Should I Give My Teenager a Gas Budget?
Remember when gas prices were at the highest levels in history just a few short months ago? Like most drivers, you probably curtailed your use of the car and used public transportation instead. Did your teen use the family car and if so, did he or she pay for the gas?
Thinking back to when we were teens, it was probably unthinkable to ask our parents to pay for gas whenever we used the car. At that time, most of us were living on budgets and our parents certainly couldn’t afford any excesses. We applied for part-time jobs in order to pay for the privilege of driving the family car.
Today, it’s quite different. Here is one parent’s answer to this age-old question, taken from Denise’s Parenting Blog: “We give our son $30 a month to cover gasoline for the 20 minute commute to school and he fills the tank the rest of the time to go to work, friend’s houses, out to eat, movies, etc.”
Another parent uses the same methodology that a rental car agency uses. That is, whatever amount of gas is in the tank when you use it is the amount that must be put it when it is returned.
In another example, a parent asks for $5.00 every time he gives his teen the keys to the car.
There are other scenarios that are similar, but the one fact that is replayed over and over is that parents today should not pay for gas, but instead have the teen pay whenever the car is used for leisure activities.
If the teen is using the family car, then the parents would also pay for their fair share of the expenses. But if a teen owns the car, then it is incumbent upon him to pay for the gas. However, in this case the parents may pay for the insurance or if the teen is working, would receive a portion of the insurance from the teen as well.
In today’s economic recession, it would seem prudent for families to discuss and set down rules with their teens regarding expenses relating to driving.
It seems only fair that while most families are trying to stick to a budget, the teens in the family not only contribute to the household expenses but, at the very least, carry their weight when it comes to utilizing the family car.
Should My Teenager Contribute Financially to Household Expenses?
Whether or not your teen should contribute to the family’s budget is a personal opinion. Time have changed, however, thinking back to when we were growing up, our family was on a budget and we applied for part-time jobs after school so that we could help out with household expenses.
Having your child contribute to the family’s budget is one way to teach them financial responsibility. Of course, depending upon your family budget it may be a necessity for your teens to contribute. Regardless of your circumstances, every teen should consider contributing something to the family budget.
One of the ways in which a teen can become responsible not only for his own expenses but contribute to the family expenses as well, is to acquire an after-school job. A few hours a day can make all the difference not only in the teen’s self-confidence, but the empowerment gained by becoming a responsible member of society.
How much a teen contributes depends on the needs of the family and other personal circumstances. Even if the family is financial stable, it is certainly worth it for the teen to contribute a modest sum.
One woman related that when she was a teen, she took a part-time job while in high school at the age of fifteen. She gave most of the earnings to her parents, and just kept a small sum for transportation, lunch, and sometimes dinner. Her parents didn’t ask for anything, but she felt compelled to help with the family expenses. It was just the way she was brought up.
For most teens today, there is the temptation to buy all of the latest electronic gadgets with their money. One example is a recent report about a teen that spent over 30,000 hours in one month text messaging her friends. Excessive? Most definitely. Were her parents aware of it? Not until they received the bill.
Should your teen contribute to the household expenses? The decision is personal but your teenager will certainly learn about the value and responsibility of money by contributing at least a small amount to the family budget.
Should My Teenager Have a Credit Card?
According to an article in the Wall Street Journal, “plastic has become a fact of life in the U.S., even for teenagers, who made $169 billion of consumer purchases in 2005. 18% of youths ages 12 to 19 had debit cards, while 8% had credit cards.”
There is something inherently wrong with these statistics. Giving a 12-year old a debit or credit card is sending a message that could be interpreted in the exact opposite way in which it was intended.
While most financial planners and bank officials feel that is it perfectly okay to give teens credit cards, it seems that opponents of this argument should also have their day in court as well. In their defense, here are some thoughts.
Children learn from their parents. If parents have conversations with their children and involve them in household budgets and the like, it seems clear that as they grow up they are more likely to become financially responsible. Does this mean they should be given credit cards? Probably not at such a young age, but in the likelihood they are, they will be better equipped to handle the responsibility of owning one.
Some parents, on the other hand, feel justified in allowing their teens to own credit cards as long as boundaries are met and responsibility is shown by the holders of these cards.
One financial planner recommends that children should be taught at an early age about the basic principles of saving, budgeting, and being able to distinguish between things they need and things they want.
