College and credit cards

With the present day economic situation, many people are in panic mode. All the doom and gloom is making even the most optimistic people a bit fearful. With this state of mind, decisions are being made, that may or may not be best.

While we are reacting to the day’s events, our kids are watching us closely. They are observing our behavior, our decisions and our attitudes. Although this normally happens everyday, it is especially important to be aware of this during these challenging times.

Some kids are asking their parents “are we going to lose our house”, “do we have enough money”, “why can’t we buy this, we never had a problem before”. The very core of their stability, their security and their safety is being rattled. For some, especially younger kids, this can be very traumatic.

So, what are we, as parents, to do? In my opinion, we have two choices: One, we bring our kids into the fear, panic and uncertainty mode that seems to be running amuck, or two, we capture an amazing opportunity to empower our kids with money and life skills. I choose the latter.

First, change your attitude. Take control of your fear and panic and step back for a moment. Ask yourself, “what can I do today to change this predicament?” “How can my lifestyle choices be adjusted so that I now prioritize my expenditures?” “What type of resources, skills and talents do I posses that would help me start my own company?” Be creative, look for opportunities (they are everywhere) and know that ‘this too shall pass’.

Whether you realize it or not, this is a perfect opportunity to teach your kids, whatever their age, invaluable life lessons. They should start to evaluate the way they spend their money, especially teens. How much of their money is being spent on fast food or coffee houses? Do they really need that $100 pair of jeans or would a pair at half the price be just as nice?

What percentage of their money is put into a savings account? This is a great opportunity to show them how that savings account may someday get them out of an unforeseen predicament.

Do they have credit cards? If so, show them how credit card abuse has created this environment of debt gone wild. Teach them the correct way to use a credit card and how misuse will cost them dearly.

I encourage you to involve your kids, age appropriately, in the present day circumstances. Let them realize they have control over their destiny by the choices and lifestyle habits they create for themselves. Once they realize they have this power, much of that fear will disappear. My hope is that you realize the same.

Posted by Patti Handy | Filed Under Budgeting, Credit cards, Resources, Saving, Spending | Leave a Comment

Make a Budget – A First Step to Curbing Impulse Buying

January 31, 2009

Part of growing up is learning to make choices. There are consequences to those choices. As long as we learn from those consequences, they have value. Teaching your teen the value of wise choice making will save him grief, and start him along the way to a sound financial future. Budgeting money is a valuable tool he will use for the rest of his life.

With your support, your teen will hone this skill while the consequences of poor choice-making is low impact.

Here’s what you can do…

To help your teen make financial choices, ask him to look at how much money he’s likely to have over a set period of time -- for example, the two week pay period, or the next three months.

Encourage him to start by writing down his allowance and income from regular employment. Consider any events where he might receive money as a gift -- like a birthday or holiday.

Advise him to wait until he actually receive the gifts before including them in his actual budget. Remind him that he can always revise his budget to include any changes to his income.

Next, write down the things that he wants to do or buy during the period and how much each is realistically likely to cost. If, after making a budget, he discovers he wants more than he can afford, he’ll need to decide what things to get and what to cross off his list -- prioritizing the items he wants to buy.

Often times, a purchase can be postponed until it meets budget requirements.

Your teen will have to make some tough choices, but in the long run, he’ll learn a priceless lesson in finance that many adults wish their parents had taught them.

Posted by Patti Handy | Filed Under Budgeting, Spending | Leave a Comment

Teens And Impulse Buying

January 27, 2009

Today’s teens live in a materialistic society. Peer pressure and the desire for immediate gratification compounds the sense of urgency that motivates unnecessary spending.

They see it, they want it.

Of course, that’s nothing new. It’s part of being human -- no matter how old you are or how much you have. People are forever looking at what others have -- new clothes, a new car, a new flat screen TV -- and thinking that they would like to own it, too.

However, buying things just to have them, or because they are “what’s cool now” can leave with your teen with very little or no savings and a closet full of purchases they really don’t need.

As a parent, the first thing you can do is set a good example with your own buying habits. The second – teach your teen moderation and budgeting while they’re young.

