Kids Finance Coach - Brett S. Ellen

What are Your Financial Goals for 2012?

2011-12-30T14:13:00.000-08:00

Think about how you want to SAVE, INVEST, DONATE and SPEND money in the coming year. Viewing the videos on this blog will get you started and there are a lot of tools at American Financial Network too. Happy New Year!

A free gift - Kindness

2011-12-16T11:16:00.000-08:00

One easy way to not break your budget this holiday season is to give one of the best gifts of all (and it's free) ... kindness. A smile, a "hello", helping a neighbor carry in groceries, or opening a door for someone can simply make their day - and your's. It feels great. Let's all Turn Kindness On. Happy Holidays. Coach Brett

What's on your wish list?

2011-11-30T13:47:00.000-08:00

Creating a wish list is a great way to define Needs and Wants. Use this holiday time as an opportunity for you and your children to define what you need and what you want for yourselves and for others. Create columns on a piece of paper and post it right on the refrigerator. Revisit the list and allow changes. Sometimes just thinking about an item overnight may have you change it from one column to another. Involve the whole family. It's fun and provides great insight into how everyone is thinking about themselves and others. May all of your wishes come true!

'Tis the Season

2011-11-01T18:53:00.000-07:00

The spooky holiday is behind us (hope you all had a great Halloween) and there is much to look forward to as we participate in community, family and friend gatherings through the New Year. The relationships we have with one another and the relationship we have with money are both important. It's a good time to start thinking about money - saving, investing, donating and spending it. Watch the video's on this blog http://www.kidsfinancecoach.com/ and visit www.afn-net.com/learning_center.cfm for great insights!

What does AGI stand for anyway?

2011-10-03T14:52:00.000-07:00

From Ajusted Gross Income to Zero-Coupon Bond. We've got a robust glossary of financial terms just one click away. http://www.afn-net.com/glossary.cfm

Curiosity is Cool. What if ... ? 5 Questions for Kids

2011-09-22T12:14:00.000-07:00

Kids love to ask questions. And so do parents. Here are five questions that will give you great insight into what your kids are thinking and curious about. Take their responses a bit futher by asking them to describe ways of how they could save, invest, donate or spend money to do the things they want.

1. If you had a million dollars in your pocket, what would you do with it and why?
2. If you were to do something nice for someone, who would it be for and what would you do?
3. What kind of job do you think would be fun to have and why?
4. What is your favorite thing to do and why?
5. If you could buy something for someone else, what would you buy? Who would it be for and why?

Be sure to scroll down and over to the right to watch Kids Finance Coach Kids Keanu and Tristen's videos about how to Save, Invest, Donate, Spend money.

Covering Your Bases - A Game Winning Strategy

2011-09-06T14:05:00.000-07:00

As a financially savvy kid, it’s important to set short, medium and long-term goals. Then create a budget and a financial plan to illustrate how you can meet all of your goals. Consider how much money you will put into the following 4 categories:
SAVE – SPEND – DONATE – INVEST

Before you spend, you must save. You must spend on your budgeted items before you donate. With excess money, you can then invest for the future. Then it’s time to save some more!

College Bound

2011-08-26T16:13:00.000-07:00

What Can You Do To Start Planning For College?

Most likely, your parents have already started saving for your college education. But how have you gotten involved in preparing for college? Working together with your parents to be part of the planning process can be very educational. Although you may not have the same amount of money as your parents do to save for college, there are other ways you can help your family plan for college.

Maintain good study habits which can help you achieve good grades. Academic scholarships are an excellent source of money to help pay for college.

Take college preparatory classes in high school and start thinking about possible career choices. What you want to be when you grow up may strongly influence your choice of college. Most colleges prefer to accept students who have taken more than the basic requires for high school graduation.

Set aside money from part-time jobs to save for college expenses. Tuition is just a part of the cost of going to college. You have to buy books, pay for room and board if you go away to school, travel costs and general living expenses, as well.

Parents: Start talking to your kids about college planning and get them involved with the process. This will help them take ownership of their educational goals. Read “How Can I Save for My Child’s College Education?” to learn more about financial tactics for college planning.

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How Can I Earn That?

2011-06-17T06:55:00.000-07:00

So you’ve either earned or been given some money, but what do you intend to do with it? The age-old lesson of need versus want it too often lost in today’s vast world of consumerism. The newest, greatest version of everything is coming at us faster than ever, making it easy for us to get confused about what we really need to spend our money on and what is just too cool to pass up. As soon as my children were old enough to point and ask for a toy or candy bar in the check-out line, I taught them to say “how can I earn that?” rather than “I want that”. This simple little step can completely change how you view all the stuff around you. If it isn’t worth doing an extra chore to get it, then maybe it really isn’t that important to have, after all. And if you choose to put a little skin in the game (earn the money to pay for the purchase) it makes you appreciate the item all the more.

How to knock your parents socks off! Stop asking your parents to buy you things and starting asking them "How can I earn the things I want?"!

