Archive for the ‘Financial Reality’ Category

December 2010 marks the three-year anniversary of the Great Recession. We’ve spent the past three years hearing so many stories about what went wrong. People got laid off unexpectedly, couldn’t find another job, and ended up losing their homes. And others had to go from a typical middle-class income to unemployment literally overnight.

What we overlooked, however, are the positives that came out of this rough economic time. Here are five good things that came out of the Great Recession.

People learned how (and why) to save

With the threat of being laid off at any time looming, people stopped spending freely and started tracking where their money was going. Families started cooking more instead of eating out, and some even started growing food in their backyard to cut grocery costs. Another change brought on by the recession? People cut up their credit cards and worked on a cash-only policy. They also added more to their retirement savings and started itemizing their deductable tax expenses (http://goo.gl/6xH3D).

Creativity flourished…

While consumers were forced to make cuts, companies had to think of more creative ways to market their products and services. Since sales are harder to get and budgets are slashed sometimes by 50% or more, workers had to get to their bottom-line more creatively than ever before. (http://goo.gl/ft9z5) And this went beyond the workplace. Slashed personal budgets meant keeping refurbishing older clothes, doing home renovations by hand and getting creative in the kitchen.

…As well as small businesses

Did you know that college students can rent textbooks now instead of buying them? Where was that when I was in school! Websites offering this are everywhere, and a lot of students are taking advantage of it. Other businesses are profiting from the recession as well. Pawn shops and thrift stores are “reporting higher volumes of business and even a broadening of their customer bases.” (http://goo.gl/TuaWb).

People began to pursue their true passions

A while back, I read an article about a man who got laid off from a management job. Instead of searching for another similar position, temping or getting part-time work, he decided to intern for a politician. At 42, he was the oldest intern in the building. I found this so inspiring. He turned his recession layoff into an exciting opportunity for himself. And there are thousands of others who took the same path that he did.

We started to value what’s truly important

And it’s not money or a bunch of stuff, either. Your health, your family, and your children – they’re all priceless. And the recession reminded us of that. Sure, less money meant more stress. But it also meant more time with your kids, and pursing that career you always wanted to but never got around to. This recession forced us to re-evaluate our relationship with money, and that newfound stability has set a great foundation for the future.

Tags: recession, great recession, the great recession, recession anniversary, Julie Murphy Casserly, unemployment, saving money, emotion behind the money, emotion and money

There’s no doubt that many of us were financially strapped these past few years. We can thank the Great Recession for that. As the three-year anniversary approaches, I’d like to take a moment to reflect Read the rest of this entry »

The holidays are a fantastic way to teach your kids about money. Spending, saving, and giving responsibly are lessons all children need to learn.  Why not start with the holidays?

Introducing concepts of money management and instilling a good sense of fiscal responsibility should start at an early age, and be continued throughout a child’s life.  Below are some of the top money rules parents can teach their children during different life stages.

1. Pre-School

Yes, money patterns start during the pre-school years.  You can start talking to your child about money when they are two or three by explaining that everything costs money – from the food they eat, the clothes they wear, to the house they live in.  These talks need to go beyond the necessities too.  Explain that new toys, accessories or video games are things your family can live without. Introduce new toys to them a few at a time, rather than showering them with over-abundance.  This will help them get used to the fact that they don’t need a ton of toys to be happy. 

1. Elementary School

By the time your child is six or seven, you can start teaching them about prioritizing their money.  For example, when you are at the toy store, instead of letting them pick anything off the shelf, try giving your child five dollars and letting them choose something that fits within this price range.  For parents who buy their children anything and everything, the child will expect this later on in life too, giving them a sense of entitlement.  Ask yourself, “is this the reality I want for my child 15 years from now?”   

This is also the point to show your child that money is the result of hard work.  Work out a plan with a family friend or neighbor where your child will do housework or yard work for $5-$10 cash. Then give them the power to choose how they want to spend or save their hard-earned money. 

1. High School

At this point in life, it is critical to create a financial collaboration with your child.  Encourage them to get a part-time job to help pay for their car insurance, their gas or portions of the monthly car payment.   Children should be held accountable for sharing some of these costs with their parents.  Once they get that paycheck, show them how it should be dispersed — 1/3 goes towards that car payment, 1/3 goes towards their future college fund and 1/3 can be spent on whatever they choose. 

During this age, it’s also important to highlight the importance of living a quality life, rather than the quality of things that you own.  Help your children understand that material things like a brand new car when they turn 16, are often a source of immediate happiness, but sooner or later, this happiness fades and they will be left searching for deeper self-fulfillment.

1. College

Your child is an adult now. Have an adult conversation with them about their finances and make sure they understand how credit works.  Tell them about your experiences with credit card use – the good, bad and the ugly.  Once children are on their own, temptations will always arise and children in this age bracket will more than likely try to open a credit card to fund some of these temptations.  Explain how credit cards can bring a false sense of financial reality.  They make us less conscious of where our money is flowing.  Talk about how the constant struggle to earn cash to pay off debt can take a physical and emotional toll.