the H&R Block Budget Challenge to teach students important personal finance concepts. From how to manage a budget and properly saving for a 401k, students are learning how to be smart money managers through this simulation without the real life consequences. Don’t believe us? Hear it straight from teachers who have participated.*

“Budget Challenge is an excellent “formative” assessment tool that accurately assesses the students ability to manage their finances over a longer period of time.   It gets to the heart of their personal habits and personality traits when it comes to managing an account. I also use their scores as a jumping point in discussing credit scores and credit worthiness.” 

“It was well designed and allowed me to expose my student to Personal Finance concepts in a realistic, interactive and fun manner.”

“I learned the issues that seemed to give students the most problems. This allowed me to go more in depth on those topics in order to enhance student knowledge.”

“Both of our school principals have spent time in my classroom during the simulation. They enjoyed seeing the students’ work and how they progress. They also enjoyed how competitive they were with who was in first place in our room.” 

“School administrators have pushed for a required PF (personal finance) class at our school. They were excited about the BC (Budget Challenge) simulation when I brought it to their attention.” 

Get your class involved in the H&R Block Budget Challenge. Find out more info about how to enroll here.

*All responses were anonymously gathered from the H&R Block Budget Challenge Fall 2015 Survey

3.10blog

The Dollar Doesn’t Fall Far from the Money Tree: Making Sure Your Teen Doesn’t Pick up Your Bad Financial Habits

Think back to when you were a bright-eyed teen. Do you remember where you acquired the personal finance skills that would serve as your foundation for saving, spending and investing as an adult?

If you were lucky, you learned what you know from your parents. Otherwise, you probably picked up tidbits here and there through trial and error.

Even with a whole new generation of soon-to-be-adults out there with an appetite for money management, studies show the majority of them are still learning from their parents due to a lack of in-school financial literacy education. That leaves you in the role of parent/teacher.

All of those decisions you made with your money are now useful teaching tools in steadying your teen on the right track from the get-go. If you never quite learned proper financial literacy yourself, now’s your chance to clean the slate and start anew alongside your teen.

These three tips will help you and your teen build a strong financial literacy base:

  1. Don’t forget to save

Any responsible adult will agree that saving money is important. This key component to effective financial literacy spans the gamut: saving for personal items like clothes or entertainment; keeping enough funds in the bank for essential items like a car or rent; stashing away enough for retirement and beyond. If you’re not saving, you’ll eventually run into trouble. Yet, according to a Federal Reserve Board study, 47 percent of Americans would not be able to cover an emergency expense of $400 without borrowing money or selling something for money. Don’t let your teen be one of the 47 percent. Urge them to save early and often to avoid harrowing times when an emergency arises.

  1. Don’t forgo other essentials

When money is tight, some people will deprioritize certain aspects of their lives in order to pay the most pressing bill. The same Federal Reserve Board study reported that 31% of their respondents went without some form of healthcare in 2014 because they couldn’t afford it. Not only does this fact highlight the importance of savings, it also stresses the need to sacrifice non-essential items if needed. Your teen should be made aware that medical treatment is ultimately more important than the newest iPhone.

  1. Communication is key

You may think you’ve been doing a good job as parent/teacher, but what does your teen say? A Time article claims that while 73 percent of parents say they regularly talk to their kids about saving and spending, only 61 percent of kids agree with that sentiment. So before giving yourself teacher-of-the-year award, make sure your teen understands what you’re saying and can apply the learnings in practical setting. One easy way to accomplish this is by not forking over cash for your teen’s luxury items, for instance if your teen wants to go to a concert, make sure they can earn cash either through a part-time job or even household chores.

3.1blog

3 Big-Ticket Items Teens Save Up For That Also Have Hidden Costs

There comes a time in every teen’s life when their interests and hobbies outgrow the realm of childhood and enter into a mature landscape of adulthood. The only problem is their maturing interests develop faster than their financial literacy skills.

Despite their best efforts to save money toward expensive items they intend to buy , most teens fail to account for the additional, and sometimes hidden, costs associated with these purchases.

Here are three big-ticket items many teens will save up for without considering the additional costs.

Cell Phone

Today’s cell phones are used for more than strictly making phone calls, but that doesn’t mean your teen should buy one simply for its camera capabilities. A data plan is a necessary evil, and the average monthly bill can range upwards of $100, according to U.S. News & World Report. Additionally, there are the expenses to insure a phone, not to mention all the bells and whistles teens will surely want to add on. What all this means is after your teen has saved up money for the physical phone they will need to continue their thrifty ways on a month-to-month basis if they want to keep their phone operational.