Make a New Years Resolution to Start Saving Now

2011-01-04T08:53:00.000-08:00

We’ve talked a lot about savings, but you may not realize how important it is to start saving as soon as you can. One of the first things that you can do is to open a savings account that pays interest. Set aside a little bit from your monthly allowance or money you receive for doing a job. It may not seem like you have very much to save in the beginning, but you’ll be amazed how even a little bit can add up over time. (Review my post about the Rule of 72.)

Say a boy deposits $50 per month into a savings account. At a basic compound interest of 5% in five years he could have $481.15 more than if he had just kept the money in his piggy bank.* If he increases the amount that he saves per month each of those five years, he’ll have even more.

Parents: Read about the advantages of saving early in Save Now or Save Later.

*This hypothetical example of mathematical compounding is used for illustrative purposes only and does not represent the performance of any specific investment. Rates of return will vary over time, particularly for long-term investments. Investments offering the potential for higher rates of return involve a higher degree of investment risk. Taxes, inflation, and fees were not considered. Actual results will vary.

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor.

How Do You Decide How to Spend Your Money?

2010-12-20T11:57:00.000-08:00

As we move through the holiday season, your parents may be telling you to think about what you want versus what you really need. It can be very confusing to understand how your family spends its money. To determine how to spend money, your parents may have set up a family budget.

Ask them to tell you about the budget, and show you how they allocate their income. They may talk about paying for utilities and other necessities and then how they determine what they have to spend on things that the family wants.

Then think about how you can use that information to set up your own budget with sections for what you earn and what you want to spend and what you might save, invest or donate. If you don’t have enough money to pay for all the things that you want or want to do, think about how you can earn the money.

Parents: A good way to answer children’s questions about how the family budget is determined is to explain where the money goes. Read How Can I Keep My Money from Slipping Away? to learn more.

What Would You Do?

2010-11-23T10:45:00.000-08:00

Here's an idea! This Thanksgiving, while you are sitting around the table with all of your family and friends, play this game. Ask everyone at the table, “What would you do with $1?” After everyone has answered, then ask, “What would you do with $100?” Finally, asked everyone, “What would you do with $1 million?” This kind of game can really get you thinking about what is important in your life and in the lives of the people you love. Notice if anyone starts to change their mind about what they would do with the money after they’ve heard ideas from others. Are you surprised or inspired by anyone’s answers? Money is not the end game. It is a tool to help you achieve what you really want to do in life.

This holiday, think about what is most important in your life and be thankful.
Happy Thanksgiving!

What’s the Difference between a Bull Market and a Bear Market?

2010-11-16T08:52:00.000-08:00

You may have heard the terms Bull Market and Bull Market and wondered what they mean.

The stock market goes up and down all the time in little amounts and sometimes in big ones, but then it will go in the other direction for awhile. This is why the stock market is considered a risk when investing. Say you buy your bike today but it goes on sale tomorrow. That would be an example of what can happen in the stock market. Of course, you could also buy your bike on sale and pay less than someone who buys a bike a few days later when the sale is over. You can read about how the value of stocks change in our earlier post, How much do stocks cost?

But, sometimes the stock market goes in one direction, either up or down, pretty consistently for a few months. If the stock market goes up by 20% for two or more months, it is said to be a Bull Market. Most investors are excited about Bull Markets because it means that the value of their investments is going up. This is like you buying your bike and being able to sell it to your neighbor later for more than you paid for it.

If the stock market goes down by 20% for two or more months, that is called a Bear Market. The most famous Bear Market was the Great Depression in the 1930s. Most investors believe we are in a Bear Market right now because we are in a recession, and unemployment is high. You may have heard about this on the news or from your parents. Some people like Bear Markets because they can buy things at a low price and then wait for them to go up in a Bull Market.

Doesn’t it make sense to buy something when it is cheaper and then sell it when it is worth more? Things like bikes, tend to go down in value (you will probably have to sell it for less than you paid for it), but some things, like rare baseball cards or other collectible items can go up in value as time goes by. The problem with the stock market is that nobody knows when the value of stocks (or bonds) will go up or down.

This is why it is a risk. The best way to invest in the stock market is to invest for the long-term, for many decades instead of many years. That way you go through a lot of Bear and Bull markets before you sell your stocks.

The market goes up and down for a lot of reasons. We covered some of these in an earlier post. What causes the stock market to go up and down?

There are many theories about why the terms Bear and Bull are used. One of the most popular is that Bears rise up above their prey and come down, while Bulls use their horns to thrust up.

What are the Risks of Investing?

2010-10-21T08:16:00.000-07:00

We’ve recently spoken about the importance of saving for the big (and small) things you want and need in life, from a new bike, to a college education. Investments can be one way to grow your savings, but there are a lot of risks that you should be aware of before you begin.

Inflation is the increase in the price of products over time. Inflation rates change every year. Right now inflation rates are low. That means that purchasing power is relatively stable, but there is a lot of fear that that will not continue. You want the return on your savings and investments to be higher than the rate of inflation.

Interest rates also vary over time. When interest rates are low, as they are now, stable investments increase in value, but when interest rates rise, the value of these investments fall.

Parents: As you help your kids learn about investing, help them be aware of the potential risks. Read What Investment Risks Should I Know About? to learn more.

What is a Stock?

