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6 Lessons In Kindergarten That Will Help You Develop Great Financial Habits

little girl holding moneyWe can all benefit from good financial habits. In fact, we all want to make sure that our children start learning them early. This is why it is encouraged that parents teach kids about smart money management skills. When you let your kids develop the right financial behavior at an early stage, they will most likely bring that with them as they age. When you mold them to become great money managers at an early stage, you can be assured that they will make the right financial choices as they mature. And even if they make mistakes, it is okay. They will know how to get themselves out of the mess that they put themselves in.

While you can teach your kids a lot of things about money, did you know that they can also teach you a couple of things as well? There is this poem by Robert Fulghum titled All I Really Need To Know I Learned In Kindergarten. The same author also wrote a book that expounded on the ideas on this poem. This literary piece enumerated a couple of lessons that we learned in kindergarten. These lessons are something that we can implement even as we age. It tells us of how simple things really is for a kindergarten. In fact, even something as complicated as money can be simplified if you try to look at it through the eyes of a young one.

This is why we tried to search for tips that we can use to help develop financial habits in this literary piece. If you broaden your mind, you can actually see 6 different lessons that you can use to help improve your behavior when it comes to money. Since these are supposed to be lessons in kindergarten, you can probably use this to teach your kids about the proper way to handle their finances.

6 lessons in Kindergarten that can improve your financial behavior

So what financial lessons for kids can you use as an adult? Here are the 6 lessons we got from the poem by Robert Fulghum.

When you go out into the world, watch for traffic.

Everytime you cross the street, it is important that you look both ways before you step off into the busy street. When you watch out for traffic, you will know where you are, what is coming for you and what awaits you. The same is true when it comes to money. Before you make a decision, it is important that you know the whole situation first. You need to know where you stand financially. You also have to find out what will happen when you make a particular decision. Finally, you need to know you want to go it can influence the decisions that you will make about your money.

Everything you need to know is there somewhere.

This is in relation to the previous lesson. If you want to learn something, you will always find it somewhere. If you are persistent and determined to learn, you will find a way to get the information that you need. In today’s digital age, you can easily research something over the Internet. If you do not trust what is one the web, you can always find a professional that will tell you what you need to know.

Put things back where you found them.

This is a lesson that you can use if you want to learn financial habits that you can use every time you borrow money. If you used something, it is very important that you put it back if it is not yours. The same is true for any money or object that you borrow. You need to learn how to return it. You need to pay it back. This lesson mentioned that you need to put it back where you found them. In the same way, you need to return what you borrowed in full – including interest if that is what you agreed upon when you loaned the money.

Hold hands and stick together. This is a great advice for those people who are working towards a common financial goal. You may have goals with your spouse, partner, family or friends. Whatever it is, you need to work hard to meet them together. Cooperate and remember that two heads is better than one. Even if you have set your goals on your own, it helps to find someone that you trust and respect to confide in. This person is the one who will support and encourage you as you try to reach your financial goals.

Say you’re sorry.

This is a great advice for couples handling money together. At one point, you will make mistakes when it comes to handling your money. Since you are a couple, your mistake is bound to affect the other. Learn how to apologize and work with your partner to get past the error that you made. Try not to fight about it. If your partner gets angry, do not react negatively. Be humble about it and do not add fuel to the negativity of the situation.

Share everything.

You are not really required to share everything – but you are encouraged to share. This is not really something that will improve your finances – but it will make the growth of your wealth worthwhile. It does not really matter how much you give. As long as you share with those who are less fortunate than you, then it will add to your motivation to improve your finances.

Tips to develop the right money habits

Developing the right financial habits cannot happen overnight. It is a process that you need to patiently work on. Here are a couple of things that you need to do in order to make this happen.