Car

When it comes to ditching the “little kid” status, owning a car is just about the quickest route for teens. But cars are a big responsibility, and the associated costs back that up. Right off the bat there’s car insurance, which the DMV says averages close to $900 a year. There’s no grey area here—if your teen wants to be on the road they MUST have car insurance. Then there’s gas, which is fairly important if your teen wants to actually drive anywhere. (Parents might be fine with a car that never leaves the driveway though.) And don’t forget how costly it is when—not if, when—the car needs repairs. Teens should be aware that car ownership is an ongoing responsibility.

Computer

It’s more than likely that your teen already has access to a home computer. It’s also more than likely your teen wants their own fancier version. That’s fine as long as they understand that without paying the additional costs, they’ll be able to use it for games of solitaire and little else. Most software comes with a price tag (think Microsoft Office), as does hardware (mouse, printer, speakers). Then there’s virus protection and a warranty, which is recommended if your teen wants to get the most out of their purchase.

Maybe you’re covering all of these costs for your teen, and maybe you’re not. It’s safe to say most parents will fall somewhere in the middle. Encourage your teen to research additional costs when they begin the process of saving. It will save them from disappointment later on, which will save you from having to hear about how unfair it all is.

Teens’ First Jobs and Spending Habits [VIDEO]

How do teens earn their money, and what do they spend their hard-earned cash on? What financial advice from parents do they follow, if any? H&R Block Dollars & Sense hits the streets to find out how influential an open parent/child dialogue is in in reinforcing good money management skills.

 

new-year

3 New Year’s Resolutions That Can Save You Money (and Are Actually Attainable)

As 2015 comes to a close, it’s natural for people of all ages to reflect back on the past year. Common questions one may ponder are: “Did I have a successful year? Did I achieve any or all of the goals I set for myself? Where did I fail?”

That last question is the one that resonates most loudly, especially when it comes to finances. Whether failing to save for a new skateboard or putting too little into a 401K fund, we look to January 1 as a chance to start from scratch. Yes, it’s New Year’s Resolution time!

The Washington Post reported that less than half the population sticks to their resolutions for six months. However, a Time.com article stated that resolutions of a financial nature tend to have better success than those having to do with health or fitness.

So this year, instead of making grand resolutions that are difficult to keep—I’ll run a marathon—and then give up a month in when you see yourself veering off track, you and your family should make smaller financial goals that are attainable. The same methods that can help your son or daughter save for their first car can help you save up for their college education.

Here are three realistic financial resolutions that your whole family can make to start 2016 off on the right foot.

1. Create a budget

Budgeting is the most important step to being a smart money manager. If you don’t know what you’re spending your money on, it’s hard to accurately save. The easiest way to start building a budget plan is to record spending habits for a month. There are several mobile apps that can simplify this process. Track expenses like bills, cost of transportation, and money spent on both food and leisure activities. Once you see where you spend your money, you can forecast for the next month, with the intention of putting aside more money for savings.

2. Set aside a little bit every week

In 2015, it was estimated that roughly one-third of Americans had no savings set aside, meaning more than 72 million people don’t have a safety net to catch them in the event of hard times. No matter your age, savings are absolutely vital in the money management process. Even a little of savings is better than none, and there’s no better time than the present to begin. Put aside a small amount—$10 for instance—every week, and include it into your budget plan. It may not seem like much, but $10 every week for a year will amount to $520.

  1. Eliminate wasteful spending

If you’re finding it difficult to set aside money for savings, there’s one simple way to get over the hump: reel back on wasteful spending. With an accurate budget in place, it becomes very clear where and when you spend money on non-essential items. Even if you only eliminate that after-school or after-work treat—enough to save you $10 for weekly savings—you’re doing a great job. The more fat you can cut from your spending, the more you can save. It’s that easy!

It may not seem like much, but these three simple financial resolutions can pave the way to more disciplined financial behavior, especially if you tackle them together as a family.

Learning financial literacy is fun with the H&R Block Budget Challenge. To find out more about how you and your class can learn real-world money management skills without the real-world consequences, encourage your teacher to register here for the next H&R Block Budget Challenge simulation.