2010-09-09T12:17:00.000-07:00

Let’s say that you and your friends decide to bake cookies to sell. You decide that each of you will bring one ingredient. Jayden brings the flour, Bethany brings the sugar, Emily brings the eggs, and you bring the chocolate chips. When the finished cookies are sold, you all share the profits. You know that you won’t get anything back until the cookies are sold. And if no one wants your cookies or they don’t want to pay what you are asking then you may not get much or anything back. You accept the possible risks and possible rewards when you put in your chocolate chips.

In the same way, a company can sell a portion of itself in order to raise money. This portion is called a stock. Owning a stock means you own a piece or a share of a company, just like you contributing the chocolate chips means you own a piece of your friends’ cookie-making business. A stock holder or shareholder doesn’t actually have to run the business, but because they own a piece, they have a claim on the company’s assets and earnings.

If the company does well it may pay a dividend to the shareholders. Each stock is worth a certain amount when it is sold. That amount depends on a number of factors including how many stocks were sold in total. In your company there are four shareholders. In the real world, a company may sell millions of shares. A company may decide to reinvest its profits back into the business in order to grow the company value. Stocks can be bought, traded, or sold, on the stock market. There are many variables that determine the value of a stock in the market. A stock may increase in price and the owner can sell it for more than they bought it. But a stock may also decrease in price and then the owner will lose money.

Because the market can go up or down, there is always a risk when investing.

Parents: Reading about stocks and how they relate to business can be a great learning experience. Read What is a Stock? to find out more.

What About Scholarships?

2010-08-12T07:01:00.000-07:00

We’ve talked quite a bit about how to save money for college. But keep in mind that scholarships can also help pay for your college expenses. Although there are more options available for students with top grades, academic scholarships are not your only option. Scholarships are offered for a variety of factors in addition to academic performance, such as athletics, volunteer work, minority status, field of study, or even overcoming adversity. Typically, you do not have to repay scholarships and grants.

There are numerous Web sites with information about scholarships and financial aid. For example, fastweb.com and finaid.org contain information about thousands of scholarships. In addition, fafsa.ed.gov provides an overview of federal student aid programs, including Pell Grants, campus-based aid programs, Stafford Loans, PLUS Loans, and others. Also, scholarshipexperts.com offers a free scholarship search targeted to the student's profile. Don’t forget, your local library and high school guidance office may have information about state-sponsored aid programs and scholarships sponsored by local organizations.

Parents: Financial aid can be a valuable source of funds to help finance your child’s college education. Don’t assume you won’t qualify. Read “What About Financial Aid for College?” to learn more.

I’m Just a Kid! How Can I Save For College?

2010-07-15T09:23:00.000-07:00

Adults have been told that they should have begun saving for college costs as soon as you were born! Well, I suggest it’s never too early for a kid to start saving money for his college expenses either. Here are some things you can do:

Start earning your own money with a part-time or summer job. (Look at my old posts for ideas about how kids can earn money.)
I’ve talked about how you can divide your money into categories to Save, Spend, Invest and Donate. Set aside a portion of the money you save for college expenses.
Ask your parents for help opening a college savings account. You might even ask them to consider making a matching contribution each time you deposit your own money from work or gifts.
When asked for gift ideas, suggest money for your college savings account.

Parents: Evaluate the potential benefits of contributing to tax-advantaged college savings vehicles, such as a 529 plan or a Coverdell Education Savings Account. Read “529 Lesson Plan: High Scores for 529 College Savings Program” to learn more.

What’s It Going To Cost To Go To College?

2010-06-30T09:56:00.000-07:00

As most of you know, or should know, the cost of going to college has become very expensive and the costs are increasing every year. If you are going to be responsible for paying all or a portion of your college expenses, the first step is to find out what the actual cost is going to be.

Start by visiting:
• The College Board
• The U.S. Department of Education
• A High School Guidance Counselor

If you are fortunate enough to know that your college expenses will be paid for by your parents or grand-parents, discovering the actual costs will help give you a deeper appreciation for your family's financial sacrifices in order to send you to college.

Parents: There are college investment options to fit almost any investor. No matter how modest or how ample your income, careful planning is the best way to “find” the money for college. The key is to start early and remain consistent. Read “What College Investment Options Do I Have?” to learn more.

What Can You Do To Start Planning For College?

2010-06-18T05:41:00.000-07:00

Most likely, your parents have already started saving for your college education. But how have you gotten involved in preparing for college? Working together with your parents to be part of the planning process can be very educational. Although you may not have the same amount of money as your parents do to save for college, there are other ways you can help your family plan for college.

Maintain good study habits which can help you achieve good grades. Academic scholarships are an excellent source of money to help pay for college.
Take college preparatory classes in high school and start thinking about possible career choices. What you want to be when you grow up may strongly influence your choice of college. Most colleges prefer to accept students who have taken more than the basic requires for high school graduation.
Set aside money from part-time jobs to save for college expenses. Tuition is just a part of the cost of going to college. You have to buy books, pay for room and board if you go away to school, travel costs and general living expenses, as well.

Parents: Start talking to your kids about college planning and get them involved with the process. This will help them take ownership of their educational goals. Read “How Can I Save for My Child’s College Education?” to learn more about financial tactics for college planning.

