Listing Your Projects

I think it's pretty obvious from my writings that I'm a planner when it comes to life.  Everything doesn't need to be detailed out, but I like to be aware of what's coming down the road.  With that said, I often battle the same urges to procrastinate as anyone.  One of the best ways I've found to combat procrastination is to start with a list.  By seeing the projects named out before you, you will be more inclined to get started and finish your tasks.

With all that in mind, here are my projects for the year:

1.) Realign bricks around flower beds
2.) Re-paint stairs/hallway down to basement - this actually looks scary with dirty finger and hand-prints all over the place.
3.) Paint laundry room windows
4.) Paint side windows of garage
5.) Fix the outlets in the office and living room
6.) Start getting the house ready for babies - This one will be more work than I think I realize

Needless to say, I think these goals are pretty doable and will make things look rather nice around the old household.  If we apply the S.M.A.R.T. system to these goals we can make them more Specific (kind of already did this), Measurable (I can obviously know when they will be completed), Attainable (these are goals that can be done), Relevant (they make sense in my overall life goals), and Time-Bound (I want all these finished by the end of this year).

Now that I've seen these goals and have an action plan, actually completing them won't seem so hard.

What projects do you have for the year?

Wonderful Moment of the Day: Petting my cat while he rolls around in the grass.

Getting Focused

With all the possibilities that life holds for you in your future, one of your biggest enemies in your quest for greatness is closer to home than you may think.  Procrastination is a terrible problem that if left unchecked will deny you from living to your potential; promotions will be passed over you, and opportunities will be missed.  With that in mind, here are some ways I've managed to maintain focus in my own career.

1.) Vary the assignments: You've been working on this big report for the past two hours and now feel drained.  For some reason, you just can't seem to get around to finishing it.  It's quite possible that you're just bored from working on the same thing for so long.  Instead, try mixing things up for a bit and work on another assignment for 30 minutes or so.  This will allow your brain to switch gears and hopefully get that much needed kick start so that you can return to your original assignment with verve and vigor.

2.) Get up and stretch: If you have the privilege of working in a sedentary job, then you might be forced to sit at a cube all day.  May sure you get up and stretch at least once every hour.  You need to get blood flowing back into your legs and other extremities, otherwise over time you could develop blood clots.  One way to give yourself an excuse to get up is to drink a whole bunch of water which will make you go to the bathroom.  Hopefully your bathroom is on the other side of the building.

3.) Listen to some music:  Sometimes your work environment can be distracting with the noise of multiple conversations, computers humming, printers printing, and telephones ringing.  This can cause a type of dissonance in your mind which may be very distracting.  Try listening to some music (preferably via headphones).  Music will not only cut out the cacophony, but will allow you to focus more on just one noise.  This often clears my mind and lets me focus on the task at hand.

4.) Take a walk: Finally, when all else fails, I need to take a walk.  A walk is a chance to literally and figuratively take your mind away from the situation at hand.  It gives you a chance to contemplate your problems before you and explore solutions that you might have not otherwise thought of.

Don't let procrastination rule your life.  Try some of the above tactics next time your having problems with getting things done.

Wonderful Moment of the Day: Playing with my cat in the yard.

Sell in May and Go Away

The old stock market adage of "Sell in May and Go Away" has its roots in the idea that many wall street traders and other money managers will usually take a vacation in the Spring/Summer months and therefre returns are far less in that time frame than the November to April returns.  With the advent of automated trading and discount online brokerages, this saying is far less true, but there are some aspects that should "go away".

One way to approach the concept of May is to "Go Away" from all the investing and financial planning you ususally do.  What I mean by this, is that you should pretty much have your retirement planning on autopilot, and shouldn't have to do much in this regards besides the occasional portfolio rebalancing.  With that in mind, it is definitely harder to stay indoors when the weather is nice out.  So, wait until November to rebalance your portfolio or make a bulk contribution to your IRA. 

All work and no play will leave you drained.  Everyone tries to take a vacation when the weather is nice, but intead of asking yourself where you want to go, think of a vacation that will provide the least amount of stress.  Booking airfare, traveling, and seeing family can all be great sources of stress to different people.  If you are living an active and busy life, finding time to unwind and de-stress is a rare opportunity.  Instead, think of a vacation that will leave you reenergized and ready to come back. 

