Finances

Tips on Teaching Your College Kids About Personal Finance

Money management is a life skill that is just as important as learning proper English grammar, yet it is often neglected. As a parent, it is your responsibility to make sure your child is not lacking in this life skill. Your child’s attitude toward money can make the difference between whether he will have a pleasant way of life in the future or one that will drag him to the pits of misery. There is no better time to teach your child proper personal finance management than when he is setting out on his own for the first time — his college days.  

Talk about money

Money is something we deal with throughout our life, yet it is a subject we rarely discuss. Before you release your child to the jungle that is college, make sure you take the time to dive deeply into the subject. Be open about issues like how you are going to cover his or her college expenses and what you might have to do if something untoward happens, like if you suddenly lose your job. Handling money matters should be a team effort for your family. The more involved your child is, the more he will be responsible for his or her own share of expenses.

Work through a budget with your child

Take the time to sit down and create a budget with your child. This will not only teach him a skill that would prove useful in life, but you can also help make sure that he does not struggle with making ends meet, or worse, end up with nothing to eat while he is miles away from home. Also, if he ends up asking you for more money, you can refer back to the budget you have prepared and work out how he ended up running short. You can then suggest ways to improve.

Make your budget as detailed and concrete as possible. Create categories, break the budget plan down by month so tracking expenses can be easier, and take the time to evaluate the plan and how your child is faring every end of the year or as you see fit.

Require them to track their spending

One of the ways you can ensure that they will stick to a budget is by having them track their spending. The young ones often do not realize how the little purchases can add up. Ask your child to track every single purchase he makes. You can recommend an app that will allow him to do this. The techie tool will make the process easier and more inviting for him. Tracking every single expense will help your child get a feel of the outflow of money, and appreciate the complexities of money management early on.

Set money boundaries

Do not hesitate to discuss with your child just what you are willing to spend on for him. While sending him to school may be your responsibility, covering, say, fraternity expenses is not. Be clear about your boundaries. Explain to your child that if he wants to be able to indulge in luxuries, he should be willing to work for it or find resources of his own. Not only will this help you avoid getting into financial trouble, you will also be able to train your child to be more resourceful. You just might be able to ignite an entrepreneurial spirit in the process.

Do not always bail your child out

Make your child feel secure by explaining that you will always try to do your part and be religious with sending out his allowance. You can even explain that you will always be there to bail him out of trouble, that he should not hesitate to seek your help. After all, the likes of money transfer are only around the corner. Instilling a sense of security in kids is important if they are to set out to the world with confidence. Still, be just as clear that your offer of assistance has its limits. And that while fortuitous events are understandable, losing money over Starbucks is not. Be clear with your boundaries, and be willing to refuse to provide assistance when your child has been irresponsibly careless with his spending habit. Make him own up to his mistakes and learn from them. More importantly, teach him to sort out his own problems and solve them on his own. This will be yet another important life skill he could learn.

Talk about the pitfalls of borrowing

Whether you are thinking of giving your child an extension account to your credit card or you are just worried about him taking debts from his friends, make sure you talk candidly about the pitfalls of borrowing. Many people find themselves in a financial mess in late adulthood because they started off on the wrong foot. There is no better time to warn your child about the dangers of getting buried in debts than when they are just setting out for college. Emphasize the importance of avoiding debts. Mention real life anecdotes if you must, and explain just how much trouble it is to have wrong credit habits.

Talk about the possibility of taking a job

Sit down with your child and seriously ruminate the possibility of taking a job. Discuss possible opportunities available, and discuss the benefits of having a part-time job. Explain that learning about the hard work it entails to earn money will help him value what he has even more and be more responsible with how he spends it. Having a job will also help him earn many life skills that he can use when he enters the real world. This will help ensure eventual success in his career endeavors. You may also help him with time management, so you can make sure he can handle juggling school and work.

Set attractive goals

You may also establish goals that your child will want to work hard for. You can teach them the value of investments and compounded interest so they can have something to strive for. You can both identify exciting things to do with savings and investments, like travel abroad or just a fatter bank account. Having something attractive to look forward to will help motivate your child to stick to the planned budget or to take on that part-time job. Ensure a good future for your child by taking the time to properly train him or her on money management. Personal finance is no small matter, and should be treated accordingly.