If parents believe their children are able to cope with responsibility of owning a credit card, they can choose either a debit card or a prepaid debit card.
However, there are disadvantages in allowing teenagers to have a credit card. Children and/or teens are not always aware of the consequences of using credit. They may overuse the card and expect it to have a balance no matter what they buy.
The Hidden Cost of Bank Fees
There have always been bank fees, but it has become more apparent recently that banks are raising their hidden fees and charging their good customers as well. Considering the banks have just been given more than 250 billion dollars from the U.S. Treasury, the idea that they are still imposing these ridiculous fees is ludicrous.
According to MSN Money’s Liz Pullman Weston, here is a rundown of these charges:
ATM. If you use the ATM bank to withdraw money from another bank, you will incur charges from both. According to Bankrate.com, “your bank charges you 25% more than it did six years ago for using another bank’s ATM. In addition, a foreign bank adds a surcharge of 40% or more which is higher than it was 10 years ago.”
Cash Advances. Ten years ago, credit card companies issued a 2% minimum fee and $10.00 maximum fee on cash advances. “Today, the fee is now 3% with a minimum of $5.00 and no maximum.” Note: Most banks have sent out notices to credit card holders advising them of the new fees for 2009.
Stop-Payment Fee. Ten years ago, if you put a stop payment on your check the cost was $10.00 or less. “Today, the charge is an exorbitant $25.00 or more.”
Bank Teller Fees. Believe it or not, there was a time you could walk into a bank and talk with any teller about any banking problem you may have. “Today, there is a fee incurred regardless whether you call or visit a bank to have a discussion with a teller.”
Cashier’s Checks and Money Orders. Savings and loan banks do not charge a fee for cashier’s checks or money orders. This is not the case with commercial banks. “Cashier’s checks and money orders now cost $10.00 or more. In fact, some lenders have fees ranging from $5.00 to $15.00 for making payments by phone or online.”
Other Fees. Remember a time when you could easily receive a copy of a cancelled check from your bank for a very small fee? Not anymore. “Today, banks and lenders may charge $5.00 for a copy of an old check or $10.00 for an old statement.”
At a time when the banks are not lending, and when billions of dollars have been infused into the banking system in order to prevent a total economic collapse, it adds insult to injury that commercial banks are still imposing hidden fees to their customers.
To prevent some of these fees from reducing the amount of money in your account, it is recommended that you contact your own bank as well as other banks and ask many questions about their hidden fees.
Currently, there is no law that mandates disclosure. However, you can save a great deal of stress and money by confronting these banks and demanding they disclose all hidden fees.
Small Savings = Family Vacation
Saving for a family vacation during the year is possible, through some simple measures.
Most banks have a vacation and/or holiday club where you deposit a specific amount each week depending upon how much you wish to save. For example, a Christmas club for $5.00 would yield $250.00, whereas a Holiday Club for $25.00 a week would amount to $1250.00 for the 50-week period.
In addition, you can automatically withdraw an amount from your paycheck and have it deposited to a savings account.
If you have a family budget, you may already be setting aside money for the family vacation. But there are other ways you can save throughout the year.
Here are some ideas:
* Cancel magazine and newspaper subscriptions.
* Bundle your cable, internet, and phone service.
* Call credit card companies and reduce the interest rate.
* Become more energy efficient.
* Bring lunch to work as well as a thermos of coffee.
* Instead of eating out once a week, try once a month.
* Walk to your local stores instead of driving.
* Park on side streets where there are no meters.
* Ask everyone in the family to put the change they have accumulated at the end of the day into the family jug.
If you consider how much you can save by engaging in any one of these money-saving tips, imagine how much you could save if you followed all these tips.
If you are a smoker, quit. $10.00 a pack per day or $100.00 a carton per week can pay for a fabulous vacation for the entire family.
Utilize grocery coupons whenever possible. There are a myriad of online websites devoted to discounts, printable coupons, and other savings. Comparison shop; check out consignment stores for clothes; utilize the library to take out books, DVDs, and magazines.
Money is very tight these days, and this recession is not going to get better any time soon. If you want to spend even a few days away with the family, try these ideas to begin limiting expenses and finding alternative ways to save money.
Ten Remortgaging Tips
Here are ten remortgaging tips to help you secure the best rate for your home.