Kids Finance Coach Donates $1,000 to School During Financial Literacy Month

2010-05-26T12:56:00.000-07:00

I recently gave a presentation to about 900 high school students at Oaks Christian School. We talked about the basics of money management; including budgeting, responsible spending, charitable giving and investing. The energizing presentation was complete with music, a T-shirt launcher and prize wheel! The students were tremendously engaged and informed, which made for a really exciting time. (Click here if you want to find out how to bring The Kids Finance Coach to your school or group!)

While at the presentation, my team and I awarded a $1,000 check to the non-profit school. According to the school's headmaster, the donation was the first time the school had actually received a donation from one of its speakers. But for those of you who have been following my blog regularly, you know who committed I am to charitable giving as one of the four building blocks of money management: save - spend - donate - invest. What better way to teach those students about giving back, than by showing them how it's done?

How have you been giving back, lately?

Pay Attention, Parents. This One’s for You!

2010-04-20T07:42:00.000-07:00

Who are our children’s first teachers? That’s right…parents. April is Financial Literacy Month, so I’m doing what I can to help kids understand and become comfortable with financial concepts. Here’s a list of things YOU can be doing to help teach the valuable skill of money management to your child.
Ten Tips for Teaching Kids about Money

It’s never too early to start talking about money with your kids.
Don’t make personal finance topics taboo from kids. Talking about money is a learning opportunity. Any discussion is better than silence.
Consider giving your kids an allowance. Set expectations about spending, saving and giving to charity.
Encourage your kids to make their own money. That way, they connect work to money. Money is a means to an end, not an end in itself.
Teach your child to ask, “how can I earn that?”
Make sure saving is a habit. Reinforce it. Don’t forget to do it yourself.
Don’t say “we can’t afford it”, say “we don’t need that right now.”
Keep talking about issues like debt and credit with teenagers, even if they act like they are not listening. Credit/debit cards can feel like plastic funny money.
Kids remember and copy parents’ behavior. So model good stewardship of money no matter how much you have. Discuss the basics of budgeting.
Think of a financial planner as a resource. Just ask. They can help you talk with your kids about money.

What Does “Invest” Mean?

2010-03-15T09:17:00.000-07:00

I talk a lot about dividing your money into 4 categories: SAVE – SPEND – DONATE – INVEST. Investing means using your money to buy something that can make you money when you sell it. You can use your money to buy stocks, bonds, real estate, collectables and more. It is important to remember that in real life, before someone can invest money, they must make sure they are saving enough money to meet their daily, weekly and monthly expenses. Below are a few definitions to help you start learning about investing:

Investor: Someone who uses their own money in order to make more money in return.
Interest: Payment in exchange for the use of money over time. For example, you can earn money (interest) by lending your money to a bank. In addition, you pay money (interest) when you borrow money from a bank.
Stock: A unit of ownership in a company. The value of a stock goes up or down depending on investors guessing about future profits.
Bond: A contract between an investor and the US Government or agency. The investor agrees to lend money to the government for a set period of time in exchange for interest.
New York Stock Exchange: The busiest stock exchange, representing more than 3000 companies where millions of stock shares are traded every business day.
Dow Jones Industrial Average (DJIA): 30 Stocks listed on the New York Stock Exchange. The Dow is used a scorecard to show average stock performance for each trading day.
Diversification & Asset Allocation: How money is divided up between different types of investments.

Six Simple Steps to a Savings Plan

2010-02-23T13:20:00.000-08:00

Build from the ground up with solid foundation!
• STEP SIX - Review Your Progress
Are you on track to reach your goals? How long will it take? Do you need to make any adjustments?
• STEP FIVE - Identify Your Earnings Plan
Will you be getting an allowance? Would you like to get a job? What other income can you expect?
• STEP FOUR - Establish a Savings Vehicle
Do you want to save your money at home? Do you want to open a bank account? Do you want to start a collection?
• STEP THREE - Set Up a Budget
How will you earn money? How much money will you need to reach your goals? How will you divide your money if you are saving for 2 budget items?
• STEP TWO: Set Your Goals
What are your financial goals? What do you WANT and what do you really NEED? What do you need now and what can wait a few months or even a year?
• STEP ONE: Get Educated
Where does money come from? How does a bank earn money? How can you make your money grow in value? What is compound Interest? (Hint: Check this blog’s archives. I’ve answered these questions before.)

Covering Your Bases - A Game Winning Strategy

2010-02-08T12:45:00.000-08:00

SAVE – SPEND – DONATE – INVEST

Before you spend, you must save. You must spend on your budgeted items before you donate. With excess money, you can then invest for the future. Then it’s time to save some more!

How Can I Earn That?

2010-01-13T08:17:00.000-08:00

As a New Year's Resolution, I challenge you to stop asking your parents to buy you things and starting asking them "How can I earn the things I want?"!

2009-12-23T06:30:00.000-08:00

Happy Holidays!
Aren’t the holidays great? School’s out and gifts are in! But hold up. Sure we all can use a little break from school work, but is this season really all about the presents? No matter what religion or tradition you embrace, I believe this season is a great time to give back to your family, friends and community. So I challenge each of you to change your holiday story from an emphasis on “getting” to a time of “giving”. And there’s no better gift you can give than the gift of your time.

