The Debbie Davis Blog

In an era of huge discretionary spending, learning how to manage money responsibly is one of the most important skills young people need for successful adulthood.  No matter how much or how little money your children earn as adults, they will need to know how to live within their means to avoid money problems.  An allowance gives your children experience with managing money, setting spending priorities, and budgeting for expensive items.  It not only helps them to appreciate the power of money, but also the limits and consequences of fiscal behavior.

When should my children begin to receive an allowance?

Your child needs to be old enough for money to be meaningful (or, as one parent put it, “old enough not to eat it!”).  Children should be aware that items in stores need to be purchased and that they need money to buy them.  They should be able to recognize different coins and know coin values, and they should have basic counting skills.  These skills are usually emerging by about the age of 5 or 6.

How much allowance is enough, but not too much?

“Enough so that your children can squander it, but not so much that you’ll be upset when they do,” advises Janet Bodnar, who also writes” Ask Dr. Tightwad,” a column about kids and money that’s syndicated by the New York Times.  That is, the children should receive enough to make some meaningful decisions about what is important to them, but they shouldn’t get more than they’re comfortably able to manage.  Research shows that, while children from higher-income families are more likely to receive an allowance, they don’t receive a higher allowance than other children.  The amount of a weekly allowance should increase with age.

What should the allowance cover?

That depends on the age and maturity of your children, the tasks you want to entrust to them, and the financial values you want to encourage.  Young children can manage “budgeting” for toys or discretionary items, but children may need to be about 10 or 12 before they are ready to budget for their own clothes.  If you want to instill the values of charitable giving and long-term saving for major items such as a car or a college education, your allowance structure and amount will need to take this into account.  Make a list of your child’s expected monthly expenses (including investments and donations), as well as sources of income (allowance, gifts, work for pay) to see if they’re in sync.

Should allowance be tied to completion of chores?

It is important for children to learn to earn money.  After all, in the real world, work produces earnings.  However, many parents feel that chores are the children’s contribution to the maintenance of the family and home, and there should be no pay for these tasks.  It seems less complicated and cleaner to keep allowance and chores seperate.  Differentiate between which jobs are not paid but rather are expected to be done to help the family, and which jobs may be done to earn extra money in addition to allowance. 

 - From the National Association of School Psychologists

Summer is here, and for many of you that means it is time to plan the annual vacation.  Sometimes planning a family vacation can give you a tremendous headache, especially since money is always an issue in today’s world.  Just remember that taking your family on vacation does not mean you have to break the bank.  I hope my travel tips can help make your vacation the best one yet!  These are tips my husband and I have picked up during our own family travels.

Summer Family Fun Tips: Your Guide to a Budget Friendly Vacation

First and foremost you need to set a budget and stick to it!  Vacations need not be expensive and you should never go into debt to take a vacation.

Look for vacation rentals - you can save a ton by renting a beach house or cabin.  Sometimes booking room for an extra family member can double your expenses, so do a little research on rentals before opting to pay a hefty price on hotel rooms.  Vacation rentals come with other advantages, like a living room and a kitchen.  Another great reason to look for vacation rentals is simple - you can save money on food expenses by cooking the majority of your own meals at the beach house or cabin.  I know, I know…cooking and cleaning up after your family does not sound like a great way to unwind, but opting for cereal and sliced fruit for breakfast and sandwhiches for lunch can leave more money for dining out for dinner! 

Airline Tickets - airline tickets get more expensive the closer you get to your vacation, so purchase them as early as possible.  One great way to compare prices and save money is to buy your tickets online.  I have found that purchasing tickets online can be a great way to comparison shop and you can sometimes even name your price.

Hotels - Although vacation rentals can be a great way to save money, I have learned that it is good to switch it up a bit.  A great way to save money is to do a little research before deciding on a hotel.  I usually book my hotels by checking the rates on the internet and then calling to check their quoted rates.  When you call, always ask if they have any specials.  You have to ask about discounts because they usually won’t volunteer these discounts unless you ask.  When you check in, always ask for a free upgrade.  A lot of people are not aware that hotels give free upgrades and it doesn’t hurt to ask!