1. There are many types of remortgage deals available. Speak to several lenders to find the most appropriate and low cost deal for you.
2. Ask the lender what the interest rate will be for a remortgage. If it is a fixed rate, be sure to determine the duration.
3. Based on your current mortgage and the new remortgage rate, the lender should be able to give you the amount you will be paying each month.
4. Ensure that you look into the current SVR or Standard Variable Rate since you may have to pay the lender’s SVR if you are opting for a fixed rate.
5. Ask the lender exactly what your monthly payments will be, based on the standard variable rate.
6. Ask the lender what the APR (Annual Percentage Rate) will be.
7. Before you carry on the process of remortgaging, ask the lender what the early redemption charges will be. While these may apply to mortgages that are changed, it is a good idea to ascertain if they apply to the new remortgage.
8. Are there any remortgage fees that will be incurred?
9. Determine how long the process will take. Some homeowners have stated it can take anywhere from a few days to a week.
10. How many times can you remortgage? The answer is that you can remortgage anytime you like. However, keep in mind that when you do, you will have to pay the early redemption charges each time.
In addition, MSN Money offers these valuable tips:
* “Don’t use a lender which offers its best deals only to new customers
* Don’t pay annual interest
* Don’t pay a mortgage indemnity guarantee (MIG)
* Avoid extended redemption
* Avoid mortgages with insurance tie-ins”
If you are thinking about remortgaging, research the many websites online to ascertain not only what questions to ask potential lenders, but compare and contrast lenders so that you are afforded the best possible terms.
Sub-Prime Mortgages: An Explanation
A sub-prime mortgage is that which is given to homeowners who have less than a stellar credit rating.
For example, someone with a FICO score of 600 or lower may be eligible for a mortgage, but the interest rates would be much higher than for someone with a FICO score of 700 or above.
The sub-prime mortgage crisis was a result of homeowners who dealt with unscrupulous lenders. These lenders offered mortgages, in some instances, with no money down. They then resold the mortgages to others and the interest rate dramatically rose, and the homeowners were unable to meet the monthly payments.
As a result, most banks are holding what is called “toxic mortgages,” and while the Treasury Department gave them bailout money so they could begin lending again, instead they are holding on to the money in expectation that there will be additional foreclosures.
Lenders who offer sub-prime mortgages often charge exorbitant interest rates based on the risk factor. We know that many banks became insolvent as a direct result of these toxic mortgages.
This sub-prime mortgage crisis had a direct affect on the stock market and, as they say, the rest is history. The banks stopped lending, businesses could not restock their inventory, and many companies are going out of business or merging with larger companies.
Currently, the Federal government is debating whether or not to buy these toxic mortgages from banks (which was originally the case with the first bailout money), but since the value of homes is in decline, a determination of how much to offer for these unpaid mortgages is a major consideration.
Recently, there were news reports that predatory lending has begun again. This can only cause undue hardship for homeowners in particular, and for the global economy in general.
The best course of action for anyone considering buying a home is to wait until their credit standing has improved and their FICO scores are in the low to mid 700s. In addition, it is also recommended that a down payment of at least 25% or more would be required for banks to even consider a mortgage.
Supermarket Savvy: How to Cut Your Food Bill
There is an old saying that states: Never shop on an empty stomach. Think back to the last trip you made to the supermarket. Did you have breakfast or lunch before you left home? If not, how much more did you spend on items that were not on your list?
We all do it; we make a list for the supermarket and once there we peruse each aisle looking for the items on our list but inevitably something not on the list winds up in the shopping cart.
Sometimes we buy items because they are on sale. We make an evaluation that we are saving money by doing so. Other times, we find an item we may have seen on TV and want to try it. Or sometimes the urge is so great that we have to buy that particular item.
Being supermarket savvy requires three things: First, we buy only those items on the list, second, we buy generic or store brands instead of the name brand items, and third, just because we saved money on one item doesn’t give us the go-ahead to buy a more expensive item.
It’s a mind game we play with ourselves. We use coupons and save money, but then we spend it elsewhere.
This is also true for buying items in bulk. Here’s a great example. One woman loves to buy the rice pilaf at her supermarket. Unfortunately, it is so popular they run out of stock quite frequently. She checks online to see if it is available and finds it on Amazon.com. She buys a case.