  • Educate yourself. This is the first step. According to the NFCC.org financial literacy survey, 3 out of 10 Americans reveal that they are not confident with their financial knowledge. If you think that you belong to this statistic, you may want to start researching about the financial concepts that will make you more confident about making decisions.
  • Observe the financial habits that you currently have. Once you have done your research or while you are doing it, observe the habits that you currently have. You need to understand your current situation before you can make improvements.
  • Identify what needs to be improved, retained or removed. Based on what you find out from the first two tips, you need to think about the habits that you need to develop. What are the current habits that you need to improve, retain or remove? And beyond that, are there any habits that you need to add? Determine what these are before you proceed.
  • Practice the habits you want to develop. After you have identified everything, it is time to implement them. In developing new habits, you need to practice them repeatedly. According to an article published on 99u.com, a habit is developed through the practice of three things: setting cues, going through the routine and earning a reward. If you do it repeatedly, you can train your brain to unconsciously do something. That is how you develop a good habit.
  • Always keep yourself informed. Lastly, you need to keep adding to what you already know. It is not enough that you develop the financial habits that you need to use to make your life better. You have to see if there are new habits that you need to form. This is why you need to continue educating yourself.

Follow these tips and you should be able to develop the financial habits that will help you improve your current financial situation.

4 Good Financial Habits That Can Go Too Far

woman looking at her credit cardYour financial habits are hands down, the key to improve your financial situation. It does not matter how much income you earn. If you implement the wrong habits because of incorrect financial concepts, then you have no chance of getting out of a bad economic situation.

Some people have grappled with the idea of what habits should and should not be implemented in their personal financial condition. There are so many misconceptions out there that it can be quite confusing to know which should be followed or not.

Take for instance our belief that credit card debt is caused by irresponsible spending. While it is true that your spending can lead you to unmanageable credit card balances, that is not the whole reason why you have credit card debt. According to a study done by Demos.org, there are other factors affecting your credit card spending. Things like your education, insurance coverage and children are part of the reasons why you are currently suffering from credit card debt. You have to understand these things before you can truly and completely be free of your compulsion to spend using your cards.

Just like this misconception, there are also a lot of things that you should know about financial habits. It is not a simple good and bad habit. You have to go deeper than that concept to truly understand what is right and wrong for you. Sure it is easy to say that you should practice only good financial behavior. But you have to know that there are certain habits that although they have good motives, can turn out of be really bad for you.

4 good habits that can ruin your finances

In truth, anything in extreme is never good for you. It is true what they say – too much of a good thing can also be bad for you. That being said, let us discuss 4 financial habits that will not do you good if exaggerated.

Saving too much for the future.

A lot of people might disagree here. In fact, financial experts love to preach this: we need to always think ahead into the future because we owe it to ourselves to have a good retirement. They say that we need to pay ourselves first – meaning we have to make sure that our retired future self will be well provided for. There is some justification to this but remember that you should also let yourself enjoy the present. We need to save but not to the expense of our present life being too miserable. What need do you have for millions of dollars in your retirement if you will only spend it on expensive medical treatments because you exhausted your body trying to earn money to save? Saving can save your life but you need to set a limit. Plan what you need to save up for and cut your present self some slack once in a while.

Cutting back on your unnecessary expenses.

This is another of the financial habits that can really tear consumers apart. Some people believe that cutting back on that latte is imperative if you have a lot of debt to pay for. There are also people who will tell you not to treat yourself to a spa or a massage because that money could go to your savings. If you think about it, these make a lot of sense but here’s what you should consider. Some unnecessary expenses are needed for you to be motivated enough to pursue your financial goals. People may think that the morning latte is a waste of money but if it gets you going in the morning, then indulge yourself. If that is important to you, then buy that unnecessary item. Just make sure that when you do so, it will not make your expenses bigger than your income or it will not put you in debt. But if you have the extra cash to spare without making your savings contributions for the month zero – then give yourself the needed pampering. You do not have to completely let go of these things to find financial happiness. In fact, it might be just what you need to be motivated.

Comparing prices.

We all want to get the best value for our money. However, you do not want to spend forever trying to figure out and compute what product to use. While we do not want to waste our money, you do not want to waste your time either. Take for instance couponing. It is true that this can help you lower your expenses but it is just too tedious and time consuming to do. If you have the option to work longer hours to earn more, wouldn’t you want to spend it earning instead of clipping coupons? Are you really saving if you are too obsessed with saving pennies on each purchase you make?

