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Glen Craig

12 Things Every Teenager Needs To Know About Money (And How To Teach Them)

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There Is More Free Money Than You Realize For College

Before Cell Phones - A Quieter Life

This is a guest post from Grant Baldwin, the author of Reality Check, a book about helping students transition into the real world. His new website, BrokePiggy.com, answers questions from teenagers about personal finance, savings, and all things money.

BREAKING NEWS…THIS JUST IN…SPECIAL ANNOUNCEMENT….

College Is Expensive.

Ok, so I figured you already knew that. I think most of us would probably agree that college is a solid investment that has the potential to pay big returns in the future, but like we already established…

College Is Expensive.

Statistics say that approximately two-thirds of college students have some education debt and that the average student loan debt is around $21,000. The inaccurate perception is that student loan debt is okay, because you are investing in education. But if you graduate from college with several thousand dollars in student loan debt and no way to pay it off, that’s a bad start to the real world.

So how do you graduate with as little debt as possible, or even better, no debt at all?

• FAFSA (Free Application For Federal Student Aid) – This is the single largest source of financial aid available, so you definitely want to fill this form out. The government will use this form to determine your eligibility for things like Pell grants and even some work-study programs.

• Scholarships – This is a numbers game. The more you apply for, the better your chances are of getting some. Think of it this way: if it takes you an hour to apply, and you get a $500 scholarship as a result, that’s a pretty good payday considering how little time you put into it. Last time I checked, McDonald’s wasn’t paying $500 per hour!

• Community College – I highly recommend getting some of your general education classes taken care of at a local community college. You will almost always find it to be much less expensive, and the classes can often transfer to a “better” school that you are interested in attending later.

• Work-Study Programs – Many schools offer the opportunity to have a part-time job on campus to help contribute towards the cost of your education. Check with the financial aid office of the school you’re interested in to see what opportunities are available.

• AP & CLEP Tests – These are two great ways to not only save money but to earn college credit while still in high school. AP (Advanced Placement) and CLEP (College Level Examination Program) are programs that allow you the opportunity to receive college credit for what you already know by earning qualifying scores on various tests.

• Live At Home – Living on your own isn’t cheap. While there is nothing wrong with wanting to leave the nest, spread your wings and fly, the airfare is expensive. You can save literally thousands of dollars by postponing your departure for a little longer.

Can you add any other ideas?

This series “12 Things Every Teenager Needs To Know About Money (And How To Teach Them)” is a community blog experience.  This post is only one of the 12 points in the series so to view the other 11, please visit the list of links below.

  • Money Doesn’t Grow On Trees @ Bargaineering
  • Two Words: Compound Interest @ PoorerThanYou
  • Delay Gratification To Succeed @ GatherLittleByLittle
  • Living On A Budget Isn’t An Option @ TotalCandor
  • Credit Cards Will Steal Your Lunch Money @ Prime Time Money
  • Should You Earn A College Degree? @ TheDigeratiLife
  • Spend Money Based On Needs Not Wants @ MoneyNing
  • Living On Your Own Isn’t Cheap @ Studenomics
  • Taxes Are A Necessary Evil In Life @ MoneySmartLife
  • Do What You Love, Love What You Do @ GenXFinance
  • Don’t Be A Tightwad: Give Generously @ CashMoneyLife

    • This is a guest post from Grant Baldwin, the author of Reality Check, a book about helping students transition into the real world. His new website, BrokePiggy.com, answers questions from teenagers about personal finance, savings, and all things money.

    Creative Commons License photo credit: Sister72

    Don’t Let Money Ruin Your Marriage!

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    Wedding Day

    You found that perfect person who completes you that you want to spend the rest of your life with.

    Now you are getting married!  It’s a big step and will be one of the biggest days of your life.  Sharing your life with someone is a wonderful, intimate experience.

    But are you intimate enough?  Have you sat down and had the money talk?

    Money talk, you ask?

    Yes, money talk.  Have you sat with your spouse-to-be and have a serious talk about our finances?  I mean intimate talk.  Telling each other about your money history, your money experiences, your debts, your plans, your thoughts about money and debt…a real honest talk.

    Do you know many couples don’t have this talk?  Did you also know that many marriages end because of money?