Set your itinerary - Agreeing on an itinerary is important because adults and kids do not always consider the same things to be fun.   I wanted to do things that I couldn’t do at home:  visit historical sights, go snorkling, check out musuems.  Our children basically wanted to do what they could do at home: watch TV, play their Nintendo DS or swim in the hotel pool.  The best advice I can give is to compromise on this one.  Plus, the whole family might be suprised to learn that they actually enjoy doing some of the things they thought they would despise! 

Check out this website I found for more helpful family vacation tips!

http://www.YourPerfectFamilyVacation.com

You’re 50 and you’re already looking forward to what you’ll do 15 years from now.  You’ve dreamed about leaving your job at 65, vacationing in Tuscany, taking a trip around the world, or perhaps spending your afternoon on the golf course.  Or maybe you’re thinking about the next career you’ll embark on.  That’s the “new retirement” that many Baby Boomers must now envision.

Delay retirement age.

You’re likely going to have to work longer than you’d planned.  A 50-year-old who is just starting to save will need to save 65% of their annual salary to be able to retire at 65, according to calculations by T Rowe Price.  That’s an enormous number and extremely daunting.  But if you wait to retire until age 70, that gives you more years to save and fewer years that your savings will have to support you.  Also, delaying Social Security until then will give you the maximum benefit, helping to fill in the gap.

Add money to your IRA.

IRA contributions increased for 2008.  Those who are 50 or older can contribute up to $6,000 this year to a traditional or Roth IRA.  If you have enough time before you have to start making withdrawals, a Roth IRA may be the better option.  Compare for yourself at www.finance.cch.com.

Contribute the max to your 401(k).

Workers age 50 or older can invest up to $20,500 this year — that’s the maximum contribution of $15,500, plus a so-called “catch-up” of up to $5,000.

Don’t look for a “magical” investment

“They should not be thinking there’s something “magical” they can do with their investments to make up for lost time,” says Stuart Ritter, a certified financial planner at T Rowe Price.  Don’t put all your money into a gold fund or solar energy stocks, just because their markets are hot right now.  At age 50, Ritter says you should have about 75% of your retirement investments in diversified equities (the rest in bonds and short-term investments).  A Retirement Date Fund or Target Retirement Fund is a good way to put your investment strategy on auto-pilot.

Consider starting a side business.

A recent American Express survey found that 26% of baby boomers began their own business because they were financially unable to retire.

- Sharon Epperson

CNBC Personal Finance Correspondent

Budget bombs: your best intentions for wise saving & spending are easily sabotaged by any of these budget blunders.

1.  Cut out all the fun stuff.

All budgets should allow for entertainment.  Think about where your recreation priorities lie and add up how much you spend each month on those activities.  If the total is more than 10 percent (5 percent is ideal) of your total househould budget, it’s time to scale back.  But don’t blunder by eliminating recreation altogether or your best-laid plans will eventually self-destruct.

2.  Spend more than you earn.

It’s the cardinal rule of household budgeting — live within your means. In our instant gratification society, however, it’s easier said than done. Experts insist living with less begins with changing your spending philosophy. Learn to moderate, resist reckless spending and, above all else, don’t take another vacation until you’ve got the money in the bank. You’d be surprised how gratifying it is to bid farewell to the financial treadmill.

3.  Be hit or miss with savings.

5.  Pay only the minimums on cards.

There’s no better way to perpetuate debt — or waste your money — than to carry a credit card balance.  Making only the minimum monthly payments will cost you thousands in interest fees that could otherwise be applied toward savings or entertainment.  Send as much as you can to your credit card company each month.

6.  Live without emergency savings.

If you haven’t set money aside for a rainy day, you’re one job loss or illness away from financial ruin.  Most consumers should save between three and six months’ worth of living expenses in a liquid interest-bearing account.  Those who are selfemployed or work in a high turnover industry should have up to a year’s worth tucked away.

Do you wish you could save an extra $1,000 this year without downgrading your lifestyle?

Here are some tips to give yourself a $1,000 raise:

Look for discounted dinner entrees   

Saving money doesn’t mean you can’t enjoy meals at your favorite restaurants.  Discount deals can be found in the mail, newspaper or online.  ”Before you head out to eat, check out your restaurant online,” says Fatima Mehdikarimi, founder of the coupon web site: Theshoppingqueen.com  “Or, after you arrive, simply ask the manager if they have any special promotions.  Don’t forget to ask about promotions that are offered on other days or times.”  She notes that one restaurant near her home has a relationship with a local movie theater, so dinners can get a discount on an entree if they present a ticket stub.  “If you receive a “half off your entree” special or similiar promotion a couple of times a month, and each discount is worth $5, the savings will top $120 after a year.