Summer time is also the perfect time for our teenager or child to start to learn about the working world.  Many times, parents will leave their teenager to their own devices to find a summer job.  These kids have never had to find a job, and usually don't know the first thing on whether there are good opportunities out there.  You should take the time to help your child find a good job or internship.  It my seem like a mild source of improvement now, but it will pay off later in life.

Whether you go away in may literally, financially, or even mentally, the late Spring and Summer weather gives plenty of opportunities to reenergize your life.  Think smart, focus on a couple, and improve your life!

Wonderul Moment of the Day: Just bought a rope chain saw, and am excited to cut down some high over-hanging branches.

Getting Back to Gardening

With the approach of summer and the days getting longer, you can probably guess what time of year it is again....that's right, it's gardening time!!!

If you've read some of my historical posts, you probably might already know that gardening is one of my favorite hobbies.  The ability to watch something grow from a seed all the way to producing wholesome and delicious food is such a great positive reinforcement.  Even better is that this all takes place within the span of 1 growing season, so you can definitely see the rewards of what you sow.

If you currently don't have a garden, now is the perfect time to set one up.  The start-up costs can be a little pricey, especially if you have to construct raised garden beds, but over time, your renewable costs will be minimal.  My Wife and I practice composting so most of our fertilizer comes directly from the veggie scraps we didn't eat throughout the year.

With the start of May right upon us, here are some things to be doing right now:

1.) Till the garden bed you plan on sowing.  Now is the time to start loosening the soil and getting a last bit of composting in before you full on plant.

2.) Start planting colder weather crops.  If you are in a high frost risk zone such as where I live, you can still start planting some colder weather crops.  Lettuce, chard, and radishes can all be planted a couple weeks before the last average frost giving you the chance for two or even three crops throughout the year.

3.) Start setting up your square foot markers.  If you practice the square foot gardening method, you need to start getting your garden ready for planting and it makes things much easier if you have your garden all squared off.

4.) Plan what you want to plant.  Now is the perfect time to finalize your planting list, and figure out where everything is going to go.  You might want to do a crop rotation if you have a bigger garden and take advantage of the nutrients certain plants provide and take, or you might want to think about companion planting.  Basil and tomatoes grow great together.  Also, make sure to only grow food items that cost a whole bunch in the store.  If you're trying to get the most bang for your buck out of this garden, then growing potatoes isn't really going to help out very much.  Instead, grow the items that cost much more like sweet peppers, herbs, and tomatoes.  These will pay for themselves and more.

Hopefully this little list will get you started and excited for your garden adventures ahead.  Here's to happy planting!

Wonderful Moment of the Day: Having friends come over, want to use your grill, and make dinner for you...can't beat that!

Becoming an Angel Investor

Recently, I've been fascinated with the idea of becoming an Angel Investor and the potential career path that might lead.  An Angel Investor, otherwise known as an accredited investor, is someone with a significant amount of wealth/income who has been registered with the SEC and has the ability to invest in start up companies. 

The trick to becoming an Angel Investor is the whole concept of obtaining accreditation from the SEC.  The general guidelines for such an accreditation are no easy feet and generally require a net worth (excluding the value of your home) of over $1 million, or a salary over $200,000 for the last 2 consecutive years.  It's a little more relaxed if you through in your spouse as well, but nonetheless, you will still need a significant amount of wealth. 

I am by no means anywhere close to this kind of wealth, but I have to admit that it sounds like an interesting career choice.  Generally, Angel Investors are people who have started their own company and in turn want to invest in the early stages of a start up in order to potentially reep big gains at some point in the future.  They take an early stake in the start up and often have to invest both time and money into its future growth.  It sounds particularly interesting to me since it would expose an individual to all sorts of companies and experiences.  On top of all that, it just seems like an exciting experience.

If you have the wealth to become an Angel Investor, you might be in the position for a significantly exciting career path.  If not, well then you have something to shoot for.

Wonderful Moment of the Day: Woke up spooning my cat this morning.

