And pay we did.. at increasingly high interest rates.

You don't need to be an expert analyst to be able to manage your family's finances. Enter the role of money/financial advisors. Previously catering mostly to high net worth individuals, there are now many financial advisors out there who address the concerns of those with money problems.

The internet literally holds a wealth of information. Just seach the web and you will find sites such as Capital One Canada which help people understand their credit and debt: hold to maximize the former and minimize the latter.  For those just starting out, it pays to be informed of the various low interest credit cards out in the market: be able to ask questions and ascertain which products best suit your needs. What I also found to be quite interesting is the information about canadian secured credit cards which are geared towards helping people build and/or rebuild their credit.

So what are you waiting for? Make today the start of your financial education! =)

Unfortunately, it doesn’t seem that many lessons from the recent crisis are especially clear, at least as far as policy prescriptions might go. While it is true that many lenders were certainly irresponsible, many borrowers freely admit that they were, too. And while the availability of easy credit certainly contributed to the growth of debt, it’s important to recognize that, in general, access to credit is a very positive thing, provided that it is offered and taken responsibly, with rational pricing of risk all around. To put it more concretely, while access to credit and the resulting growth of debt led to many Americans losing their homes, access to credit helped put some of them in those homes in the first place, and it helped others improve aspects of their lives, if only in the short term given how events played out. Without excusing irresponsibility on the parts of the various players involved in the recent debt crisis, I think it’s essential to note that addressing the problems in these markets entails what might end up being a fairly delicate balancing act, and that the parameters governing such an act aren’t necessarily known.

I can’t help but wonder, though, if we wouldn’t be able to achieve a lot by focusing on some of the informational aspects of the decisions made by consumers. Specifically, I wonder about the role financial illiteracy and opacity played in convincing borrowers to take on risky high-interest-rate loans of various sorts. Was it the case that many borrowers didn’t understand the economic risks they faced in general (e.g. the risk of medical emergencies or layoffs), some of which might be large enough to force them to default? Did they, perhaps, fail to understand the risks associated with ARMs, or the terms underlying their credit-card debt, or the specifics of any of the myriad of other debt instruments that were purchased? It’s an empirical question, surely, though I think it’s somewhat intuitive: who hasn’t been at least somewhat confused by the terms and fees associated with a bank account or credit card? If it is indeed the case that these sorts of misunderstandings were important in the evolution of the current financial crisis, perhaps there is a role to be played by government in promoting financial education or enhanced transparency of financial contracts, independently of any regulation of the terms of those contracts.

From what I know of the literature in general, the evidence about the efficacy of financial education and transparency interventions is mixed. But I can’t help but think that it’s important to continue exploring this area. The economic world becomes more complex every day, and it seems that the importance of the effective management and transmission of information grows with it. Perhaps focusing on better financial education and transparency on the ground will prove to be a more valuable (and workable) approach than playing an outmoded blame game.

What do you guys think?

There are other cultures in the world that agree with this approach to marriage.  Many marriages are arranged and the primary objective for the family unit is economic rather than romantic.

I realize in our society, we marry for love.  However, as the article states, "…marriage is far more than a romantic arrangement; it has legal and financial ramifications as well. Those who ignore the business aspects of marriage do so at their own peril…"

Do have the financial skills to not only be a good "life partner", but also a good BUSINESS partner?

Event promotions officially start on July 21 but you may already book your seats by sending an email to register(at)iluvlearning(dot)com.  Promo fee is P250 (will increase to P300 on the 21st).

Speakers include Dr. Queena Lee-Chua on rising inflation and how it can affect savings and setting financial goals, Chinkee Tan, author of “Till Debt Do Us Part” to talk about overspending and how to get out of a debt trap and how to manage credit wisely, Ramon Tejero, head of research and portfolio strategy for Citibank’s insurance and investments arm in the Philippines, will walk participants through the step-by-step preparation of a financial plan (so you won’t come home with only dreams of financial independence in your head) and bestselling author Francis Kong, who will teach how these can all be made possible.

Go to http://blogs.inquirer.net/moneysmarts/2008/07/14/moneysmarts-celebrates-first-year-with-personal-finance-seminar/ for more details.

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Motherhood has a very humanizing effect. Everything gets reduced to essentials. ~Meryl Streep

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Unfortunately many attorneys do not get involved with the mortgage process because they see it as a matter of course and it is what it is. However, if the divorce attorney takes an active roll in their client’s mortgage and takes the time to understand how it impacts their client’s cash flow and overall net worth they can and will do a better job negotiating a property settlement agreement for their client.

For instance, what if they negotiate a settlement wherein their client retains the house and then they discover that their client can’t afford to keep the house. Selling it changes the dichotomy of the finances which may have tax implications and the settlement that took so long to reach may have to be re-opened? This wastes time and money.

Many times a mortgage planner will discover that the client cannot afford to remain in the current residence and that of course will impact your approach to settlement discussions. A mortgage planner will analyze the income and assets (as you think they might be post divorce) and come up with what your client can afford. Once you know the answer to this you will be in a better position to negotiate for keeping the home or selling it.