Forgoing professional services.

DIY – this is another of the financial habits that we are being encouraged to pursue. There are things like debt relief or financial planning that we can do on our own but this is not always applicable for everyone. Again, time is a factor here. But even if you have the time to work on something on your own, make sure that you can do it properly. There are certain tasks that are best left in the hands of  professional because the cost of making a mistake will end up making you spend more that you should. While it is a great idea to do it yourself, make sure that you really have the capabilities to do it correctly.

Learning to balance your present needs with your future goals

We are not saying that these financial habits are bad. We are just saying that they should be done in moderation and with a deep regard for present circumstances. Being wise with your spending and saving more money are great habits to have. However, you have to learn how to balance your present needs with that of your future goals.

There is this article on Forbes.com that discussed how even spending on experiences instead of material things may not make you happy. The article mentioned that if you focus on life experiences, it does not necessarily mean you will be happy with your spending. You have to take into consideration what is valuable to you as a person.

For some people concentrating on buying for the sake of experience could work but for others, it may not. For instance, buying clothes is more of materialism than experientialism. However, if you are in an industry wherein you need to portray your professionalism through your outward appearance then buying clothes is something that you know you have to do.

What we are trying to point out is this. The financial habits that you should pursue may or may not be according to what the majority is doing. Sure saving for retirement is a good idea but if it is keeping you from enjoying your life today, then you need to rethink how you can save for retirement without depriving the present.

All it really takes is to know what is in moderation. Even the good financial habits, when done in extreme can do you more harm than good. Do not be too blinded by your need to succeed financially. First and foremost, understand yourself and your financial personality. Once you have that knowledge firmly in place, you will know what you truly deserve out of your money. After all, it is just a tool to help you thrive in this life. Everything else, the rules, the control, the plan and the implementations are all up to you.

3 Tips That May Not Be The Best Financial Advice For You

couple with a financial expertWhile there is a financial advice for every generation, there is still a need for you to consider if these tips are really applicable to you. There is no one size fits all financial management. You need to understand which of them should be implemented in your life based on your specific financial situation.

There are a lot of gurus out there who are truthfully, sincere about helping you improve your financial standing. But before you apply their teachings in your life, make sure you understand what is at stake first. It is not enough that you keep on implementing what you hear. You need to filter out what will benefit you the most.

3 financial tips that are not always good for you

There are certain financial tips that when you first hear about them, you would want to implement them immediately. But before you do that, please make sure that it is an advice that you will really benefit from. If not, you can lose more money because of it.

Here are three financial advices that you need to consider carefully before you commit to them.

Financial advice 1: Automate your bills payments

There are financial advisers who tell consumers to automate their payments so it will never go to default. This makes a lot of sense if you think about it. You do not have to worry about making deadlines and keeping up with all the money that you have to send out every month. You do not have to juggle with due dates and all the details that come with making payments each month. Best of all, you do not have to worry about late payments.

But according to BankingMyWay.com, a pitfall of automating your payments is you will get lazy. The convenience that makes this mode of payment appealing can also be its downfall. You can easily lose track of all your payments. Since you are no longer thinking about them every month, you could think that your financial obligations are not as demanding as you thought it was. That could make opening new accounts more tempting.

You can also miss out on any machine related mistakes that could have caused you to pay more than what your should. Or it can cause you to pay less which will end up making you incur late penalty fees. Not only that, you can be in danger of overdrafting on your account. That is something that you do not want to happen.

Unless you are sure that you can control your spending and you can keep track of your payment, you may want to rethink following this financial advice.

Financial advice 2: Using credit cards for their rewards.

We have heard this advice before – if you will take a credit card, make sure you can benefit from the rewards. Some people are only interested in applying for the card because of the rewards and discounts they will get immediately. According to the data provided by CardHub.com, the initial rewards and bonuses of credit cards are 10% more in the first quarter of 2014 as compared to the same period in 2013. This can be very tempting to grab since the points and miles-based rewards are considered to be at an all time high when it comes to value.