Things to do Instead of Spending Money

If you're trying to keep a strict budget, one of the chief problems that can throw your whole life out of balance is that of boredom.  You might be saying to yourself "that's not such a bad problem".  In fact, some people might even consider the lack of having to do anything as a major luxury.  In our fast paced and busy world we live in, this can often be true, but if you are bored too often, this could spell a disaster for your finances.

Let me elaborate:

Often times, boredom is a rather unpleasant state we find ourselves in.  We try to find ways to avoid being bored, and we usually have "go to" methods for at least doing something.  If you're not careful, your "go to" boredom fix could be something very expensive such as eating out, going shopping, or other entertainment venues.  Before you know it, you find yourself spending way more money than you should have.  So how do we relieve our boredom in a fugal way?  If you're a home owner like myself, there are always an innumerable amount of tasks that should be done, but sometimes I like a little spice in my life.

This blog here suggests at least 56 things you can do that cost very little to nothing.  Most of them are pretty good ideas, however I would argue that they are not all cheap.  Entertaining friends can be pretty expensive if you're not careful.  That said, it's at least a good start to having you think outside of the "proverbial box" and come up with some different ideas.  For me, writing this here blog is often a nice hobby and keeps me thinking.  If I was a better writer, it could even be a source of income.  Either way, look to your own environment for some entertainment, and you'll be surprised at what you find.

Wonderful Moment of the Day: My impatiens seedlings have all sprouted and will be ready to plant soon enough!

Cost of Living Comparison

Sometimes in life, you need to just pick up and start over in a new city.  Whether it's a new job, a new love, or just the need for a change of scenery, moving can often be a scary endeavor.  You could almost think about it as a leap of faith.  One of the most overlooked concepts when moving to a new city is it's cost of living.

Cost of living can be easily thought of as purchasing power for the basics of life.  If two cities have the same average $ value for a wage, and it costs $1.39 for a gallon of milk in one and $1.89 for a gallon of milk in the other, you could assume that it's cheap to live in the first city.  It might be far to say that the first city has a lower cost of living.  With that in mind, I found a nice site that lets you easily compare the cost of living in major cities around the world.  Site here.

A simple comparison between NY City and Washington DC will provide a varying array of results from consumer prices, rent, restaurants, groceries, and overall purchasing power.  In this particular example DC was lower than NY in all category except Consumer prices.  This type of tool is especially useful if you are going to compare a job opportunity in another city.  Say you are currently making $40,000 and you get a job offer for $45,000 in another city.  This would constitute a 12.5% increase in pay, however the city you are moving to has a 20% increase in the cost of living making your real wage go far less than when you were in your first city. 

Wages and costs are relative just like much of everything else in this world.  Don't accept absolute values, but instead, find ways to compare them and make an informed decision.

Wonderful Moment of the Day: Hitting the 70 degree F weather now!

6 Words of Advice on Investing

Over the course of my reading and analysis of different financial techniques, I've found 6 easy pieces of advice that will convey the heart of investment wisdom.  They are as follows:

On Earnings: Never depend on a single income source.  Make investments to create a second source.

This is the concept of diversifying.  You increase your potential returns while also reducing your overall risk.

On Spending: If you buy things you do not need, soon you will have to sell things you do need.

Keep a budget, and stick to it.  Do not go over your means.  This is the fundamental step towards wealth accumulation.

On Savings: Do not save what is left after spending, but spend what is left after saving.

In other words, pay yourself before you pay the bills.  If you make a habit of saving first, your expenses will fall in line.

On Taking Risk: Never test the depth of a river with both feet.

This concept has you understanding how much risk is involved with an investment.  Don't go all in, and if you are investing in new territory, consider testing the waters before committing.

On Investment: Do not put all your eggs in one basket.

Once again, this is all about diversifying your investment across asset classes and also within asset classes.

On Expectations: Honesty is a very expensive gift.  Do not expect it from cheap people.

One could interpret this along the lines of you pay for what you get. 

What bits of advice could you provide a future investor?  Often times when you think about it in terms of you teaching someone, you'll better understand your own deficiencies.