There are two other big benefits in starting with a mortgage planner months in advance of the settlement discussions. One benefit is that you can use the information on affordability as a red herring to get something else during the negotiations. The important thing is to “know” the financial impact to your client before you begin settlement discussions. Of course there also may be a big emotional tie to this issue so the sooner you ferret out this issue the better for you and your client.

Another big benefit is to begin with a credit review. The majority of people going through a divorce have their credit destroyed either out of spite or ignorance. By having a mortgage planner run a tri-merged report they will be able to find out if there are any issues with your client’s credit which could dramatically impact the ability to get a new mortgage and of course it will also have an affect on the monthly payments. In addition, by running a credit report you can see if the other spouse has run up any of the credit cards unbeknownst to your client. You will not be able to see if they opened any new cards in their name but any cards with your name attached to them will show up on your report.

As you can see there is a lot to gain in having your client consult with a mortgage planner at the onset of your discussions with your new client. Additional benefits are having an ally to help deliver bad news to your client when they can’t afford to stay in the house that they want to keep for emotional reasons. In summary, form a relationship with a quality mortgage planner you know and trust and use their services to do a better job for your client and make your life easier.

About the Author:  Dave Muti, JD, RMA is the author of Mortgages: What You Need to Know and a Senior Mortgage Planner with Millenium Home Mortgage, LLC located in Parsippany, New Jersey.  Dave can be reached at info@mortgageswhatyouneedtoknow.com.

Pe langa informatiile prezentare intr-o forma usor de navigat, ceea ce mi-a placut foarte mult sunt jocurile care faciliteaza accesul si intelegerea mai usoara a termenilor financiari: http://hsfpp.nefe.org/students/channels.cfm?chid=53&tid=3&deptid=15

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"Why the f*&^ would you be telling me to give my hard earned money away?!" 

I could tell this guy was pretty upset and it was all I could do to restrain myself from responding to match his inappropriate way of expressing himself.

So here I am running a seminar, the room is filled with people hungry to learn more about money, and this guy is standing at the back providing some unplanned entertainment.  Luckily for me and everyone else in the room things calmed down pretty quickly and we all moved on, but that situation really made me think about how I teach the principle of giving.

It's true, I teach the importance of giving as a vital part of the process of controlling your money.  In fact, I teach that you must give first, as a priority, to prove that your money does not own you.  I teach that there are four reason to give first:  spiritual, success, business, and generosity.  In all of these principles the concept of multiplication appplies.  When you give, you allow your money to multiply.  Let me explain with a simple analogy I use when I teach the giving principle to kids.

Take an apple and cut it in half.  In the centre of the apple is the core, and here you find the apple seeds.  If you took an apple seed and planted it in the ground, watered it and looked after it, what would you grow?  An apple?  No, you would grow an apple tree.  And what would the apple tree produce for you?  One apple?  No, the apple tree produces a life time of apples.  All this from one tiny seed.

And so the principle of giving is portrayed.  When you give a little bit of money away you plant a seed somewhere.  That seed can be looked after, watered and nutured, and will produce a harvest somewhere in the world.  The old saying "you reap what you sow" is true, for if you don't plant the apple seed in the ground you don't get an apple tree.

So I encourage you to introduce the concept of giving into your finances.  Don't think that giving money away will limit your lifestyle, rather the oppposite.  Because what I have learned is that when I give some money away I make room for more to enter my life.  If I don't make room, it doesn't appear!

Try it and see.

For more info from Phil on how to get more from your money, visit his library of articles on www.wisemoney.co.nz

The Retirement Commission's 2006 report for the OECD is interesting reading. The Economic Survey of NZ 2007 by the OECD goes on to encourage NZ to improve its financial literacy and notes that the NZ government "plans to integrate financial literacy into the NZ curriculum by 2009" and that further "efforts in this direction should be pursued".

A 2007 article on the importance of financial literacy to the overall economy by NZ's Reserve Bank can be found here. Various useful resources and links can be found on the nzliteracyportal.org.nz page.

One guy has written that "today’s society lacks financial literacy and business educators should team up with teachers to do something about it". The same guy has written an interesting blog on NZ's internet and its comparison with Finland.

Mum and Dad pay attention.  If you ignore your kids education about money they will leave home useless, by that I mean they will be unable to make financial decisions and probably end up in the "pooh" very quickly.  Is that what you want for your kids?

Now, I do not mean that you shoud hand out hard, cold cash to your kids and call it financial education!  This is not teaching them anything.  I do not mean that you should buy them what they need so that you feel good.  Do not use money as a parenting substitute for it will come back to bite you on the bum in the future.  Be proactive, be positive, and most of all construct opportunities to feed them knowledge about money.  Sometimes that means letting them learn from your mistakes.  but hey, wouldn't you rather they didn't end up making the same mistakes you did?

Here are a few ideas on what I think you can do:

1.  Involve your kids in discussions about family goals.  If they know you're working hard to achieve goals this will teach them how they can be proactive in achieving things in the future.  Role model to them the positive decisions you make around opportunity cost.  That means show them that you sometimes make sacrifices in the short term in order to achieve better things in the long term... you do do this don't you?