Spend one evening playing board games with the whole family
Play with your younger brother or sister
Do someone else’s chore for them
Bake cookies for your neighbors or the local fire station
Visit residents at a retirement home
Collect and deliver food to a community soup kitchen
Pick up trash at a local park
So whether the lights at your house are on a Menorah, a Christmas tree or a Kinara, this holiday can be even brighter and more meaningful when you choose to give back to others.
Peace!

2009-11-25T10:34:00.000-08:00

At Thanksgiving, we stop and say thank you for all the people and things we are grateful for. It’s a time to remember how fortunate we are to be healthy, to have a warm home and to never go to bed hungry. However, being grateful should not be an annual obligation, but rather a way of life. Let this season be the beginning of a new more thankful you for the entire year.

Simple ways to say, “Thank you”:

Thank you notes are nice but it can be really fun to make a handmade note. Be creative and decorate it anyway that shows off your personality.
How about a fun treat for someone you appreciate? Bake a giant cookie and write “You’re Sweet” with icing.
Design a certificate for the “World’s Best Teacher” to say how much you value what they do for you.
Do a chore around the house without even being asked. Your parents will be thrilled and it lets them know you don’t take them for granted.
Even if you just say thank you to a stranger for an ordinary act such as holding the door, look that person in the eye and speak loud enough to be heard so they know you genuinely appreciate their thoughtfulness.
Volunteer to collect items for the needy or sort cans at a food bank. Anytime you give or time to help your community, you are showing gratitude for what you have that others may not.
Perform a random act of kindness. Need some inspiration? Check out what other kids are doing at TKO Helping Hands.

2009-10-08T09:38:00.000-07:00

"Character is doing the right thing when nobody's looking." ~ J.C. Watts

Did you ever have a chance to cheat on a test, but chose not to? Perhaps when no one was looking, you picked up the pencil your teacher dropped and put it back on the desk for her. Maybe instead of spending all your birthday money like your parents think you did, you actually put some of it in the collection box at church when they weren’t looking. We don’t make these decisions and take these actions for praise and rewards. We do them just because it's the right thing to do.

That being said, it sure does feel great when someone notices you being good! I was recently honored to receive a Community Leadership Excellence in Mentoring Award for doing what I love most – helping kids. I got dressed up, flew to New York City and went to a fancy dinner where a large group of professional people thanked me for teaching kids about money and for motivating children to change their world through volunteering. Sure it felt good to get all this attention, but the best part of the award was a large donation check that was given to my favorite charity, TKO Helping Hands.

I would coach kids and teach children and volunteer to pick up trash and more even if no one knew I was doing it, because I know it is right. You should be proud of yourself for doing all the good things you do when nobody’s looking. You may not know it yet, but you are making us adults very proud of you, too!

2009-09-22T09:18:00.000-07:00

Wow! What a Work- shop!

Last month I held my first Kids Finance Coach Workshop at my home and it was a blast! We invited kids and their parents to my house for an afternoon of fun activities to learn about money. We talked about things like allowance and spending, and even why and how to start saving money. Of course we couldn’t talk about money without learning about charitable giving. Money really can be used to help improve the lives of others.

Parents, interested in having Coach Brett visit your community or starting a League of your own? Contact Denise Villanueva.

2009-09-04T04:15:00.000-07:00

I know people save money, but how can companies save money so they don't go broke?
When your parents feel that the family is spending too much money, how do they cut back? Maybe they don’t go out to eat as often. Maybe they use more supermarket coupons. Perhaps they decide to cut the grass and do the yard work themselves instead of hiring a service.

Well, companies also have to find ways to reduce their costs, especially during difficult economic times like we’re experiencing now. When times are tough, companies often experience a decrease in sales revenue. When sales go down, and costs stay the same, the company is less profitable, so they have to find a way to maintain profitability by reducing costs. Let’s take look at how this works.

If a company has sales of $100 and costs of $60, then they make a profit of $40. If sales go down to $90 and costs stay the same, the profit is reduced to $30. But if they can reduce their costs to $50, then they still make a profit of $40.

Here are some of the things that companies can do to reduce costs:

Supplies and materials - sometimes companies can negotiate with their suppliers to pay less for the materials they use to make their products, or for the supplies they use in their offices.

Freight - manufacturing companies spend a lot of money shipping their products to market. Shipping specialists can often help companies find ways to reduce their freight costs.

Electricity - Power is usually a large percentage of the costs of a manufacturing operation, especially when they are charged based on their highest level of demand in a given month. By installing monitoring equipment, they can ensure that lights and other equipment are shut off when they approach peak demand, which helps reduce the hourly rate that the company pays for power. (It’s not too different from your parents reminding you to turn off the light when you leave a room.)

Staffing - One of the main things that companies do to reduce costs is to decrease the size of their workforce by letting some employees go. This is known as “layoffs”. Most companies try to do everything possible to cut costs in other ways before laying off employees.

2009-07-22T07:40:00.000-07:00

What have you done lately to help out in your community? You may have heard on the news or from your parents that our economy is not doing too well lately. That means more people than ever are struggling to pay bills and even provide food for their family.