Wonderful Moment of the Day:  I'll leave you with this bit of wisdom "At the end of the game, the King and Pawn are placed in the same box".

Why I Only Have 1 Credit Card

Owning your own credit card is one of those milestones in any young person's life.  It creates a sense of pride in an individual.  To think that a bank would trust me enough to temporarily loan money is often one of the first experiences one has with lending.  If not managed properly, these little pieces of plastic can be quite problematic, however, if managed properly, they can provide a whole slew of benefits.  With all the credit card options on the market, and seemingly every store offering their own version, it would be enough to make anyone confused.  In this article, I talk a little bit about why I have chosen to stick with 1 credit card instead of many.

Managing Your Credit Score:
People often wonder what goes into their credit score.  Well, the newly created Consumer Financial Protection Bureau (CFPB) has a nice concise explanation.  Generally, how much credit you have, how active you are in using it, how many accounts you have recently opened, and whether you pay off those accounts are the main factors.  If I were to open many card accounts, I'd probably take a ding on my credit score.  That said, it is a little more difficult to increase your credit line with just one card which would improve your overall score.

Low Maintenance:
Keeping inventory of your many credit cards can be quite a hassle, especially if you are trying to maximize benefits.  Do I get 5% cash back at supermarkets on this card, or is it 10,000 points at gas stations if I spend $2,000 in the first 3 months on that card?  All this can get very confusing if you're not a financial pro.  The added benefits to me are simply not worth the hassle and work involved with keeping up with all these accounts.  It would seem very easy to accidentally miss a payment, and now much of the benefits you reaped or taken away in the form of late fees and increased interest.  It is just much easier to pay off your card each month through using 1 card.

Keeping Track of Spending Habits:
With multiple cards, it is much harder to keep track of your spending habits, unless you are religiously recording every transaction.  With just one card, you have all your credit spending in one place and can easily budget accordingly.  It becomes increasingly hard to know what you spent in a given month if you're looking at 3 or 4 different statements.

Potential Fees for Not Using:
Some cards have fees if not used for a certain amount of time.  Therefore, you have to keep balancing whether you used your card in 60 days or so.  This can get annoying after awhile.

There are some downsides to having only one card.  My Wife and I experienced this a little while ago when our card information was stolen and some fraudulent charges were paced on it.  It took us about a week to get a new card, which could have been a problem since we had no other credit cards.  Overall, though, I think the benefits outweigh the risks.

Wonderful Moment of the Day: Finally starting to get some Spring weather.

Maximize Your Life Through Breakfast

If you want to succeed in life and maximize your potential, then the first thing you can do immediately  is to eat a healthy breakfast.  The simple act of feeding yourself in the morning with a nutritious meal has lasting effects throughout your day, and over time, can be the difference between you succeeding and reaching your goals, or failure.

We all know the old saying that "breakfast is the most important meal of the day", but what does this mean?  Studies have shown that eating a healthy breakfast can have the following effects:

1.) A more nutritionally complete diet
2.) Improved concentration and performance
3.) More strength and endurance
4.) Lower cholesterol levels

I would like to put a note of caution on the 4th point.  It depends on what you eat.  If you're chowing down on bacon and pancakes everyday, your cholesterol might not be too good.  Overall, eating a healthy breakfast has a whole slew of benefits that are too simple to pass up.

Another important feature of eating a good breakfast is that it gets you started in the morning with a good routine.  I know that sometimes in our life, routine can sound like a bad word, but there are reasons why it can be helpful.  Routines allow us to focus on more important parts of our lives, and the comfort they provide can allow us to focus our time and energy on other events that may not be routine. Eating a good breakfast allows your brain to process the events that will likely occur for the day.

Finally, eating a good breakfast can be a nice way to spend time with your family.  Whenever guests come over to my house and spend the night, we try to cook a big and deluxe breakfast as most families don't usually do this.  Not only is this seen as a nice treat, but it is also a great setting for spending time together.

If you're not eating a healthy breakfast everyday, maybe you should rethink your routine.  As far as quick hits go, this is so very easy, that you'd be foolish to pass up.

Wonderful Moment of the Day: Just watch this clip.  It will warm your heart!