2.  Give the kids some areas of responsibility with money.  You make a judgement call on just how much responsibility they can handle, or how much "risk" there is.  But why not put them in charge of the groceries every now and then?  Stop laughing and consider the wide range of skills you could help them to learn by giving them this level of responsibliity.

3.  Encourage them to contribute.  I've just helped a lady who is working hard to achieve some goals for her family.  She has accepted my challenge to involve her daughters, and will be asking them to contribute to the amount required.  Set a target for them to raise and help them ot come up with creative (and legal) ways to raise funds.

I hope this gives you some ideas.  If you have any constructive ideas that could help others, post a response.

To save yourself from financial hardship you can vote with your feet, (literally) as you boycott petrol companies by walking everywhere.  Think of the time and finger-nails saved by not having to scrape ice of your windscreen in the morning, and the vitality you'll feel with the fresh, crisp air filling your lungs as you stride to work.  Think of the joy you'll have taking the children to school, singing together as you skip through the fog.

We are all aware of the lack of provision the recent Budget has promised us, so you can take heart by considering the savings you can make in other areas by boycotting the petrol companies.

By walking you'll avoid the depressing news items you hear on the car radio which will no longer distract you from your work.  Instead of sitting at your desk for 8 hours a day totally immersed in your solutions to the world's problems, you'll be able to focus 100% on the tasks you're paid to complete.  The freedom you'll experience by not carrying the burdens of the world each day will allow you to enjoy your job and your life.

There will be no more queues waiting to pay for your petrol, as you don't need any.  You will save hundreds of dollars by not buying the coffee, chocolate bars and cheap jandals that often tempt you in the petrol store.  You will no longer lie awake at night perplexed by the transformation your petrol station has undertaken to morph into your corner grocery store.  Finally sleep will come as you are released from these taxing sessions of mental gymnastics in the middle of the night.

You can also distract yourself by focussing fully on saving more money at the supermarket.  You will be limited in your shopping capacity by the size of the basket on your bike, or the size of your shopping trundler.  The small amount of space you now have for groceries pales in comparison to the size of your car bootspace, and you no longer feel like you need to fill that huge cavity.  Thank heavens you'll have no room for cheese, think of the savings! 

And finally, you can turn your garage into an extra bedroom as you've been able to give your car away.  Who would pay to buy a gas guzzler anyway?  That extra bedroom space you have can now be rented out to the neighbour's kids as a practice room for their heavy metal band.  Oh how you'll enjoy the sweet sound of music ringing in your ears morning, noon, and night.

Ok, so maybe you don't want to give away the car and walk everywhere.  But here's my key point:  Let's not get distracted by the things we can't control and focus on the things we can.  Here are five ideas:

Make some different choices to make your dollars go further
I was amazed the other day at how many budget brands had appeared in our shopping trolley.  Kathy had a real focus on saving money on the groceries and had made some different choices.  None of the family have really noticed and it meant that the shopping budget went further.  So what different choices can you make in the areas of groceries, banking, clothing, schooling, and lifestyle choices?

Make a commitment to spend a limited amount on petrol every week
Petrol is the real killer at the moment and you have no control over the price at the pump, but you do have control over how often you have to return to the pump.  So try setting yourself a limit on how far you go during the week, after all, this is how a budget is supposed to work!  I'm sure you'll come up with creative ways to get places... or imagine how much more you can achieve around the home by deciding not to go out?!!

Discover new hobbies that don't cost money
Apparently if you try hard enough you can find hobbies you enjoy that don't cost a cent!  I say "apparently" because I haven't discovered any for me yet - I am looking though.  Suggestions include; learning a musical instrument, (get lessons from a friend instead of paying for them), try finding the enjoyment in exercise, (if you walk with friends you can learn to communicate by talking instead of texting!), or you could try an online hobby (maybe you're the next online poker champion?)

Start a crash diet... on spending
Go through your bank statements and credit card statements and find a weakness that you need to eliminate from your spending.  We all have weaknesses, mine is great coffee.  If you can identify something that is literally stealing money from you and you are prepared to go on a crash diet then this is the time to break that habit.  Do it "cold turkey" and cut out all spending on that area.  Be tough on yourself!

Use the power of goals to find your success
For me, I refuse to accept that less money in my life means I have to achieve less.  Why should you be any different?  This is the time that we all need to dig in deep and find the real person inside every one of us; we need to be motivated to do whatever it takes to find our personal success.  And the way for you to do that is harness the power of financial goals.  As I always say, "Financial goals are how you can get ahead no matter what your 1ncome level."  And today I'll add, "And no matter how much petrol costs!"

So to all of us, including me, I say:

Come on everybody, isn't life great?  Let's not get distracted by the things we can't control and focus on the things we can.

Check out more articles here www.wisemoney.co.nz

The educator support team at the Dallas Fed recently secured approval to provide continuing education credits for a two-day session on globalization planned for San Antonio, on June 30 and July 1. These sessions are easy, generally loaded with details, and tailored for educations. Plus they are usually well catered.

$35.00 gets all materials, two lunches, one continental breakfast, and 12 hours of credit.

All details from the Fed's press release, below the fold.

