Business advice


Changing the next generation’s personal finance habits
December 25, 2008, 1:21 am
Filed under: businness advice | Tags: , ,

America’s personal finance habits need an overhaul. This is not new to anyone who has seen a news headline during the past year. We, America as a whole, are in a financial mess. We haven’t a clue as to how to use logic when it comes to money.

Suze Orman, Oprah’s financial guru, has risen to superstar status because this has been in the headlines non-stop. Let’s see if we can apply some logical similar to her offerings.

This country needs help in earthquake strength. We are in the midst of a whirlpool of financial debt resulting many times from poor judgment. There is no way to change everything within the next generation. The only way to tackle such a mess is one step at a time. Martin Luther King, Jr., started with one article, one demonstration and then another.

So we can start with involving all family members in budgeting for grocery shopping. You are saying, what? I don’t have time for that. Make time. No one will ever make wise financial decisions if they don’t know how to budget.

Everyone wants to eat on a regular basis. Call a family meeting and explain it is now going to be a family project to make sure you keep within a certain spending limit. Go into the reality of how the family is going to have to be careful with spending and here is the place to start. Giving an entire dismal picture about the family budget is too much to burden children with.

Explain coupons, sale days and lists. Assign tasks to everyone to get ready for shopping day. There will be no more quick trips to the store. Explain how much is allotted for the food budget. If they help find a way to get in under that amount, there will be a reward.

Start a policy of keeping daily spending dairies. No one can save money if they don’t know where money is going. You can create a chart, get it blown up and put it on a bulletin board or the kitchen refrigerator. Receipts can be kept for daily entries

You are changing your family’s way they view money. Once children start these habits, this behavior will become ingrained. It will change the way they think out their buying decisions as they grow older and plan during their adult lives.

Decide on how much cash you are willing to hand out every week. Once that’s gone, the children are responsible for finding other ways to earn more. Collecting cans in the neighborhood takes work, but can be done by children at a fairly young age. They will have to organize it and let you know when it is time to go to the recycling center.

Parents complain these days they feel like an ATM machine when it comes to their kids. Things can’t get better, unless parents change the patterns they have ingrained in themselves. Before cutting the kids off, explain the options. If they don’t like the idea of cans, especially for younger children, put up a rooster of chores they can do if they want extra tacked on to their allowance.

The next time one of the children, or even your spouse, talks about wanting a fairly expensive object, sit down and have a detailed discussion. Can you afford it? Do you need it? Most of the time, the money will not be readily available. So, there will have to be a savings plan. You can establish your own family lay-away plan.

Search for financial reading the children can grasp. Get them involved, no matter how hard it may be at first. The following link contains several helpful books on Amazon: http://www.amazon.com/s/ref=nb_ss_gw?url=search-alias%3Dstripbooks&field-keywords=%22children+and+money%3A&x=0&y=0

The path you are starting on will not only help your family, but hopefully spread to the next generation. Pre-teens and teens, for the most part, have been spoiled these days. They fail to comprehend ‘no’ when it comes to asking parents for money. Unless this trend is squashed, they will carry on the same way with their children. This all leads to the overspending that triggered this financial crisis to begin with. Let’s puts some common sense back in how we use the cents we earn.

Once children start watching what they do with their money, they will have some left over. Make sure they don’t spend even that foolishly. Sit down and suggest savings plans. There are still Christmas club accounts. There are regular savings passbooks that don’t require a specific opening balance. They may even get enough together to put into an account that earns interest. Put a new spin on money. Never stop hitting on the theme that money is not just for what it can do for us today, but what will it earn for us tomorrow.

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Is your money controlling you?
September 18, 2008, 2:25 am
Filed under: Blogroll, Business Advice | Tags: , ,

The country is in a widespread financial crunch. It would take quite a bit to find someone who isn’t having some kind of financial problems.

It’s very common during trying economic times for folks to decide the answer to their problems is to start a business. That’s a bad idea. It will open the door to the dilemma of who do I pay, my vendors or the grocery bill.