What do I do with my Tax Refund?

With all the curses and frustrations that come with filing your taxes this time of the year, there also comes a blessing (at least for some of us) in the form of a tax refund.  With that in mind, your tax refund can be quite a benefit to your finances if handled appropriately.  It's easy to say that you now have the money to purchase that TV you've always wanted, but it's far wiser to put it towards benefiting your long term financial situation.  Here are my own suggestions:

1.) Adjust your deductions - If you're receiving a refund of more than $500, you should probably adjust your weekly deduction so that you are receiving a little more money throughout the year.  There are better uses of your money such as paying down credit card debt and saving for your future than letting the government take it.  That said, from a budgeting perspective it's always better to receive a refund than having to pay more.  It's a fine balance that you will only really master over time.

2.) Pay Down Credit Card Debt - Now is a perfect time to pay down your credit card debt and get that burden off of your shoulders.  With some interest rates around 20%, paying off this debt will mean more net income for you and your family throughout the year.

3.) Pay Down Other Debts - If you mortgage, student loans, private loans, etc... have interest rates of more than 4%, it probably makes sense to pay these off more quickly than contribute to a retirement account.  You could use your money to make an extra payment on your mortgage.  Over time, doing this every year could reduce the timing on your mortgage by a couple years.

4.) Make a Catch-up Contribution to your Retirement Accounts - If you are not maxing out your 401k contributions to $17,500/year, or your IRA contributions at $5,500 per person, then here is yet another opportunity to improve your future financial situation. 

5.) Make Home Repairs - Besides being mostly likely your biggest asset, your home is where you spend a vast amount of time in so it makes sense keeping it working and in top shape.  Use your money to repair a window, reinsulate a room, and put a new paint job on.  If you plan on moving soon, you might even get a small return on your investment.

6.) Finally, if you've done all this stuff and are in a good financial situation, you should take the family out for dinner and celebrate each other.  Too many families don't acknowledge how special each other are, and a tax refund is a good opportunity to do this.

Try to take the emotion out of your spending habits, especially when small windfalls such as a tax refund come into play.  If need be, give yourself a week to think about the money before spending it.  You'll likely make a wiser financial judgment with some time under your belt.

Wonderful Moment of the Day: Happy Good Friday!

Financial Tips for Traveling Abroad

Within the next week, my Wife will be traveling to Egypt for 2 weeks on a medical mission trip.  This whole experience has been a good exercise on the financial steps necessary for a longer stay in a foreign country.  Here is a short list of some of the steps we took to prepare her financially for this trip.

1.) Contact your credit card and debt card companies - Make sure you contact your bank and credit card company in order to let them know that you will be traveling abroad, the country, and the dates of your travel.  With modern day fraud protection, your bank might block your card if it sees a whole bunch of strange charges in a foreign country.  I have actually had this happen to a friend while I was traveling with him and I had to loan him some money until he could contact his credit card company.

2.) Work with a bank that has no ATM fees - This is more of a long term decision, but I currently use Schwab for most of my checking needs, and one of the perks is having no ATM fees.  This is especially useful when you first arrive in a foreign country as you can use an ATM as your currency converter.  Just simply withdraw the appropriate amount of the local currency, and the ATM does all the conversions based on the day's exchange rate.  I find this to be the best and most efficient way to exchange currency.

3.) Stay current on the currency conversion - Before you go on your trip, check the currency conversion rate so you know how much you will need and what your currency is going for.  If you need to use one of the private money exchange kisosks, you'll be much more informed on whether you are getting a good deal.

4.) Acquire travel insurance - I actually didn't know about this insurance until recently, but have developed a new-found love for it.  Most insurance plans will not cover you in foreign countries and that's precisely when this insurance kicks in. Travel insurance will cover all your medical needs, potential losses, or even travel supplies in some cases.  I believe they'll even pay for the shipment of your body back to your country in case of death.  It only costs about $50-60 and save you from a real headache in case something disastrous happens.

5.) Only carry a minimal amount of cash on your person - Depending on where you go, this rule is more applicable than in other places.  You do not want to have a whole bunch of cash on you in case you get robbed.  This is all around a good rule no matter where you go.