Global Economic Forum

A Two-Day Seminar for High School Social Studies Teachers

June 30–July 1, 2008
San Antonio, Texas

This forum will help high school educators address key issues that impact the global economy.

Trade in goods and services, foreign exchange markets and international capital flows are integral parts of globalization, the integration of the world economies. This two-day event will examine how these important topics as well as regional perspectives inform our understanding of the complex and interdependent global economy.

Sessions will provide opportunities to learn how to use conference content for classroom application. One of the forum’s highlights is videoconferencing collaboration among the Federal Reserve Banks of Boston, Dallas and New York. A panel of economists will address in particular the roles of Africa, Latin America and Europe in the world economy.

Fast Facts

Dates and Time

June 30, 2008 8 a.m.– 4:15 p.m.; reception 4:30–5:30 p.m. July 1, 2008 8 a.m.– 3:30 p.m.

Location:

Federal Reserve Bank of Dallas, San Antonio Branch 126 E. Nueva St. San Antonio, TX 78204 Directions

Fee

$35 for both days; includes conference materials, continental breakfast and lunch for both days and reception for the first day.

Registration

Register and pay using the online form.

Credit

Participants will receive a certificate for 12 hours of professional development credit from the Federal Reserve Bank of Dallas.

Hotel Information:

Holiday Inn Market Square 18 West Durango San Antonio, Texas 78204 USA To receive the Federal Reserve Bank rate of $89 for singles and doubles, book online Corporate Account number: 100236395 or Call 888-615-0725

More Information

Rachel Peña at 210-978-1663 or Elizabeth Waddle at 800-333-4460, ext. 25276.

Speakers and Topics

Video Conference Speakers:

Keynote Address
Ireland: The Celtic Tiger
John Bruton
European Union Ambassador to the United States and Former Prime Minister of Ireland

Panel on the Regional Perspectives of the Global Economy

Globalization’s Impact on Africa
Harry Broadman
Economic Adviser
Africa Region
World Bank

European Perspective on Globalization
Nigel Nagarajan
Head, Economic and Financial Affairs
Delegation of the European Commission
to the United States

A Look at Latin America through the Lens of Globalization
Agustín del Río
Economist and Head of Regional
Delegation
Banco de México
Monterrey Branch

Additional Conference Speakers:

Jesús Cañas
Associate Economist
Federal Reserve Bank of Dallas
El Paso Branch

Steve Cobb
Chairman, Department of Economics
University of North Texas

Jim Dolmas
Senior Economist
Federal Reserve Bank of Dallas

Anne Macy
Associate Professor of Finance
West Texas A&M University, Canyon

Keith Phillips
Senior Economist
Federal Reserve Bank of Dallas
San Antonio Branch

Princeton Williams
Senior Economic Education Specialist
Federal Reserve Bank of Dallas

Additional Topics:

• Overview of Globalization
• The Role of the Dollar
• Modeling Trade Using Supply and Demand
• Capital Flows: Trends in U.S.–Mexico Remittances

Balance of Payments and the Capital Account

For service to the finance sector through the promotion of financial literacy, and to the community

Paul Clitheroe is one of our business heroes. As Chairman of the Financial Literacy Foundation Advisory Board he's a key figure in the Understanding Money campaign

...to give all Australians the opportunity to increase their financial knowledge and better manage their money.

You may know of Paul from the Nine Network television programme Money, he still contributes to Money Magazine and to the Money website.  (My personal finances have improved considerably since I began reading Money Magazine!)

The State Library of WA is part of the Australia-wide network of financial literacy resource providers - if you want to find out more come and join us this Thursday (12 June) when the Business Subject Specialists present "Money: your bottom line" 11am-12 noon, 1st floor, Alexander Library Building, Perth Cultural Centre.  Ring 9427 3111 to book your place.  Can't make this weeks session?  We are repeating the session on Thurday 17th July, 5:30-6:30pm.  Contact the Business Subject Specialists for more details.

You can read more about the honours list in news stories from Google News Australia, and more about the Australian system of honours at the It's an Honour website.

How can our children and teens get honest about their money habits?

Dr. Robyn interviews Mr. Sam Renick about teaching children financial literacy

Thank you for joining us here at the Powerful Parent Blog, Mr. Renick. I know you’ve spent a great deal of time working with children on creating a “habit” of earning and spending money wisely through your children’s character “Sammy, the get in the habit, rabbit.” In the spirit of honesty month, you really help them to get “honest “with their money habits. So let’s jump right in so we can help parents teach their children financial literacy, a vital skill everyone should learn, and that we’ve been discussing lately and that we've discussed previously on the blog.

What kind of information do you share with children about money?

I spend a lot of time talking with elementary school students sharing with them: why I think saving money is a great habit; how it makes them strong and why habits are important. I let them know the key reason why a habit like saving money is important and powerful is because it has a predictable outcome. In other words, the habit of saving money is reliable. It’s dependable. It’s true. It’s honest.

What happens when children and teens make a habit of saving money?

When we make a habit of saving money we can honestly predict our money will grow. We can also honestly predict: (1) we will be better prepared for emergencies; (2) we will be better positioned to make dreams come true; (3) we will be better prepared to help ourselves and others; (4) we will be better prepared to get what we want and need, when we want and need it; and (5) we will have more choices, freedom, independence and security.