    Why don’t more couples disclose their money thoughts and history?

    This is very similar to why more don’t have a budget.  Some people are embarrassed about their past and are afraid of being judged.  Others don’t want to have to answer for their spending habits and have to answer for what they spend.  I wouldn’t be surprised if many just don’t think d talking about money.  Whatever the reason you aren’t allowing yourself to have a complete relationship by keeping money secrets from your significant other.

    Here’s what to discuss in your money talk:

    Credit Card Debt

    Let your partner know where you stand with your credit card debt.  Don’t be embarrassed.  You’re going to share your lives together and this includes your debt as well.  It’s better to get this out in the open now.

    What Credit Cards You Have

    Discuss what credit accounts you both have open.  You may find that you have way too much credit between the two of you.  This also helps to improve trust in that you don’t have any secret credit cards the other doesn’t know about.

    Student Loans

    Your partner has a right now they are possibly marrying into tens of thousands of dollars in student loans debt.

    Past Money Problems

    Talk about past issues you’ve had with money.  It’s ok that you’ve had bad money experiences.  Talking about your past money issues will help your future spouse understand your emotions about money.

    Bills You Currently Pay

    Show each other a list of everything you currently pay.  Again you should both get an idea of what bills are coming into the relationship.  You may be able to eliminate a lot or combine some (like cell phone accounts).

    How and Where You Save/Your Checking

    Disclose your savings and checking accounts and your current savings plans.  Discuss how you want to handle these once you are married.  Put together a plan for both of you to save.  Will you keep separate accounts?  Will you combine them?  Talk about it!

    Retirement Saving

    What type of accounts to you save for retirement in?  Get the paperwork prepared to add each other as beneficiaries on each other’s accounts.  Talk about how you both feel about retirement and how you will save for it.

    How Will You Handle Spending

    Do you want to come home one day and find a huge flat screen TV?  Maybe you do but its got to be paid for doesn’t it?  Discuss how you will handle purchases.  Put together a plan for how you will go about purchases and what kind of purchases you’ll both discuss before making.

    Who Pays What

    Who will be responsible for what bills?  Where will the money come from?  If you have two checking accounts which account will pay what?

    Credit Reports and Scores

    Pull your credit report and credit scores and share them with your partner.  This is full disclosure with your partner about what accounts you have and black marks you have on your report.  It can also be a great surprise in finding out how great your credit has been!

    Finally

    In order for you to start off right in your marriage you need to be honest and share yourself. Keeping secrets about money and finances from your partner is dishonesty.  I think you’ll find that when you talk to your partner you will build up your trust and this will lead to a greater, more intimate bond between you!

    Are you going to let money ruin your marriage?

    Creative Commons License photo credit: makelessnoise

    9 Ways To Save On Baby Costs

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    Baby Feet

    So you’re expecting?  Congratulations! A new baby is an exciting event in one’s life (how’s that for understatement of the year!).  In preparing for the little one’s arrival you’ll start to think of all of the things you are going to need for the baby as well as the costs!  But it doesn’t have to always be expensive.

    Here are 9 ways to save on baby costs:

    1) Shop at wholesale stores

    Places like BJ’s, Costco, and Sam’s Club will be your friend when it comes to shopping for your baby.  We love the big boxes of diapers and wipes that we get at BJ’s.  They also have great deals on car seats and strollers from time to time.  Do your homework on what you expect prices to be of course, but we find that things like diapers are always worth getting at a wholesale store.

    2) Reach out to friends, family, and co-workers

    If you know anyone else who had a baby before you then talk to them about what they have.  Not only can they give you some practical advice on what they bought but odds are they have a ton of stuff that’s relatively new that they would be happy to give you!  Baby stuff takes up space and parents love to clear out the clutter.  We’ve gotten tons of clothes (it’s great when you can be clothing kids close to free), toys, bassinet, high chair, swing, and much more from friends and family.  Sometimes it was to keep while others said just give it back when we’re done.  Understand that many items will be used for a baby for a few weeks or months and will still be like new!  Heck, there was a time when we had to rush to put our little guy in clothes before he outgrew them.  Seriously, reach out to friends, family, and co-workers!