Once you take care of all this stuff, you should relax and enjoy your trip an take ease knowing your financial house is in order.  Just don't spend too much on souvenirs.

Wonderful Moment of the Day: My Wife is eating all her favorite foods before she goes on this trip, so we've been eating really well the last few days.

Unit Costing your Food Purchases

Everyone has experienced the difficulty in deciding which is the better deal when shopping at the grocery store.  The seemingly endless choices in dish soap or cereal are enough to make a frugally determined person quite frustrated.  Do I choose the generic brand, or do I go with the name brand that is conveniently on sale?  I’ve seen time and time again, price conscious consumers falling for the sale signs and “reduced priced” glamour only to still be paying more for a product in which they are not very brand conscious for. 

There is a very easy strategy to compare all the cereals, or dish soaps; look for the unit cost information just to the left of the price.  All products are required to have this information, and it essentially puts every like-minded product on the same playing field.  For example, what is the better deal, the generic dish soap that is $1.99 or the name brand soap that is on sale at $1.79?  Many people might pick the name brand soap, but what do the unit costs say?  The generic is $8/gallon and the generic even after the sale is $8.75/gallon.  You know that you are getting more product for your money if you went with the generic soap.

Product packaging and design is a multi-billion dollar business and one of the main goals (besides enticing you to buy the product), is to make the product look larger than it really is.  No wonder you might have a hard time comparing product prices when all the containers have slightly different amount in them.  This is the beauty of unit costs though; it doesn’t matter the sizes, because you can compare them all just in the same manner. 

Today, my Wife and I hardly ever even look at the actual price of a product, but instead look at the unit cost.  One word of caution though; sometimes the units may be a little different.  On the rare occasion, I’ve seen the unit cost listed (for example) as $/gallon and $/liter.  This may through things way out of whack, but this is usually a rare occurrence.  I’m not promising you that your grocery bills will be smaller with this shopping tactic, but I can guarantee that you will be getting much more for your money if you follow it.

Wonderful Moment of the Day: Been having a relatively easy week at work given that I just came back from a week long vacation.

Parenting Idea: Negotiated Allowances

I was watching a Ted talk recently by Cameron Herold who is a successful entrepreneur, father, and is a self-confessed failure in many things in life.  The whole point of this particular talk was that he thinks the current way children are taught in school and by their parents makes them more likely to just follow orders and stifle creativity.  Instead, he proposes a series of changes and parenting techniques that might allow someone to become a better parent, and foster their own child's particular set of skills.

One idea that came up in his talk was about encouraging subjects in which your child is already good at and has a desire to learn.  If your child has an A in math, but a C in Spanish, which topic would you help them and encourage them in?  Most parents would probably choose Spanish, however your child may be very gifted in Math, and so that subject needs to be explored and emphasized.  I would put the caveat that a certain amount of basic knowledge in every skill set is needed in order to pass each grade and milestone of life.

Teaching your children to think entrepreneurial can happen in many forms.  Take for example a child's allowance.  Instead of giving your child a wage each weak, why not make this a lesson?  Have them look for jobs and ways of being useful around the house, allow them to propose the job to the parent, and then negotiate with the parent for how much they will be paid.  This simple arrangement will teach opportunity finding skills, negotiating skills, and other basic business building skills.  It may end up even being cheaper for the parent :-)

Take a look at the video, and if you are not familiar with Ted.com, then check out some of the other interesting talks.  There is literally a plethora of knowledge on that site, and I can easily spend a few hours there just exploring the many varied topics.

Wonderful Moment of the Day: Happy President's Day!

Resell Your Gift Cards

We've all been there, received a gift card in the mail, only to realize that it's a store not in your area or someplace you don't enjoy.  Typically in this type of situation, the card will either never be used or you re-gift it.  Another annoying scenario occurs when you have $1.25 on a gift card, want to spend it, but don't want to pony up some additional funds to buy anything worthwhile.  Well, you're in luck, because new services online will buy your unused gift cards and give you some nice cash for the option. 