No matter how old you are, there are many creative and inexpensive ways to help others this summer.

Take a Stand With Sunkist
Kids ages 7 to 12 can register at http://www.sunkist.com/ and submit their "Take a Stand" pledge and receive a free Sunkist lemonade stand, while supplies last. Then sell glasses of homemade to raise money for a charity.

Angels in Action
Students ages 8 to 18, will be recognized and rewarded for exemplary acts of service to benefit their community, a charity or cause. Visit http://www.angelsoft.com/ to get great ideas for creative projects by reading about last year's winners on the Angel Soft site.

Stamp out Hunger
It is easy to help local hunger organizations at a very low cost by donating coupon bargains.
Students can use the Grocery Deals by State page on The Savings Mom Web site, www.savingsmom.com, which lists grocery coupon deals in most states.

Clip coupons and buy several items to donate yourself. Or make a flyer asking neighbors to stick a few canned items in a sack and leave the sacks on their front porch on a designated day. Then go around collecting the bags to be delivered to a local food pantry.

Start a Great American Bake Sale
Sponsored by Domino Sugar and C&H Sugar, kids can sign up to receive a Participant Kit which includes everything you’ll need to get baking and starting selling your treats. Donate the money you earn to an area homeless shelter.

2009-06-25T08:03:00.000-07:00

Need Cash? Get to Work!
It's not always easy for kids to find a job. But here are some things kids can do to earn a little extra cash over the summer.

Babysitting of course. Check your local hospitals to see if they offer a babysitting class, or learn more about babysitting and earn a babysitting certificate here.

Get your lemonade! Not only is a lemonade stand fun, but you can shake things up and offer home-made cookies too. Don't forget to pay Mom and Dad back if they help with supplies.
Walk dogs/care for pets. Lots of people are too busy over summer to take care of their pets. Start your own pet care, dog walking business. Those long-haired dogs might need brushing, too.

Yard work and gardening is another good idea. Offer to cut grass, weed gardens and do general yard work for people. Seniors especially can use the help in the summer.

Hold a car wash! Get a group of friends together and with parents’ permission start your own car wash.

Have a yard sale. Clean out your closets, toy chests and basements of all the toys/books you no longer use. You'd be surprised how much stuff you no longer use.

Teens can visit here to learn how to find a job, where to get working papers, where teens can work, what to wear for an interview, and how to obtain references.

There are laws about kids working so you have to be creative when you are young to earn money. Get your parents involved too, they may have some good ideas. They may even be more encouraged to help you out if they see you trying to make your own cash instead of just holding out your hand.

2009-06-11T11:35:00.000-07:00

Learning the “Real” Value of Money through Giving

I have always believed that a necessary part of learning about money is learning how to value what you have and sharing with people who do not have as much as you. In an effort to teach these lessons to my own children, my wife and I helped our sons Keanu and Tristen establish their own non-profit organization call Turn Kindness On (TKO) Helping Hands. TKO Helping Hands motivates children of all ages to change their world through volunteering, harnessing their uniquely empathetic energy and empowering them to build a lifelong relationship with community service.

During a recent family vacation to Africa, our family did what we always do when we travel. We took money and supplies collected through the efforts of TKO and local students and delivered them to children’s organizations in the communities where we visited.

Click here to watch and see what a difference you can make when you understand the “real” value of money.

2009-06-09T09:16:00.000-07:00

What is Diversification?

Have you ever heard some say “don’t put all of your eggs in one basket”? What does that mean? Well, if you put all of your eggs in one basket and that basket drops, you run the risk that all of your eggs will be broken and lost. But if you put a few eggs in two or more baskets and only one basket falls breaking only its eggs, you still have some good eggs in your other baskets that didn’t fall and break.

That is diversification: putting your money in several different places or buying some stocks from several different companies. For example, if you use all of your money to buy stock in only one company and the value of that stock drops then you could lose all of your money. But if you diversify, maybe you buy stock in several different companies and put some money in the bank for saving and keep some money at home in your piggy bank. Then if the value of stock in one company goes down, you only lose the money you invested in that stock but should still have money in your other locations.

By the way: what’s the most you can ever lose in stocks? The amount you invested. What’s the most you can gain? Unlimited – anything can happen.

2009-05-18T11:00:00.000-07:00

How Much Do Stocks Cost?

When you think about buying stock, you should remember that there is risk that goes along with it, but there is also opportunity. So if someone asks the question “what are the best companies to invest in,” the answer must take into consideration the amount of risk that investor is willing to take. If the investor says, I don’t want to lose this money to make a fortune, but I really think it’s a great company - there are lots of companies that look promising. Many of them you’ve never heard of, but they believe they’ve got the next newest idea.

Have you ever heard the expression “Time heals all wounds”? When you get older, you’ll have typical grown-up experiences – like with boyfriends and girlfriends. You’ll break up and think the world is coming to an end. But over time, you’ll get over it and your life will get back to normal and things will be OK. Well it’s similar with stocks. If you invest in enough stocks and diversify – buying some companies that are less risky and some with medium risk and some that are real risky – over time it should all be ok. However it's important to remember that diversification doesn't guarantee you will make money and it is still possible to lose money in your investments.