But even if that is true, you need to exert caution. These cards will only be beneficial if it fits your spending lifestyle. If not, then do not avail of it. They will only be a temptation to increase your purchase.

Financial advice 3: Do not touch your emergency fund.

There is an interesting article from Investopedia.com that discussed why an emergency fund is a bad idea. According to the article, it is overly prudent to create an emergency fund. If you understand the risk and your other options, you will realize that there are better places to put your money than to let it sleep in your bank account.

At least, this is true if you are after financial wealth.

If you do the math, a person who lives on $30,000 a year will have to save up at least $22,500 to have enough emergency funds. But think about it. The average interest on your savings account is a mere $1-2%. That only translates to $225 to $450 growth. Even the ones with the highest yields of 3.5% will give you less than $790 of annual growth.

Now if you put that money on an investment that will earn you 15%, then it will earn you a whopping $3,375 per year. Don’t you think the need for an emergency fund is not too smart at this point? Just think about it.

You can probably set aside 3 months worth emergency funds and put the rest in an investment that you can liquidate easily should the need arises. That is how you setup your money to work for you.

How to filter the money advices you get

In truth, there is no such thing as a bad financial advice. Even putting yourself in debt is a good advice – but again, it has to depend on your unique situation. We were all told to eliminate debt but there are benefits to being in debt. Things like having the opportunity to raise your credit score is one. It can also help put money in your pocket – if you use it correctly.

The key is to know how you will filter out the advices that will have a good effect on your financial life and those that will not. Here are 5 tips that should help you decide what advice you can follow and what you need to forget about.

  • Have a clear idea of your financial goal. If you do not have one, then go think of a goal. It will not only give your financial habits direction, it will also help motivate you to improve your financial situation. If you have financial goals, you simply have to determine if the financial advice that you are getting will bring you closer to it. If not, then you can choose not to follow.
  • Know your financial behavior and situation. If you are also aware of your current financial standing, it will be easy for you to determine if an advice will be good for you or not. It is also vital for you to understand your own personal behavior to see if it will bring you closer to your goal or not.
  • Keep your financial education updated. Financial literacy is an important aspect of financial growth. It is also give you the foundation to choose the advices that you will follow. So make sure you are updated not just on the concepts, but the latest news about the financial situation around you. That way, you can know if a certain financial advice is still relevant based on the current economic conditions in the country. Someone might be telling you something that used to be effective in the past but not under the present economy.

In the end, having a clear picture of what you want, what you are capable of and what is realistic will help you make smart choices about your money. Keep in mind that a certain plan may work well with someone but it does not necessarily mean it will do the same for you. Think about that before you really choose to follow a financial advice.

3 Facts About College That Will Set Up Your Financial Future

student holding a past due envelopIf you want to keep college debt from crippling your financial future, you need to make sure that you will act appropriately while you are in still in school. Some people make the mistake of partying all the way through college and end up living like a student on a limited budget once they start working. That is because they are already paying for the financial mistakes that they made in the past.

Study shows that what you do in college will affect your life

What you do in college have serious effects to your future. In fact, Gallup.com conducted a poll survey that proved how a students life in college affected them after graduation. It is interesting to note that your level of work engagement and your overall well being will be affected by how you acted back in college. The bottom line of the study revealed that college graduates would have been more engaged with their work and thriving in various areas of their well being if:

  • Their school prepared the for life after graduation
  • Their school were sincerely concerned about the long term success of students
  • They had a mentor in college, had a professor who got them excited about learning and cared about students as a person
  • They had an internship in college, active in extracurricular activities and worked on a project that took the whole semester or more to complete

3 important truths about college life and your future financial standing

From the above study emerges three important truths about your college life that has a significant impact on your financial future. Let us discuss them one by one.

Where you graduate is not important.