New sites such as PlasticJungle, Cardpool, and Raise have tapped into a customer need to remove their unused gift cards.  How their business model works is that they will pay you up to 92% (in PlasticJungle's case) for your card and they will credit you cash to a paypal account (or other option).  This whole process takes a few days for processing, but it serves a customer need to at least get something back for an otherwise useless piece of plastic.

When I think about these companies, it makes me realize how useless gift cards really are.  You essentially dedicate funds to a particular store, give those dedications to someone else, and lock them into spending all or some fraction of that amount.  In the end, the retail stores, and these gift card re purpose marketplaces are the ones who make out in this whole transaction.  Instead, why not just give your friend or relative cold hard cash?  I am always baffled on why there is a social stigma against this; it's the definition of liquidity, you can use it for anything, and they can choose when they want to use it (i.e. no expiration). -

I personally like PlasticJungle the best, because it offers to buy your cards no matter what the balance.  I also think these exchanges have a purpose in that you can buy some really discounted cards which means some potentially free cash.  See for yourself.

Wonderful Moment of the Day: My Wife and I celebrate 9 years of dating each other today!

Post Christmas Savings

Well, you did it.  You made it through the Christmas season in one piece, and hopefully it was a fun, family filled occasion.  You can now relax, and enjoy all the fun memories replaying in your head.  Hopefully your kids (if you have them) also had a good Christmas, and that they are now enjoying their many presents.  If your kids are anything like I was as a kid, then they might have gotten some cash from a relative as a Christmas gift.  Instead of just letting them spend all of their money, why not try to teach them a little something about investing and save for something even better.

As a child, I was a big saver.  I would almost exclusively ask for cash for any holiday or birthday, and I would but anywhere from 80-90% of it away in a savings account. Back in those days, savings accounts earned anywhere from 4-6% interest so it wasn't too bad of an investment.  Now, imagine doing this from the age of about 6 until the age of 17.  Over those 11 years, I accumulated enough cash to purchase a car!  Not to shabby if you ask me.

Personal savings rates are tough thing to instill in a child, especially if the parents have a hard time doing it themselves.  According to the St. Louis Federal Reserve, the current personal savings rate is at 3.6% of disposable income in the month of November.  That's including any sort of retirement plan such as a 401k or pension.  This is pretty awful if you ask me.  Saving at 3.6% will make you work for the rest of your life, and you won't have much to live off of when you eventually retire.  At minimum, a person should be saving at least 10% of their disposable income in order to build some sort of safety net for the future.

Personal savings accounts are no longer the way to go for kids if you want to teach them anything these days.  With interest rates around 0.25%, they'll be losing money due to inflation if left in the bank.  Instead, use your brokerage account (hopefully you have one set up through your bank), and put your child's money in some stocks or mutual funds.  Every few months or so, give them a little review of what their money has been doing and what your strategy for investing entails.  Often times, parents will buy stock in a company like Disney since their kids already take an active interest in it.  It actually makes the whole investing process more fun.  A world of lessons for a child awaits if a parent is willing to take this route.

In the end, do your kids a favor and convince them to invest their money.  They and you may learn a thing or two along the way.

Wonderful Moment of the Day: Still eating many Christmas cookies from family and friends.

Merry Christmas

Being that it's Christmas Eve, I felt like writing a blog post would probably diminish the point of spending time with your family.  Instead, here are a few Christmas gift ideas for your kids that will help them learn the benefits of savings and finances early on in life.

1.) Piggy Bank - What better way to start learning how to save then with a piggy bank.  I can remember my own Fisher Price savings bank as a kid and how much I looked forward to filling it up.

2.) Monopoly - The game itself is a great way to teach kids how to use money and what the purposes of a bank are.  I even used to use the monopoly money as currency for other games I created.

3.) Toy Wallet - This can of gift has a two fold benefit of educating your kids on how to handle money while also making them feel like they have something an adult would have.

4.) Cold hard cash -  Most bank branches have special money envelopes they'll give you for free.  I find these to be perfect for giving cash presents to my nieces and nephews.

But that's enough of this blog for the day.  Go spend some time with your family and have a wonderful Merry Christmas!

Wonderful Moment of the Day: Christmas Eve!