Author is Jason Garcia  Blogger and Business Manager www.InvestmentDad.com

 

Most Common Financial Concerns During a Divorce

Money is an ongoing concern for many and it can often cause problems for marriages, occasionally to the point where it ends in divorce. However, divorce brings with it, money trouble of its own.

Splitting Possessions

There may be a house, a car and even a collection of some kind all of which will have to be divided. This is a big part of the divorce process and the way it works has some relevance to where you live.

There are two forms of states known as community property states and equitable distribution. Community property states see all belongings as being owned by both parties. This does not necessarily mean that everything is split 50:50 and belongings are split in a fair way.

Equitable distribution states indicate that any property obtained during the marriage will belong to the spouse that earned it. In the case of divorce, the two parties have the assistance of solicitors and such to help them divide belongings in a fair way.

Splitting Debts

Splitting debts is very different to splitting assets because you have to share the money that you owe. Therefore, it is important for all involved to understand what is owed and who owes it and there is always the scope of settling the debts at this point by selling something such as a property. There is the possibility of swapping debt for assets when they property is divided but there is also the possibility of splitting debts equally – this of course depends on how amicably the divorce is.

Tax problems

Splitting assets and debt are usually at the forefront of the divorce arrangements yet there are tax implications to consider.

As you are not considered to be married any more, following divorce, your filing status changes. There is the possibility that capital gains tax could be expected, particularly if you receive a large amount when the property is divided and there is every chance that the legal fees linked to your divorce could be susceptible to tax.

Child support and any other family support payments could be taxed and if there are children involved, who will be exempt from making the payments? The tax payments can be quite high and so they have to be considered.

Are there children involved?

It is never a pleasant experience if there are children involved in the divorce, but the main fact is that they cost money. The cost of raising a child up to adulthood can run into the hundreds of thousands of pounds and this involves providing them with a home, clothes, food, school and a lot more and so, when it comes to divorce, child support becomes an issue.

If you are not granted custody of the child then you will have to provide regular payments as a form of child support. These are payments that you will have to commit to until your child reaches 18 years of age.

The payment will be made to the other parent as they are the ones who has to pay for the majority of costs associated with raising a child.

When it comes to divorce, things can become extremely complicated and so there are hurdles and barriers to slow you down along the way. While money may have been the reason for your divorce it can certainly cause you problems beyond that, but understanding some of the financial concerns when it comes to a divorce will prepare you for what lies ahead.

Author Bio K J Smith Solicitors are specialists in family law, with an expert team of family law professionals who are experienced in all aspects of family and divorce law.

Negotiating for Fair Settlement in Divorce

In divorce negotiations who gets what asset can be the most difficult part of the whole process. People sometimes have the winner take all mentality which leads to prolonged divorces. Negotiating is like a dance. One person takes a step backwards and the other one goes forward. The partners move in sync and sometimes apart from each other. They dance around some of the lesser issues to concentrate on what is most important to them. As in dance – flexibility is important. If your spouse is not going to budge on one item, go after something similar, or two smaller ones which may have an even greater value when combined.

Lawyers and mediators are quite skilled in assessing and dividing property and investments. That said, consider having a neutral financial consultant on-board to help with a fair distribution. They can look at the assets in totality and advise a balanced split so one party does not get mainly retirement pensions and the other one cash. A few women now in their fifties who got more in liquid assets and very little in retirement benefits, are worried about their futures. Who knows what social security payments will be in the next decade and beyond.

Look at what your present needs are in order to determine what assets are most advantageous to you. If you are a few decades away from retirement, it may be in your best interest to receive a bigger chunk of liquid funds. This way you can buy a house and pay off the mortgage. Being free of a mortgage puts more money in your pocket even with property taxes, upkeep and insurance bills. Perhaps student loans could be paid off if getting a lump sum settlement. If unsure what to do in your circumstance, meet with your own personal financial advisor for guidance in choosing which type of assets you would like.

Know the tax consequences of splitting assets, especially retirement ones. It may be prudent for the lower earning spouse to take ones that will be taxed in their lower tax bracket. Compensation can be made for this, but then wealth stays with the divorcing spouses as opposed to the government’s taxation department.

Dividing assets is not black or white – there is a grey area where you have some wiggle room. Please read more     http://www.divorcemag.com/blog/negotiating-fair-divorce-settlement