Before thinking of starting your own business, take a few things into consideration first. If you are living on credit in between paychecks, you need to examine your spending to see where you can cut back. It’s painful and frustrating, but it beats dealing with overdue bills and harassing calls from bill collectors. Don’t use credit cards for miscellaneous shopping. You know those few things you just have to have in between regular shopping trips. That bill can end up being huge at the end of the month.

Getting out of financial straits sometimes require sacrifice. If you are living in a home that you can’t maintain on your current cash flow, get rid of it. I know that isn’t an easy feat with the mortgage market the way it is. You may need to talk to mortgage companies to see what you can possibly do. There are usually folks willing to pay some monies in exchange for a quit-claim deed. Before you stop listening, I know how horrible and earth-shattering that sounds. In those types of situations, your home will not be the edge to get into another living situation. You may need to find someone to help you with financial requirements to shift into a rental situation. It ‘s better than sitting around waiting on a foreclosure notice.

Getting control of your money is essential before starting a business. Instead of having one set up bills and priorities, you will now have two of everything. This kind of trouble brings chaos to families.

However, there is one slightly different angle that you can try for a year of so to clean up those bills. If there is no Avon lady in the area, sign up. Despite the fact that it is 2009, women still like Tupperware. There are various products sold via sales reps, even though the methodology has changed over the years. This types of ‘business’ functions help your taxes and overall financial picture many times without putting further burden on your and/or your family. Being a sales rep with these companies allows you to file a profit and loss statement as a part of your income tax return at year’s end. This means that a lot of expenses can be deducted and can help with your overall tax situation. This also means that it may make sense for you to change how many deductions you declare at work.

This type of business venture allows you to see just what it is like to run your own show before jumping completely into the water. If, after a time period, things are looking up and you feel as if you could run your own show full time, then it is time to take serious stock of what the future will bring. But, none of this can happen if your money controls you. Keep an accurate accounting of all expenses along with plans for the future is the only way to begin to get back the control you need for a profitable tomorrow.

For more samples of my work: www.bellbusinessreport.com

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Do you control your money or does it control you?
May 6, 2008, 6:41 pm
Filed under: Blogroll, businness advice | Tags: , , , ,

This is a good question to ponder when the country is awaiting their economic stimulus checks with baited breath. Consumers tend to think checks are going to keep coming. If you run your life on that premise, it means that you are planning on working until the day you drop dead. If you spend your life waiting anxiously for your next check, your money controls you.

Stop presuming that checks will continue to show up in your life as they can stop for a myriad of reasons. Nowadays, even government checks can be delayed.

I know. You are shaking your head wondering how to get control when all your money disappears as you soon as you pay your bills. Getting one’s financial accounts under control is a primary goal. However, it doesn’t mean that you can’t save. Nor, does it mean that you can’t put away unexpected rewards, such as the economic stimulus check. I know several working folks who are planning to use it for a vacation or new ‘toys’ they could do without.

This type of behavior simply is saying to the universe that I will keep on working. I have absolutely no hope of ever putting my money to work. You either make a plan to put some of it to work, with more later, or you will be working until your funeral.

I know times are hard and money is stretched money is stretched to the point of snapping. My point is that you have to put money away, no matter what the circumstance. This is even more important when it comes to unexpected windfalls. You only spend that $600 on a vacation if you already have an investment plan in place.

This problem, of acting as if checks will continue is so widespread in this country that even the top-earners run up bills they will never be able to pay. They are under the illusion the good times will keep rolling forever. All you have to do to realize how nutty that idea is to look at the movie stars that have gone broke once shows were cancelled.

The lower end of the earning curve can start small. There was an interesting article in the business section of the Los Angeles Times just the other day on how one can find treasures at estate sales. Don’t shake your head until you investigate. Children start out with small stamp collections that eventually end up being passed on to the next generation. Collectibles can be a starting base for building wealth. They can be accumulated with small purchases in the beginning. Forbes used to have a section that talked about the ups and downs of the market value of various collectibles.