2009-04-21T16:48:00.000-07:00

Bankers nationwide are celebrating National Teach Children to Save Day on Tuesday, April 21. Founded by the American Bankers’ Association Education Foundation, the day is dedicated to educating youth about the importance of saving.

Parents, Here are Five Tips for Teaching Financial Responsibility

Value of Saving – Teach children why you save and why they should save by using everyday examples like buying groceries. Illustrate how savings can grow by collecting money in a jar or container.
Needs vs. Wants – Explain the differences between needs and wants and how to prioritize spending. Use examples like toothpaste vs. another video game.
Allowance – Consider an allowance to teach how money is earned. Provide an allowance in a way that children can save part of it and spend part of it (for example, if an allowance is $5, give five one dollar bills so some can be saved and some spent).
Set a Goal – Setting a goal for savings or to buy a desired item will help teach a child to be responsible for him/herself and reinforce the feeling of accomplishment when the goal is reached.
Open a Savings Account – Establish regular saving habits that will last a lifetime by opening a savings account with your child.

CHECK OUT THE LINKS on our sidebar for lots of fun resources to help your children save!

2009-04-01T08:54:00.000-07:00

What Causes the Stock Market To Go Up and Down?

Have you ever heard of supply and demand? When there is a lot of something – a large supply – the price goes down. When there is a small supply of something, the price goes up.

Let’s say when it’s time to eat, there’s only one sandwich and everyone wants it. The price would go up. The person with the most money will be able to buy it. But when there are lots of sandwiches the price goes down. It’s the same with stock. If a lot of people want a certain stock – and there are a limited number of shares, the price goes up. If a lot of people want to sell a stock, and not too many who want to buy it, the price goes down, because the supply will be greater. When everyone wants to buy a stock, the price goes up.

The other thing that affects the price of stock is emotion. When people are very excited about the market and they want to make a more than anyone else and they are willing o do anything – that’s when the price of stock goes really high. That’s called greed. When people are greedy they’re willing to do anything they can. But when people are scared, what do they do? They hide. When people are scared and they sell their stock and put their money in the bank, they are sort of hiding. What’s happening in our markets today? People are scared. There’s a lot of money sitting in the bank.

2009-03-23T12:30:00.001-07:00

What’s the Difference between Stocks and Bonds?

Stocks are ownership. When you own stock, you own part of a company. Bonds are “loanership”. You’re loaning money to a business or the government. In other words, a bond is debt.

So, when you buy a bond, you are lending money to a company. When you own a share of stock, you own a part of a company.

Let’s say you own a share of stock in a company that operates an amusement park. The company sells stock because they want to grow the company and they need to get capital, which is the money they can use to invest in growing the company. Now, if you own some of that stock, you own part of the company.

2009-03-11T07:49:00.000-07:00

COACH'S BOOK RECOMMENDATIONS

Kids Ages 6 - 11

Money Savvy Pig

By Susan Beacham

This is a small plastic pig that resembles a traditional piggy bank with a twist -- instead of one slot, there are four marked "save," "spend," "donate" and "invest."

You can also purchase a workbook with the Money Savvy Pig that allows children to color the pages while they learn important concepts such as interest on savings, goal-setting, smart spending, long-term investing and entrepreneurship.

The Money Savvy Pig is the perfect introduction to personal finance.

The Kids Allowance Book

By Amy Nathan and Debbie Palen

This charming book tells children how to get an allowance and how to save and spend it wisely. The book includes responses of 166 kids to questions about the pros and cons of allowances.

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Tweens and Teens
Personal Management

By Brent Neiser

Educators too often overlook personal finance basics when teaching life lessons to preteens and teens. As a result of the absence of financial education in our schools, young people with little or no income wind up in debt. Personal Management, is an antidote to this oversight.

This booklet has been used for many years to help Boy Scouts earn their "personal management" merit badge. However, you don't have to be a Boy Scout to benefit from the practical wisdom found here.

The booklet helps young people learn about saving, spending and investing as well as how to create a budget, use credit and track their spending.

Cash Cache

By Susan Beacham

This personal finance organizer is intended to help teens learn the basics of personal finance: saving, investing, credit cards, earning money, paying taxes, spending and donating. It also includes basic information on the stock market, setting goals, budgeting and bank accounts.

Teens can learn basic personal finance lingo by using the glossary of financial terms.

The Money Book for the Young, Fabulous & Broke

By Suze Orman

People in their 20s and 30s often have big expenses and enormous debt. As a result, they have little leftover for savings. Orman's book tailors advice to this generation's situation by focusing on credit cards, college loans, income and opportunities for saving.

Teens who recently graduated from college and read this book liked the tone and thought it made sense. They said they were particularly impressed with discussions about how easy it is to fall into debt and the dangers of owning too many credit cards.

Saving for Retirement Without Living Like a Pauper or Winning the Lottery

By Gail MarksJarvis

This book emphasizes the importance of starting to save early. Author MarksJarvis focuses on using retirement plans to defer taxes, collect employer contributions and accumulate greater levels of retirement wealth.

Other themes in this book include the importance of managing costs and the long-term benefits of asset allocation.