Is this a rational way of shopping? Some may say she is wasting money on a product that is a brand name and could easily buy another type of rice and make her own pilaf. Others would argue that this is something the family loves to eat, so why not buy the case. Who’s right? Perhaps both are.
On the other hand, if an individual bought a case of canned tomatoes simply because they were very cheap but only prepared pasta dishes infrequently, could you also make the argument that this is a waste of money? Some would say yes, especially if you are on a budget.
So the moral to this story is just buy what you need, use coupons, buy store brands, and only buy in bulk if you are going to use the product continuously.
Teach Your Child the Benefits of Saving Money
Probably the best way to teach your child the benefits of saving money is the same way you were taught as a child – buy a piggy bank.
Children learn by example. They also learn by repetitive lessons. For example, buying a piggy bank and putting coins in on a daily basis is the foundation by which children will begin to understand every aspect of saving and spending.
Whether you purchase a piggy bank or use a small glass container, the children can visually see each day that by putting coins into the bank, the money begins to accumulate.
Another way to illustrate the importance of saving is suggested by Teach Kids How. They offer this advice: “Once you have at least half of the bank filled, take the money out and show them the empty bank. Then explain to them that this is what their bank will look like without any money in it.”
An effective method to show the child what happens when they spend money is to tell the child that he or she can buy one toy as a reward for saving. Take your child to a toy store or go online and ask the child to pick one item. Write down the price of the item. Take the money out of the piggy bank and count it with the child.
Let’s assume that Johnny saved $12.00. The price of the toy he chose is $16.99. Now explain to Johnny that if he wants the toy he will have to save another $4.99. This will empower the boy to continue to save to buy that special toy.
What a great day it will be when Johnny comes running up to you and says, “Mommy, I have enough money to buy that toy!”
The next step in the learning process is to take the money to the bank and deposit it in a savings account. Explain what a savings account is and let the child go through the process at the bank. Let the child hold on to the bank book and let him see his name on the book. Explain that every time you take him to the bank to deposit money, the number in the book will become higher and higher.
Most experts agree that allowing a child’s first piggy bank savings to be used to buy a toy is necessary for them to learn the importance of saving. Eventually, children can set aside money for their savings account and still have money left to buy another toy.
This learning process requires that you consistently praise the child for saving and, in some cases, reward the child by matching the amount of money in the piggy bank. This is how many of us learned to save as children, and it has served us well.
Bonds and Mutual Funds Explained
When it comes to investments, perhaps the best-known type is stocks. We hear about how popular stocks are doing every day on the news, and when the economy takes a turn for the worse, we hear about how the stock market in general has plummeted. But stocks are far from the only type of investment out there.
There are some types of investment that are completely unrelated to stocks. Many others are based on stocks, either in part or in full. Here are the basics on two popular types of investments: bonds and mutual funds.
Bonds are often mentioned in conjunction with stocks, but they are two entirely different things. Stock shares are ownership interests in companies that choose to sell them. Bonds, on the other hand, are debt securities.
Stocks and bonds do have something in common in that they are both used by corporations to obtain capital. But bonds may also be issued by local, state and federal governments. And while the money received from the sale of stock is not repaid, money received from the issue of bonds is. A bond is similar to a loan, because the principal plus interest is paid back after a specified period of time.
A unique aspect of government bonds is that the interest received may be tax exempt. Federal government bonds are not subject to federal income tax. State and municipal bonds usually aren’t taxable if you live in the state where they are issued.
Most investors agree that in order to invest successfully, you must diversify. This means investing in a variety of investment types. One of the easiest ways to do this is to buy into a mutual fund.
Mutual funds are pools of money that are invested in several different assets. They may include investments in stocks, bonds or cash, or a combination of the three. These funds are managed by professionals who know how to get the best possible returns.
Some mutual funds allow investors to buy shares with one lump sum investment. But most allow investors to put money in on a regular basis. Mutual funds may be purchased through banks, brokerage firms, or directly from financial companies. Those purchased through a bank or brokerage often require the payment of fees or commissions, while most mutual funds purchased directly from financial companies do not.
When purchasing a bond or a mutual fund, it’s important to take a look at its past performance. Bonds are rated according to the issuer’s credit history and current status. Mutual funds must publish a prospectus each year that details their performance. These tools make it easier for investors to make an informed choice.
Like all investments, bonds and mutual funds carry some risk. A financial advisor can help you choose the right ones for your purposes.