And if we don’t “get honest” with ourselves and make it a habit?

As you can imagine, the opposite it true. If we fail to be honest with ourselves about our money habits and routinely exceed our budgets, spend more than we make, and carry credit debt, then it should not come as a surprise that we will have less freedom, more worries, more stress and more strain on relationships.

What can parents do to help their children develop smart money habits?

1. Walk the talk – part 1. I don’t know of anything that’s more honest or “powerful” (to use your word, Dr. Robyn) than leading by example. If you’re already doing a good job, keep it up. If not, start by improving your own understanding of personal finance by reading a good book on the subject. I recommend "The Way to Wealth," by Benjamin Franklin and "Raising Money Smart Kids," by Janet Bodnar.
2. Walk the talk – part 2. If I could only give a person one piece of advice regarding money it would be this – "pay yourself first." So, if you are not saving or investing, start. If you are in credit card debt, start systematically paying it off. Get committed to living a debt free life. This will set an excellent example for kids to follow. The web is filled with resources and discussion groups that can help. MSN Money, CNN Money, Yahoo are all good places to begin.
3. Talk regularly with kids about money. Studies routinely cite lack of communication between parents and children as a common obstacle to raising money literate kids. Take advantage of natural opportunities to involve kids in money related discussions while shopping, budgeting, making lists, recycling, and paying bills. The more responsibility you can appropriately give them for activities the better. Also be sure to initiate dialogue about dreams, goals, home ownership, investments, etc.
4. Start early with books and music. Expose children to books and music about money early and often. Naturally, I recommend our books and music. For older kids, I love Chad Foster's "Financial Literacy for Teens," and David Bach's "The Automatic Millionaire."
5. Instill the habit. Get your child a transparent piggy bank, or better yet create your own family savings bank. Our family did this when we were kids using a Sparklett’s bottle. We all loved it and it really promoted discussion about how to use the money once the bottle was full. When the bank is full take your child to the bank or credit union, start an account and deposit the savings. Review their statements with them regularly.
6. Affirmations. Provide kids with fun slogans to repeat. Here are a few of Sammy's favorites: Saving is a great habit! Saving makes me strong! Change adds up! From every dollar, save a dime! Debt Stinks! I am sure you have some of your favorites. Post the slogans around the house or paint them onto your family savings jar.
7. Allowance. Give your child an opportunity to manage money. Be consistent and supportive. Allow kids to make their own decisions and mistakes within reason. For tips on allowance, check out David McCurrach's "Allowance Magic." It’s an excellent read.

Thank you, Sam, for being with us today and giving us these very important tips!

Who is Sam Renick and how can you get in touch?

Sam X Renick is an award winning author, songwriter, trainer, social entrepreneur, and co-creator of the children's character 'Sammy, the get in the habit rabbit.' He is also the founder of The It's a Habit! Company, Inc., a socially conscious publishing and education company dedicated to helping children and families develop good habits, especially saving money. You can learn more about Sammy, Sam, It's a Habit! and their mission at www.itsahabit.com

With seemingly ever increasing personal bankruptcy rates, this statistic should not come as a surprise.   

The U.S. Department of the Treasury conducted its annual National Financial Literacy Challenge last month. 

The result? 

Of the 46,000 students who took the test, the average score was 56 percent. 

The general consensus is that the average age of someone filing personal bankruptcy is getting younger and younger (*age is not actually declared in a bankruptcy filing). 

It has also been observed more and more students are using student loan money to pay minimum payments on credit cards and this trend does not appear to be improving. 

(Full Disclosure Note: This is just the kind of thing that led to me writing Winning the Cash Flow War and speaking in schools. This can be avoided with just a few weeks of “real world” Financial Education).

Cash. Coin. Coconuts. No matter what you call it, people are talking about it. Or are they?

My husband, Jason, and I often discuss the strange fact that we don’t learn about managing money in school. And yet, it’s vital to existing responsibly and independently even before we graduate into the “real world.”

The Facts:

• The number of credit card offers given to high school and college students has increased in relation to the weak economy
• Students as young as 15 or 16 years old can obtain credit cards
• Credit card companies are encouraging young students to “start building their credit early” without being mindful of the education teens need prior to using a credit card responsibly
• A 2001 study by Nellie Mae, a loan provider for college students, found that 83% of undergrads have at least one card and the average balance was $2,327.
• Students having balances of over $3000 rose to 21%, a 61% increase since 2000.
• College students will double their credit card debt and triple the number of cards they have between the time they set foot on the college quad at orientation and the time they leave after graduation.
• When quizzed about paying taxes, using credit cards and retirement savings, year after year, 12^th graders have received a failing grade.

One of my roommates after college was so far in debt she became reliant on others to cosign on loans, verify that rent would indeed be paid, and pay for anything that required a credit card—since she no longer had one. Isn’t anyone teaching money management?

Turns out, some people are making it their mission.

Meet beauty queen, Kelsey Malecha. You usually hear pageant queens using their platform to educate others about cancer research, children with disabilities, reading programs, and self esteem for teens. But financial literacy? That’s a new one.