For the long term, one needs an investment or savings plan. Suze Orrman, the current national financial guru, continues to talk against using retirement money early. Whatever problem is bothering you currently should be dealt with other options besides taking out retirement funds. There are penalties, not to mention the loss of a nest egg for the down the road where the only sure thing may be a social security check. Once a retirement account is established, however, it can be used as collateral for a short-term loan without penalties.

Spend some time finding out how you can grow your money if you have only a small amount to play with. Online investment firms offer bank accounts which offer higher than normal interest rates. When you have enough put away, you can start trading a little at a time.

If you accumulate enough, open a CD, a certificate of deposit, and don’t crack it open, the first time something goes wrong. You can still buy United States Savings bonds and other investment bills issued by the US Treasury. Here is a link with more info:
http://www.savingsbonds.gov/indiv/research/indepth/ebonds/res_e_bonds.htm

If you feel the need to understand more about your finances, do some reading and then start a plan of action. You are losing money every day you put it off.

For more examples of my work: http://www.bellbusinessreport.com

Laura Bell
writer@well.com

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Isn’t some money coming in better than no money coming in?
November 11, 2007, 11:45 pm
Filed under: Business Advice | Tags: , ,

This question was asked of me recently regarding a mutual unemployed friend. She didn’t take into consideration that he was receiving unemployment. So, he had some basics covered. You might want to consider a low-ball offer if in truth you have absolutely nothing coming in.

There is an under-the-current problem with this question which most folks never understand and end up making wrong decisions their entire lives. (They ignore opportunity cost, which is simply putting your hours in this case to work on one job. This keeps you from working the job you really need.)

They sit and wonder why there is never enough money to cover the bills. Some try coping by working overtime. We all know what happens to that time. The majority of that money ends up in the hands of the IRS. You can always open up a small business so that you get a bigger tax return. All of these efforts to manipulate your way around the problem you have created are attempts at getting around an economic principle. You can bluff your way around it for a short time. It is going to get you in the long run, no matter what strategies you employ.

If you take a job you really can’t afford to take, you have let opportunity cost interfere with a potential profitable life. When you take up your eight hour days on a job that doesn’t cover expenses, you are headed for disaster.

I took a minimum wage job eons ago in retail. My checks were suppose to increase when I started selling. Well, the amount I sold was so little, it amounted to a minuscule addition. It turned out that after taxes, my weekly check didn’t even cover the babysitter’s salary. We went through two months of bouncing checks all over town. I went into a bank branch one day trying to just cash my check and was sent away because our account was in the hole. That wasn’t quite as bad as trying to cash a check at our long-standing grocery store. I ended up having to leave the food. I was handed bounced checks from my husband they had been holding until one of us showed up.

None of this would have happened if I knew what opportunity cost was at that time.

Do not accept a job or work project that is so far below your expenses that you are in effect giving away your time. I once had a friend who was a perfectionist. She created a monthly newsletter for a large auto dealer. She was getting $500 as a monthly retainer. She met a business coach at her local Chamber. He volunteered to help her find out way she had no money left over at the end of the month. It turned out that she spent so much time on this newsletter that her hourly rate turned out to be about $5 an hour. This was an ongoing project. The opportunity cost of spending all that time to make things perfect, meant that she was pricing herself out of business even though her contract read $50 an hour. Spending too much time left little or no time to get additional clients.

Grab a job or project that pays you below what you need to make and you are putting yourself in a hole from which you may never climb out of. Once you are tied up with a gig that is doing nothing but burying you deeper into debt, it is hard to find the time to do a sufficient job hunt for something better.

I have an old friend who is also currently unemployed working on another teaching credential. I suggested he take on some temp work to tide him over. His response was quick in telling me how much money he needed to cover his daily expenses. He knew temp work wouldn’t do the trick.