    3) Check Craigslist and local Mommy forums for toys and furniture

    Remember my point above about parents wanting to get rid of clutter?  Same idea here.  A parent buys X for their baby, uses it for a couple of months, and now it sits in the garage practically new.  We picked up a huge toy chest for $25 that originally cost about $75.  It looked like new and the Mom was more than happy to have us take it off her hands.  Bargains like that are all over the place!  You want to be careful with something like a crib or anything that the baby would be supported in to make sure it’s fully intact and has all the parts.  Safety first!  Bargains second! (Car seats may not be a good idea to get used as they wear out over time).

    4) Breastfeed

    This one is a personal choice for sure.  But by breastfeeding you don’t have to buy formula!  Plus it’s natural and better for your baby.  But what about a pump?  First, you may not need one, it depends on your situation.  Second, you could rent them out if needed or possibly you may have a friend that doesn’t need theirs anymore.  My wife bought her pump when her daughter was born.  It was well worth the money as it was used for our son and will be used for the little one on the way.

    5) Set Up a Dependent Care Flexible Spending Account

    If your employer has this option you can set up flexible spending money to be taken out of your paycheck pre-tax for child care expenses.  If you already have a plan but re having an additional child you can make flexible spending account changes to account for costs on the additional child.  You then apply with a receipt to get the money back.  The benefit here is this money isn’t taxed!  The limit is $5000/year when I last checked.  That’s a lot to not be taxed.

    6) Set up Health Care Flexible Spending Account

    Same idea as dependent care but this can be used for things such as prescription medication and doctor’s visit co-pays.  Check with your employer for the contribution limit.

    7) Set up a 529 plan for the little one

    A 529 plan doesn’t only save for college in the future.  Many states offer tax benefits now for money you contribute to a 529 plan.

    8 ) Sign up for a baby registry

    I’ve heard parents-to-be say that they don’t want a baby shower; that they don’t like the idea of a registry.  But the truth is this is one even in your life that people genuinely want to help you start off on the right foot and want to contribute to your child’s well-being!  You don’t know who may be planning a surprise shower for you or who wants to send you a gift.  One thing they’ll ask about is a registry to get you something you need.  You don’t have to get a baby registry.  But it could also leave with a TON of onesies, bibs, and clothes as gifts rather than items you really need (nothing wrong with onesies, bibs, and clothes, but there comes a point where it too much).  Maybe your aunts and uncles will chip in to get you a crib?  Perhaps your college roommates will get together to buy you a car seat?  You don’t know!  Give them the option.  Also, most places that have a registry make it very easy to return gifts.  You’re going to find that you have extras you don’t need or items you thought you needed but don’t use.  We had a registry and were still fortunate to get two car seats!  We returned many a bib that we never used too.

    9) Check product forums and sites like Amazon for reviews

    If I’m making a big purchase I scour the web for product reviews!  I want to know what everyone is saying.  I’ll try to get as much information as I can.  I want to know the pros and cons of an item from people who are not salespeople in the store.  There are a ton of choices out there for expecting parents and it can be a daunting task trying to figure out what is best.  Do your research!  You may find that for some items spending a little more will save you in the long run.  I’m thinking about products like strollers which take a lot of abuse.  Amazon Bonus: They now have a program called Amazon Mom that offers discounts and free Amazon Prime for a time.

    There you have it! 9 ways to save on your baby costs.  Can you think of any more?

    Creative Commons License photo credit: lepiaf.geo

    No Job Is Below You

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    Northland Foods '70s Interior
    When I was a teen I worked at a supermarket (I actually worked there a loong time).  One day I ran into a friend’s dad woo had his own butcher business.  We chatted and he asked me if I worked.  I sheepishly told him I worked at a supermarket like maybe I was a little ashamed.  With all seriousness he no, it’s not what you do but how you do it!  As long as you put your all into your job then that’s all that mattered.  This took me back.  One, because I didn’t expect such a serious answer from a casual acquaintance; and two, because it really struck a note with me.  He was right.  So long as I knew I was doing my best and putting everything into my work then I had no reason to be ashamed of what I did and every reason to be proud of myself.  I would go on to get many promotions at that supermarket and became a jack of all trades in the store.  I worked as cashier, stock, unloading the truck, head cashier, bookkeeper for the store to bookkeeper for the chain writing out expenses and doing payroll (told ya I worked there a long time).  I learned a lot from that supermarket job!  From time to time I have to remind myself of that conversation but I still try to take the point to heart and do what I do to the best of my ability.