Kelsey Malecha says told her local paper that her mission in life is to teach others about how to save and spend money wisely.

How did she wind up on such a path?

The Good:

I wanted something that would relate to everyone and I thought about it for a long time and realized, well, I came from a household where I got an individual retirement account (IRA) as a graduation present from high school. I didn't get a car like some of my friends; I got an envelope with an IRA stub in it.

The Bad:

While I was in college I incurred some credit card debt, which snuck up on me like it does for a lot of people. It was a very stressful situation, because I'd wake up every day and go to work -- and I realized I'm not going to work to get spending money like my friends, I'm going to work to pay off my credit card debt.

The Ugly:

I had about $5,000 (of credit card debt). It was keeping up with the Joneses. I think the first purchase that started to rack up on it was my first iPod Nano. I had to get it the minute it came out. I saw that a lot. When I worked at Best Buy, I'd see people buying Nanos and buying cell phones who had poor credit. ... We are a materialistic society and we do make emotional spending decisions just to feel good. I'd see people coming into Best Buy and they'd say, "I need some retail therapy."

After getting honest with herself and paying off her debt, she got serious about teaching young people to be more careful with money. She has presented to children as young as 1^st grade up through high school. Her frustration lies with the fact that schools don’t seem to teach financial literacy.

Kids love money, they love talking about money. ... I'm surprised we don't have more classes in schools about how to handle money. And it's such an important life skill -- being able to manage your finances -- that I wish it were a graduation requirement.

Getting a Powerful Jump on things:

Since money management is such an important skill, we’re inviting Sam Renick, speaker and author of children’s book, It’s a Habit, Sammy Rabbit! to the Powerful Parent Blog to tell us about how to help our children save and use money wisely. He’ll be with us later this week! Interestingly, his book is one that Kelsey Malecha uses to educate students about financial literacy.

Money Management is part of learning responsibility, self control, discipline, and goal-setting. These are indeed Powerful Words. Those who save and spend wisely can focus on what they want out of life rather than how they’re going to pay back what they owe. We owe it to our children to teach them the way.

Bernanke stated that even the best laid plans can have their faults, and that no matter how extensive and thoughtful the plans are, they "cannot ensure that liquidity crises will not happen again." The truth is that bankers haven't been very thoughtful beyond manufacturing new ways to make money aside from traditional banking. Instead, most bankers have elected to become involved in the world of speculative investing in a wholesale form.

Normally, the fractional reserve, which involves holding 10% of deposits as capital and loaning the rest on a repeating scale makes bankers quite wealthy. When creative bank finance and investment hasn't worked, bankers have found that creating 90% of all money out of nothing can't even save them. This proves the folly of modern banking philosophy.

The Fed has pointed out time and time again that financial literacy is the key to the problems that ail the banking and financial investment industry. Financial literacy is based on economic theory. Unfortunately, not all economic theory is proven or sound. This ignorance places the world economy at continued risk and at the beck and call of greedy bankers and investors that look only at the short-term.

I'm feeling.. dumbstruck at his sheer brass neck and simultaneously terrified of what I might do next.. 

Either that or I'm away off to speculate on some impossibly ludicrous real estate deal and lose lots of money.

Let me give you an example of the type of wild stories he relates.  (Wild to you and me, who were educated to study hard, get a good, steady job, buy a house, get into debt, take a nice holiday every year, get into more debt and then work 'til we retire to pay it all off.)

He relates how he once saw a property he wanted to buy.  So, he went to see his friend and sold it to him. [BEFORE BUYING IT].  He then had the money to buy it.  So, he did (for less than his friend paid him for it!) and transferred ownership to his friend.  He ended up several thousands of pounds better off, basically for arranging the purchase of a property he knew someone else would want.

So, what does he have to say?  Well, he's what we'd call a self-made man I suppose.  He started a comic rental library aged 11and today has acquired more valuable 'assets' than he has 'liabilities' (two major themes of the book).  His assets fund the lifestyle he wants and the liabilities he cannot avoid.

He is sore on the current school system, which teaches young people precious little about finances.  To counter this, he recommends attending financial literacy courses, which may cost several hundred pounds each, but will bring a massive ROI.  His principles are:

1. Have a reason greater than reality
2. Choose daily
3. Choose friends carefully
4. Master a formula then learn a new one
5. Pay yourself first
6. Pay your brokers well
7. Be an Indian giver
8. Assets buy luxuries
9. The need for heroes
10. Teach and you shall receive

The main reason people struggle financially  is because they spent years in school but learned nothing about money.  The result is, people learn to work for money... but never learn to have money work for them.  (Robert Kiyosaki)

Take risks.  My take on this is that if you're the type of person who takes chocolate every night at 10.25pm, just before bedtime at 10.30pm, then you'd be better borrowing a Mills and Boon than a Kiyosaki from the library.

The second paradox is that elements of a massive liquidity freeze occurred in certain financial market segments (for example, the United States) within a context of overall excess dollar liquidity worldwide. In other words, because of bad bank securities and the risk of accepting them or trading value-for-value, bankers on a global scale began to refuse to trade with fellow bankers to protect themselves.