An award-winning writer, Gail MarksJarvis is a long-timer personal-finance columnist, currently writing for the Chicago Tribune.

2009-02-23T07:48:00.000-08:00

When A Company Needs Money, How Do They Get It?

When a business needs money, they can get it one of two ways. They can sell part of it – or they can borrow. Whey they sell stock, they sell part of the company. But a company may not want to give away ownership of all of the company. They may prefer for you to invest in their company as a bondholder. A bond is a promise to pay off the loan. So if they need money, they may want to borrow it – so they sell bonds – and promise to pay back the loan.

Now, let’s say the company does really well, and the value of the company increases. Does the value of your bond increase? No – because it’s just a promise to repay the loan. But if you own stock in a company, and the value of the company goes up, then your stock is worth more.

2009-01-16T07:49:00.001-08:00

What is Compound Interest?

There are two kinds of interest – simple interest and compound interest. You probably know how simple interest works.

For example: If I have $10,000 and I earn 6% interest, how much money do I earn after one year?
Answer: $600

If I earned 6% every year for 12 years how much money would I have earned in interest?
Answer: $600 per year x 12 years = $7200. So adding that to my initial investment, I’d have a total of $17,200

Compounding Interest
If I have $10,000 and I earn 6% compounding interest, how much money do I earn in interest?

Answer: Well, if I apply the “Rule of 72” (which we discussed in our last post) 72 divided by 6 (the rate of interest) = 12. That means my total money will double in 12 years to $20,000.

So why is the total amount of money higher with compounding interest than with simple interest ($20,000 compared with $17,200) if they both receive 6% interest?
Answer: With simple interest I earn the same amount of interest each year on the original $10,000. So every year I only receive $600. With compounding interest, I add $600 (interest) to my original $10,000. Then the next year I earn 6% on $10,600 which is $636. When added together I have $11,236. The following year I earn 6% on that amount

End of year 1 - $600 + $10,000 = $10,600
End of year 2 – 6% x $10,600 = $636. $636 + $10,600 = $11,236
End of year 3 – 6% x $11,236 - $674.16. $647.16 + $11,236 = $11,883.16
End of year 4 – 6% x $11,883.16 - $712.99. $712.99 + $11,883.16 = $12,596.15
End of year 5 – 6% x $12.596.15 - $755.77. $744.77 + $12.596.15 = $13,391.92

Do you see how this is calculated? Dan you continue to do the math?

2008-12-23T13:15:00.000-08:00

The Rule of 72 is Cool!

When people invest money, they do it so they can make money. That’s called "getting a return on your investment.” Sometimes they want to know how long it will take to double their investment. To do this, we use the Rule of 72.

Take 72 and divide it by the amount of return on your investment. That is the number of years it will take to double your original investment.

For example: Ten year-old Keanu buys a bond for $10,000 and earns 6%. 72 divided by 6 = 12. So every 12 years, Keanu’s money doubles. When he is 22, he will have $20,000.

What if Keanu leaves that money alone until he retires at 60 years old? His money will double 4 times by then and he will have $160,000.

Let’s say Keanu used that original $10,000 and bought a stock that earns 12% return (72 divided by 12 = 6) he will have $20,000 in 6 years when he is 16. If he leaves that money alone until he retires, it will double 8 times and he will have over $2.5 million when he is 60 years old.

The Rule of 72 is based on a principle called “compound interest” (return), which is sometimes called “The 8th Wonder of the World”! I’ll explain more about compound return in my next post.

Here’s something VERY important to remember. Just because things happened in the past, doesn’t guarantee they’ll happen in the future. So we use historical return rates as an example. It doesn’t mean that if you invest in the stock market today, that you will receive 12% return on your investment every year. Also, when investing in stocks it is possible to lose money, so that the value of the stock could be less than the original investment.

2008-11-12T08:44:00.000-08:00

How Do Banks Make Money?

When my oldest son was 4 years old, he said to me, “Hey Daddy, we need some more money so let’s just to go to the bank and get some.”

You probably already know that’s not how it works. You have to put money in the bank before you can take money out.

Banks are businesses that hold money for people like you and your parents. When you give them money, that’s called a deposit. What do you think they do with it? They loan that money to other people. They pay you interest to be able to use your money. The people who borrow the money have to pay interest to the bank for lending them the money. The bank charges the people who borrow the money a higher rate of interest than they pay to you. The difference between what they make and what they pay you is income for the bank.

For example: When your parents bought their house, they went to a bank to borrow the money. Now the bank owns the title to your house and your parents make monthly payments to the bank in order to pay back the bank for the money they borrowed.

Where did the bank get the money to loan your parents? They got money from all the people who deposit their money in the bank. The bank tells these people, “If you let us use this money, we will loan it to other people who need it – and we will pay you for allowing us to do this.” Let’s say the bank pays them 2% interest. To the people who borrow the money, they say, “We will lend you money but you must pay us interest to use that money.” They charge these people 5%. The bank makes 3% on that money.

So if you borrow money from the bank, you must pay the bank back for the entire amount you borrowed, plus you also must pay an extra amount called interest.

Come back next week – and bring your friends. I’ll explain more about interest.