    On the other hand, I’ve seen people look down on some jobs as though they aren’t good enough for them.  Granted, if you have the skills and knowledge to do one thing then do it.  But I’m talking about folks who are hurting financially and continually complain that they hate what they do and can’t make ends meet.  They don’t have overly technical jobs that require a specific specialization.  But they talk like doing something “common” is no good for them.

    If you recall my wife has been working a few hours on the weekend doing test prep at a private school.  She doesn’t get paid nearly what her qualifications should demand but the reality is we can use any extra cash we can get and she’s good at test prep.  Some years ago I used to help out with a friend’s entertainment business where I learned to DJ.  Many days were fun but many weekends were full of work!  A four hour party could easily turn into 6-8 hours of work with travel and carrying and setting up the equipment.  It was very different from the desk job I have but it was good money for weekend work (I might even try to jump back into it).

    Know what? Those jobs until the wee hours of the morning paid off over time as they helped me afford my first car.  My wife’s test prep work helps with some extra cash to pay for groceries and such.  Some weeks we don’t have to dip into the ATM.

    Point is, if you need the money no job is beneath you.  Hard work is hard work no matter what you do.  If it helps you make ends meet or put some extra cash in the bank that’s great!  Sitting back and complaining about how hard things are will not help you.  You need to go out there and do something about it.  Life isn’t always ideal and sometimes you have to eat some humble pie and do something you don’t want to.

    So if you need some extra dough go out and do something about it. Don’t worry about what others might say about you, just concern yourself with whether you are doing your best!

    What do you think?

    Creative Commons License photo credit: afiler

    What Is A Ponzi Scheme – In Simple Terms

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    With all of the talk about Bernie Madoff heading off to jail for a few years (a century or so) the thought on a lot of people’s minds is How did he do it? and What is a Ponzi scheme?

    I came across the post Explaining the Ponzi Scheme to a Fifth Grader recently.  I think the explanation pretty much nails it! Here it is:

    Say you went to your sister and told her, if she gives you a dollar to invest today, you will give it back to her on Tuesday next week and she will get $1.25. Then you go to your other sister and tell her the same thing only you will give her $1.25 Wednesday. Then you go on to your dad and every person you know and tell them the same thing. As you’re going around asking for money from other people you know, you give your first sister her $1.25 and she’s happy to have twenty five cents extra just for letting you invest her $1. So she says, why don’t you keep my dollar and invest it some more? So you say, OK.

    But the thing is, you weren’t really investing it were you? You were just using other people’s money to make it look like you are earning money for them. Do you see how you will eventually run out of money especially if they all ask for their money at the same time?

    So she answers, Yeah, but can’t I just ask more money from more people? Yeah, you can do that but what if you ran out of people to ask and also ran out of time? That’s what happened to Bernie Maddox and that’s why he’s going to jail.

    She then said, but they said he still has millions of dollars and he’s not really in jail. True.

    About $68 billion lost summed up pretty nice!

    The are a couple of lessons in this:

    Know what you are investing in AND There’s no such thing as a free lunch!

    You have to know where your money is going.  If not then you are asking for trouble.  From what I’ve been hearing people were throwing their money at Madoff so he could invest it.  They didn’t care how he did it so long as they got back huge returns.  I feel horrible for those people who lost their retirements and for all of the charitable organizations that were hurt.  But you have to ask the big questions and in this case the questions is Where is the money going to get those returns?!?

    It may not be fun learning about personal finance and investing but a little knowledge goes a long way.  Sure it’s fun to say you’re getting 15% every year on your investment but you have to questions how!

    Am I being too harsh?

    I don’t mean to be.  These people were swindled and hurt!  The whole situation bothers me.  It seems there’s no real accountability with Wall Street any more.  There were warnings going back a decade about Madoff’s “investments” that went ignored.

    Here’s a little lighter side that I also picked up from AMoores (where I saw the simple Ponzi explanation):

    How do you feel about it all?