World bankers are looking at these arenas for salvation: risk management in financial institut- ions; the originate-to-distribute business model of the large banks; and the coordination of financial regulation and supervision across financial institutions, markets and national borders.

World bankers say that improvement in financial literacy can be made by realigning the incentives among the originators and other participants in the securitization chain through attention to detail.
Being honest about the risks inherent in structured bank products is imperative, even though bankers refuse to use the word "honesty". Ratings agencies need to improve the usefulness and transparency of credit ratings so that investors can more appropriately apply market discipline. In other words, aggregate information of the past is largely trash in the real world. The proof is in the pudding of the past.

One problem that all bankers around the world seem to miss is that their industry is built on a measure of trust. This is not recognized and in the the industry, I have never heard the word mentioned by mainstream bankers and certainly not the central banking community. Trust has been violated and bankers are clueless.

For the time being, many investors have taken substantial hits and are cold to the prowess of the banking community at-large. Trust will have to be rebuilt. Fortunately, the greed of investors is on their side. Using clever marketing tactics and clever persuasion, eventually investors will be wooed back into the mix.

Bankers, including central bankers, have been insistent on promoting financial innovation for the generation of capital. Even World Bankers have revealed that they are against regulation while looking forward to "market-based solutions".

For those that wonder, nothing has really changed. Politicians are talking and squirming, while generating new law. Everyone is looking at symptoms, but rarely the root cause of any problem. Making money in the long-term is always more important than stability or morality. The World of International Banking doesn't know what morality or ethics is.

Banking has become the "new politic of power". The entire world is politically-powered through the financial power of the International Society of Bankers, a framework of legally independent, yet totally self-dependent and self-generating authority mongers. World Bankers have control of the world in their hands. They have money and want to make more at the expense of all.

The beautiful thing about Financial Literacy is that it often seems to include learning to donate a part of our income to help others. Maybe you've come across the idea of having kids split their income (such as it is) into three pots: Save, Spend and Give.  The idea is that you can teach them some financial skills, and make charity a habit at an early age.  Many religious traditions encourage parents to teach their children to "tithe" at a young age, but this concept is not related to any particular religion.

I've come across two different organizations that provide a structure to help parents set up and follow-through with the Save, Spend, Give idea: Moonjar and Money-Savvy Kids. Both have won a ton of awards. Interestingly, they're both decidedly secular and focused on good money habits, not on encouraging tithing. 

Moonjar

According to their web site, "Moonjar moneyboxes were created as a tool for children and families to incorporate strong financial values and practices into their daily lives."  It's basically three colored boxes, one for each category, that are kept together with a yellow band.  A Moonjar, just $8 or so, includes a passbook to record "deposits" and a guide for parents to understand how to use the Moonjar.

One mother shares the impact of Moonjar on her son:

"Moonjar has helped him to be conscious. He knows that he cannot spend money on just anything because there are people in the world who are really in need. Two or three dollars... many people in other parts of the world are very poor and desperately need those dollars, and so he simply should not spend his money unwisely. He has learned to use his money for good things and he is learning to allocate his money."
-- Felicitas Estrada
Student and Mother of Daniel (10) Sunnyside, WA "

I actually got my kids and my nieces each a MoonJar for Christmas last year, but I think they're a bit young.  I haven't even put Charlie's together.

Money-Savvy Generation

My first introduction to Money-Savvy Generation was something called The Stanford Marshmallow Study. Here's the punchline: four-year olds who can resist eating one marshmallow now for the promise of getting two later turn into more successful adults.  The ability to delay gratification turns out to be a critical life skill.  (Since reading this study, I keep asking my four-year-old daughter if she wants one lollipop/cookie/skittle now, or...and the answer is always "yes!"  Sigh. I've got some work to do.)

Founder Susan Beacham describes the origins of the organization this way: "My dream is to teach money management basics to elementary school aged children, a segment of our educational system virtually untouched because of the perceived complexity of the subject matter. Stated differently, I wanted to get 'out in front' of money management behavior before bad habits set in."

If you've visited a children's museum or gift shop, you've probably run across the Money-Savvy Pig.  It actually has four chambers, differentiating "Save" (for things you want to buy in the next 12 months) from "Invest" for things you want long-term, like a car, or college. 

Money-Savvy Generation has done academic evaluations of the impact of their curriculum, and they are making progress in getting into schools to reach kids whose parents may struggle with finances themselves. 

I especially love that some of the larger financial institutions in the Chicago area (they're based in the Northwest suburbs) are sponsoring the introduction of the Money-Savvy curriculum into the public schools.  Teaching kids strong financial habits and getting name recognition for when those kids grow up and start to save and invest--now that's strategic philanthropy.

Some say that the Bush administration intends to fix the subprime credit mess by keeping people who weren't creditworthy in debt longer and rendering signed contracts meaningless. This theme operates on the presumption that all contracts were realistic, unpredatory in nature or that homeowners deserve to get what they signed for.

Others see most homeowners as innocents that were conned and coerced into signing contracts that were not only predatory, but immoral and even stacked against the homebuyer.