Return unopened, unused items

Many times, extra money may be even closer at hand than you might think.  “If you’re looking for extra money, your closet or drawers are a good place to start,” says John Mruz, president of Juggling Duck Organizers in Morristown, N.J.  Even if you can’t find the receipt, the retailer may accept the return for a store credit. 

Look for extra grocery savings

There are several opportunities to save at the local grocery store, even if you don’t like to clip coupons.  When you enter a store, check to see if there are sales ads located near the front,” says mehdikarimi.  You might find a coupon for a purchase you were planning to make.  Just make sure the sales don’t entice you to buy items that were not already on your shopping list.  Another way to save is to sign up for store coupon clubs.  If you’re able to just save $4 off your bill during each weekly shopping trip, total savings would be more than $200 a year.

Check out materials from the library

The next time you plan to buy or rent a favorite movie classic, head over to your local library and borrow the video for free.  Many libraries stock DVDS — movie classics and newer titles — and CDs with generous borrowing periods.  If you borrow just two books or movies a month that you would otherwise buy or rent, you could save between $120 and $240 per year.

Bundle cable, phone and Internet services

If you can’t live without your cable, telephone and Internet access, but the monthly bills are getting uncomfortably high, consider bundling all of your services under one company.  Even if you don’t opt for a bundled package, ask your providers for a price break.  If you’re able to reduce your your total fees by $20 a month, that adds up to $240 a year.

Negotiate with monthly service providers

Once you get off the phone with your cable, internet and telephone provider, call your alarm company, lawn care person and any other monthly service providers to negotiate business prices.  Depending on where you live, you might even be able to negotiate prices.  Depending on where you live, you might even be able to negotiate natural gas rates.  Don’t get discouraged if the first person you speak with can’t approve a rate decrease.  “You might need to ask to speak with a supervisor,” say  Mehdikarimi.  If you save a total of $10 a month negotiating all your monthly services, you’ll save an extra $120 a year. 

Stash money for easier savings next year

By making these barely noticable changes to your lifestlye, you could save as much as $1,000 over the next year.  But how do you increase your savings in future years?  “Take the money you saved so far and put it into a high-interest savings account or mutual fund,” says Bill Billimoria who is a personal finance expert and  author of “On Golden Pond…Or Up the Creek.”  He suggests letting your cash work for you.  If you place $1,000 in an account that pays a 7 percent annual return on investment, the original amount will nearly double after 10 years.  That means twice the money for no extra work.  Saving money by doing “nothing” can be a very lucrative habit.

Hard times are forcing Americans to make changes every day.  These changes are difficult, they’re frightening.  But CHANGE brings a unique opportunity to live a bigger life.  From The Big Idea -Donny Deutsch

When you reach your must-change moment, will you have the tools and the guts to make a complete 180 and be the hero of your American dream?  Your playbook to success starts here.

Round 1: Your plays

-Feel the fear, and do it anyway

-Watch for the red flags that you need a change

-Turn interest into commitment

-Create a change-conductive environment

Round 2: Your Plays

-Give your goal a color and specific description

-Have change mentors

-Sometimes you just have to tell your brain to shut up

Round 3: Your Plays

-Begin at the end…come up with a plan by working backwards from your ultimate goal

-Immersion leads to conversion

-Find your wingman to give you tough love

-Don’t quit immediately..at first, straddle your old and new ventures

-Question whether what you’re doing is worth trading your life for

Round 4: Your Plays

-Do a “gap analysis”…where you are right now vs. where you want to get

-Determine your optimal selling strategy before you go all-in

-If the new venture can make money today…let it!

Most people would not drive a car or own a home without property and casualty insurance.  They would not go through life without life insurance to protect their loved ones in case of death.  However many people do not think about protecting their number one asset, their income.  Just stop and think what would happen to you and your family if you became disabled and could not work?  Who would pay the bills?  You may have enough money to meet short term needs, but what would happen if you were unable to work for months or even years?