An article published on the NYTimes.com revealed an interview with Laszlo Bock, the VP of Google that is in charge of hiring people. He mentioned that the GPA and the school were a graduate came predicts nothing about how they will perform in the company. In fact, there is a growing number of people in the company that did not have any college degree. While good grades are still important, they have observed that it is not the defining factor that will make a graduate successful. What is important are the skills that the student will get from their school. That being said, you should know that you can come from a community college and avoid high student loans and still be successful in big companies like Google.

What happens to you in college will set you up for life after graduation.

In connection with the previous, the Gallup study revealed that it is experience and skills that you will get from college that will define your success in your work. In effect, that will have a profound impact on your earning potential. Business owners are attracted to people of skill, not those who graduated from Ivy League schools. If you tap into the right influences like a mentor and social skills you get from extracurricular activities, you will find yourself more engaged to your work. The dedication that you will display can be evident in your output and that will make you shine in your work.

What you spend in college will come haunt you after.

This is not really directly indicated in the Gallup study but considering that we are trying to identify the factors that will affect your financial future, we need to incorporate this fact. It can be logically assumed that student loans, credit card debt – these will haunt your paycheck for the next few years – even a decade. You need to be careful about how you will use them or if you will use them at all in college. According to an article published on Demos.org, the higher your student loan debt, the more of your lifetime wealth will be compromised. Instead of investing the money you get from your paycheck, you have to share that with your payments. This is true for both student loans and credit card debt.

Financial practices of a college student to set them up for success

Given the truths that we just discussed, you have to consider how your financial practices in college should be implemented to set up your future correctly. You can influence your financial future even as early as your high school days. If you start saving your college to avoid student loans, that will start you up on your personal wealth early in life.

But even if you failed to start while you were in high school, you still have time to correct your finances when you reach college. Here are 5 things that you can do to take care of your finances as early as now.

  • Implement a budget plan. Regardless if your parents are supporting you 100% or not, you have implement a budget in your life. This is a habit that you will need until the very end. It will help you reach your financial goals and more importantly, it will keep you from debt. Most people live on a limited income and a budget plan will allow you to point out the expenses that you need to prioritize. It will help you make smart choices about your money while in college.
  • Learn about your debts. This is true for both student loans and credit card debt. A secure financial future does not necessarily mean you do not have debt. It means you may have debt but you have full control over it. Not only that, it also means you have a backup plan in case your main source of income is compromised. To create this plan, you need to understand your debts thoroughly. Your ignorance might lead you to make mistakes that could have been avoided if you only researched about your debts.
  • Reserve your credit cards only for emergencies. Student loans are bad enough and your financial future will be much worse if you combine it with unnecessary credit card debt. You can understand how this can jeopardize your financial future. Keep your debts low and if you have to use a credit card, make sure that you have a plan to pay it off before the grace period ends.
  • Get a job. If you need to get money for your college expenses, do not use your card or go running to your parents. Get a job and finance your own expenses. Not only will it teach you to be self-reliant, it will also give you the skills that will prove to be helpful when you start applying for a job. Remember that internships and skills are major factors that Gallup mentioned you need to be engaged and thriving in your future life.
  • Live a frugal life. When you are a student, you get all sorts of discounts. Make sure that you source these out so frugality will not seem restricting. If you learn about the true practices of frugal living, you will realize that it is not about deprivation. It is learning how to have the things that you used to enjoy without spending too much for it.

Statistics show that college graduates enter the corporate world with a lot of regrets about life. You do not have to be part of this statistic. Make sure that you will learn how to set up your financial future so it will be poised to grow exponentially. If that means you need to stay away from student loans, then you should know that your skills and college experiences are more important than the expensive colleges that are popularly preferred. The quality of college education is important – not where you got it.

In case you need help with your student loans, National Debt Relief has a program that can provide you with consultation services. Their trained experts can advise you about you student loan repayment options based on the type of debt that you have and your employment situation. They will even help you with the paper work involved. This service has a one time fee that will be placed in an escrow account. When you are satisfied with the service and the documentations done on your behalf, that is the only time the fee can be released. There is no upfront or recurring maintenance fee.

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