It’s very easy to make a quick judgment when you are in a financial strain. Now, that you have this information, take a little more time. You will be glad you did.

For more examples of my work: http://www.bellbusinessreport.com

Laura Bell
writer@well.com

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Nobody teaches you how to retire
November 7, 2007, 8:40 pm
Filed under: Business Advice | Tags: , ,

This is a new lead on a prime-time television commercial for an investment group. This is a truth that describes our society. The question is why?

My two cents is that this lack of our knowledge starts in childhood. My mother taught me enough about money that I could have been rich and ready to retire, but my husband’s mother didn’t have a clue. That’s my excuse.

We can help others before it is too late. Education about money needs to start at an early age. As our nation’s children mature, we need to explain the horrific future they will have if they take on a partner without the same ideas about money. Disaster is the reality.

My mother started me out with an allowance at 12. Nowadays, of course, kids get allowances at an earlier age. I was taught how to budget the money. I had budget envelopes. One was labeled ‘savings.’ Any time my mother checked I would be in big trouble if that envelope was empty. Just think how better off kids would be today if they had learned this simple lesson.

This is the beginning. And, it is only the beginning. Knowing how to budget and knowing that you have to save part of your cash opens the door to being a step ahead of the rest of the world, who spend their lives pay-check-to-paycheck.

Let’s start with a great axiom I learned from a stock broker who was one of my public relations clients. He used to write advice articles that I placed in local newspapers. So, I read everything. There are only three ways for you to make money during your life: working for a living; charity or putting your money to work.

Most people are not blessed enough to able to put the majority of their money to work. It doesn’t matter. If you don’t find a way to put some of your money to work, you will worry about cash flow until the day you die.

My son got the entrepreneurial bug at a young age. He put his money to work for the first time when he was eight. He took $2 and bought a bag of candy at the neighborhood convenience store on his way to school. When he got to school, he sold the candy pieces at $.50 each. His guidance counselor wasn’t too happy with his activities. I thought it was brilliant.

Many people feel daunted by trying to find an investment option that will be safe; and one they can afford without breaking their normal budget. It doesn’t have to move heaven and earth. Have friends who like to bake? Join forces using your food budget and start a catering service on the side.

The television show the “Unit” has a group of wives whose activities always involve a dilemma while their husbands are off fighting the latest terrorists. They decided to go into business for themselves one episode, buying real estate. All of them had hundreds stashed in their proverbial cookie jars. They were putting their money to work and reaping a nice profit from it.

Most can’t afford to have a stock account and wouldn’t know what to do if they did. This doesn’t have to be your only possible outlet for using your money. Put your imagination to work and you will find an answer. If, however, investing in the markets is something you see yourself doing, form an investment club. This is another example of pooling your money with others of like interest in order to make a profit .

Without putting your money to work in even the smallest of ways during your working life, you will find yourself in your alleged “Golden years’ relying on charity for your monthly needs. This is also known as Social Security.

If you put your money to work properly, you have a chance to become wealthy or accumulate wealth. I looked up a few definitions on ask.com and came across one that was the closest to what economists believe. You own an object that is accumulating value. This can be a piece of art work whose value is going up, a growing company, plots of real estate whose annual assessment shows an increase in value. Not everyone will end up wealthy. But if they learn how to put their money to work, they can obtain a resource that will accumulate value over the course of time. Bill Gates, of course, didn’t have a clue at first how valuable his rights to an universal operating system would be. The rights to DOS was the launching pad to his wealth.

Some people start off dabbling in real estate and end up with the majority of land in a region. This opens the doors to wealth for them and their heirs.

This all boils down to that ‘no one teaches us how to retire’ because no one teaches our kids how to budget, how to save and how to put their money to work. These days, when one discovers these keys, it is more or less by random happenstance.

Have kids? Got grandkids? Know friend’s kids? As long as you are still breathing, you have a chance to change their future with this knowledge.

For more examples of my work: http://www.bellbusinessreport.com

Laura Bell
writer@well.com

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