Jon Markman says, "It's as if the Federal Reserve and U.S. Treasury believe the best way to treat heroin addicts is through long-term, government-supplied crack." As a critic of bailing out homeowners with subprime mortgages, he must know that his statement cuts both ways very cleanly for both bankers and homeowners.

Let's get honest. Why should anyone bail out any part of a for profit money-making system? The government thinks that it adds up to confidence and security along with belief in the system. The government has already moved to cover the sins of the banking system. Should it move to do any less for bilked homeowners?

The other question that nobody is asking is whether the bailouts are expected to prolong the economic recession or to shorten it or whether bailing out bankers is good for business in other than the most short-term scenario. In fact, the Federal Reserve doesn't openly recognize the problem that bankers have created through their own greed. Instead, they choose to blame the problem on the "lack of financial literacy". The problem is that with all the financial literacy in the world, nobody really knows the answer. Economic theory has diverse and varied opinions even within the Federal Reserve and the global bankers.

Of course, the real problem is that many Americans don't want "irresponsible homebuyers" to get anything they won't get. Without question, at least a few homebuyers were less than honest when they signed the documents for their new home. The government is not suggesting that these people get a handout or a helping hand. Many of them have already lost their homes and some are out on the street as you read this text.

The government has been taking the approach that they are willing to help responsible homebuyers that are creditworthy. Creditworthiness is the determining factor. Otherwise, it's out the door Buck! Considering that dumping otherwise honest homebuyers that actually can afford to buy a home is the wrong thing to do for the nation's health, helping homeowners to stay in their homes due to predatory and unsound contracts is a sound idea.

Whether you choose to bail out everyone, the bankers, the hapless homebuyers or nobody at all isn't even academic. Nobody is knowledgeable enough to figure it all out with 100% accuracy. The variables are immense if they are truly considered. Since financial literacy and people being who they are is the problem, the problem boils down to emotion, the idea of good business and making the "customers" happy.

So what does this writer think? I'm retired and nobody is asking. I do have a few more thoughts though.

Fact 1: Jealousy is a terrible problem in America all the way around.
Fact 2: There is always a price to pay.
Fact 3: Crooked bankers haven't paid their price yet. (a reminder)

The chief force reshaping manufacturing is technological change (hastened by competition with other companies in Canada, Germany or down the street). Thanks to innovation, manufacturing productivity has doubled over two decades. Employers now require fewer but more highly skilled workers. Technological change affects China just as it does the America. William Overholt of the RAND Corporation has noted that between 1994 and 2004 the Chinese shed 25 million manufacturing jobs, 10 times more than the U.S.

The central process driving this is not globalization. It’s the skills revolution. We’re moving into a more demanding cognitive age. In order to thrive, people are compelled to become better at absorbing, processing and combining information. This is happening in localized and globalized sectors, and it would be happening even if you tore up every free trade deal ever inked.

The globalization paradigm emphasizes the fact that information can now travel 15,000 miles in an instant. But the most important part of information’s journey is the last few inches — the space between a person’s eyes or ears and the various regions of the brain. Does the individual have the capacity to understand the information? Does he or she have the training to exploit it? Are there cultural assumptions that distort the way it is perceived?

Now by no means am I saying to ignore your bills/debts but be sure to pay yourself first. Here is something I learned a few years ago which has helped me tremendously. Get yourself 5 jars or even back accounts. I recommend ING Direct as it allows you to open multiple accounts under one name that you can manage easily online.

Label your jars or accounts Financial Freedom, Necessities, Education, Give, and Play. Below I explain how each account should be used. Beside each account there is a percentage. This percentage indicates the percentage of your income that should go into that account. It doesn't matter if you get paid weekly, bi-weekly or monthly, each pay period, divide your income into these accounts.

Financial Freedom 15% - This is your golden egg! This is the money that you never touch until you hit retirement. This money should be put into a safe, interest baring account. An account that is guaranteed to grow with no risk of losing such as a GIC.

Necessities 40% - This is for your day-to-day living. With this money you pay your bills such as your mortgage/rent, utilities, car expenses, child care, groceries, etc and any debt. If you find it difficult to make all these payment with only 40% of your income then you need to consider either simplifying your life or generating addition income.

Education 15% - Yes...education is very important. I graduated from high school many years ago, however to this day, I take the time to learn new skills & techniques that help enrich my life. Whether it be buying a book on building strong relationships or a sales training seminar, I make sure that I learn something profound each month. I consider the world as my school and learn something new everyday, but still I find it empowering to learn from those whom have found success in different areas of life. This education does not have to be academical; it can be as simple and enjoyable as learning to master that hobby of yours to learning how to communicate better with others.

Savings 15% - This is different from your Financial Freedom Account mentioned above because you get to spend this money. This account is used for those big ticket items such as a luxurious vacation, a new television, a computer or whatever you want that carries a large price tag.

Give 5% - Simple enough, this account is used to give away. It can be money for a birthday gift, donate to your favorite charity or even give to your church. I often hear that it was better to give than to receive.

Play 10% - This account is a FUN account. I like to blow this money once a month...spoil myself with new clothes or a night out with the boys...whatever you like to do to spoil yourself...use this money to do it.

The above is not written in stone. You can adjust the percentages if you desire, but be sure 100% of your income is accounted for.