Every year, 1 in 8 Americans becomes disabled.  More people lose their homes because of a disability than any other person.  The two leading causes of disabilities are back problems and heart disease.  Essentially everyone who needs their current income to maintain their lifestyle should condsider buying disability insurance.  Disability insurance can cover 60 to 80% of your salary, income tax free.  Only through disability insurance can you protect yourself from lost wages for long periods of time.

How to Minimize Your ID Theft Risk

When it comes to identity theft, you can’t entirely control whether you will become a victim.  But there are certain steps you can take to minimize your risk.

• Order a copy of your credit report.
• Place passwords on your credit card, bank, and phone accounts.  Avoid using easily available information like your mother’s maiden name, your birth date, or a series of consecutive numbers.
• Secure personal information in your home, especially if you have roommates, employ outside help or are having work done in your home.
• Ask about information security procedures in your workplace or at bussinesses, doctor’s offices or other institutions that collect your personal information.
• Don’t give out personal information on the phone, through the mail or on the Internet unless you’ve initiated the contact or are sure you know who you’re dealing with.
• Confirm that you are dealing with a legitimate organization before you share any personal information.  Check an organization’s website by typing its URL in the address line, rather than cutting and pasting it.
• Treat your mail and trash carefully.
• Promptly remove mail from your mailbox.  If you’re planning to be away from home and can’t pick up you mail, call your post office to request a vacation hold.
• Always shred your charge receipts, copies of credit applications, insurance forms, physician statements, checks and bank statements, expired charge cards, and credit offers you get in the mail.
• Don’t carry your Social Security number card; leave it in a secure place.  Only give your Social Security number when absolutely necessary.
• Carry only the credit, debit and identification cards that you’ll actually need when you go out.
• Be cautious when responding to promotions.
• Identity thieves may create phony promotional offers to get you to give them personal information.
• Keep your purse or wallet in a safe place at work; do the same with copies of administrative forms that have your sensitive personal information.
• When ordering new checks, pick them up from the bank instead of having them mailed to your home mailbox.

Motivation is important - not permanent.  I am frequently asked the question, “Why is it that some people get really motivated after listening to you, but after a while slip back into their old, negative ways?”  The question really is, “Is motivation permanent?”  The answer is no - but then neither is bathing.  Now, just in case you think I’m encouraging you not to bathe, let  me assure you that I believe in bathing.  As a matter of fact, I shower every day and I generally get a real good long one with lots of soap and shampoo.  I do some of my best thinking in the shower.  The reason I shower every day is very simple: There’s lots of dirt out there and if some of it gets on me I want to  get it off.  I believe it’s important to smell good - or at least not bad.

I apply the  same principle to my thinking and daily motivation.  There is a lot of “stinking thinking” available in life today and if I’m not careful some of it will settle on me.  If too much of it hits me, then the stinkin’ thinkin’ might turn into hardening of the attitudes, one of the most deadly diseases in America today.  Life has so many negatives and demotivations that it takes effort to stay motivated.  To remain motivated I’ve got to deliberately plan to take care of my thinking each day with a “check-up from the neck up.”  Each day I read and listen to something inspiring.  I also associate with people who are making a difference with their lives because we are influenced by our associates, either positively or negatively.  Message: Read something good, listen to something good, and associate with good people as often as possible.  Do these things and your thinking will remain good, which means that I will SEE YOU AT THE TOP!  -From Zig Ziglars, Ziglar Newsletter

Successful business leaders know that leadership requires being able to communicate effectively.

A recent study by Dr. Albert Mehrabian at UCLA found that the total impact of a message is based on only 7% of words used. This shows us that business professionals must recognize that verbal content is the language of logic - nonverbal communication rule!!!!

Next time you are in a face to face meeting with a team member or colleague, boss or even your child or spouse - try:

1) Face them directly - even turning away a bit signals lack of interest and makes the speaker shut down.

2) Use head nods to keep the speaker speaking…. studies show that nodding in clusters of three nods at regular intervals - people will speak three to four times more than usual.

3) Lean in slightly. Leaning forward shows you’re interested in what they are saying.

4) Remove barriers between you and the other person. Take away objects that block your view. Move the phone or stacks of paper - or better yet - come out from behind your desk and sit side by side.

5) Maintain positive eye contact - looking around or away from the speaker indicates you are not interested in what they are saying.

Try these tips to convey that your leadship is inclusive and you care… becuase you can’t make it to the top alone…