Here’s how…

According to Linda Goodwin, president of the Children’s Financial Network in Chester, NJ, the first step is to accept that you are not going to have it all. “There are choices in life, including financial choices. We all make financial decisions that may not be the best, and we need to live with the consequences,” she says.

By teaching your teen about cause and effect, you will emphasize the importance of making sound financial choices.

Posted by Patti Handy | Filed Under Budgeting, Spending | Leave a Comment

Teen Checking Account – Part Four

January 25, 2009

Choosing The Right Account For Your Teen

So, you’ve taken into consideration all of the benefits of opening a checking account for your teen. You’ve decided that she is disciplined enough to bear the responsibility. Both you and your teen are ready -- she to begin learning a life-skill that will direct her future, and you to be there for support.

How do you know where to start? Read on…

What’s the right account for your teen?
Since checking account features vary, it’s important that you compare the various products within a bank as well as the products offered by different banks. Take your time deciding. Be aware that different banks might use different names for the same type of checking account.

For example, the bank you use for your own accounts might call a checking account that has no special features, “basic checking,” while the credit union down the street calls the same account “regular checking.” Although they go by different names, both accounts appear to provide the same level of service. Look deeper.

What’s important are the features associated with the type of account. Be sure you know what they are, and that you and your teen understand them. Also, as your teen’s needs change, many banks allow you to change the type of account you have free of charge.

Ask the banks what their policy is for changing the type of account. And check to see if a bank has checking accounts geared toward teens or students. As you decide, compare features of the different products to be sure you choose the right account for your teen.

Managing a checking account can be a first successful step forward to a bright financial future as your teen learns how to manage money. With you by her side, she will grow as you show her how to make the right choices about money. Even when she doesn’t, be there to teach her how to learn from her mistakes.

Posted by Patti Handy | Filed Under Investing, Spending | Leave a Comment

Teen Checking Account – Part Three

January 23, 2009

Is A Debit Card A good Idea?

Attaching a debit card to your teen’s checking account can be quite convenient. That and an ID will get them just about anything they need – from food to gas to books, items, and clothes. If you haven’t figured it out already – this can be a good thing or not so good; depending on how well you teach your child to manage this responsibility.

Here are the basics…

A debit card looks and is used very much like a credit card. However, instead of drawing on a line of credit, the money is moved automatically from your teen’s checking account to the merchant.

Generally you can’t use a debit card to spend more money than you have in your account. The card will usually be declined if your teen tries to make a purchase that exceeds the available funds. Of course, some transactions are allowed where the merchant runs the card at a later time. Beware! If these transactions are made for more than the amount of money available to pay for them, it can cost you big bucks in fees – especially if they try to run the card more than once before you are alerted!

Some banks may have age restrictions on issuance of debit cards, and in addition, may charge an annual fee or have fees associated with use of the debit card. You’ll want to check before you open an account to be sure the services offered meet your needs.

Posted by Patti Handy | Filed Under Budgeting, Credit cards, Spending | Leave a Comment

Teen Checking Account – Part One

January 19, 2009

Is Your Teen Ready For A Checking Account?

There are many reasons to open a checking account for your teen. Before you do, there are several things you may want to consider.

Here are just a few…

If you’re considering a checking account for your teen, you probably feel that on some level they’re ready for the responsibility. Maybe they’ve just started working part-time and they want a safe place to keep their money. They may also want easy access to that money.

You may also be thinking of the convenience factor where you’re time is concerned. Maybe you don’t like going to the mall. Perhaps walking around with a lot of cash makes you uncomfortable.

You’re not alone. Many people prefer the option of paying for their purchases with a check. It can be more convenient to carry around checks, because you don’t have to remember to go to the bank ahead of time to withdraw money.

These days, using checks can be safer than carrying cash. If checks are stolen, they can be replaced. You can stop payment on a check that’s lost or stolen. If cash is lost or stolen -- it’s gone.

A checking account can also help your teen learn how to budget money. When you write a check, you are creating a written record of your purchase -- a record of your spending decisions. This can be a good discipline for your teen as he begins his life-long relationship with money.

Posted by Patti Handy | Filed Under Budgeting, Making Money, Spending | Leave a Comment

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