The SmartyPig Blog

Teaching your kids about budgeting and finance

One of the scariest statistics in today’s word is that of financial illiteracy. A few years ago a study came out testing different counties understanding of basic financial principles. The study contained three questions. Only 30% of Americans surveyed were able to answer all three questions correctly. Here is one of those questions.

Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”

A) true; B) false; C) do not know; refuse to answer.

For clarity’s sake – the correct answer is false. However, considering every single American who dies of old age will likely retire at some point and live solely off of income from stocks, bonds, savings, and real estate, it is scary that most people don’t know how to answer this question. The most likely culprit for their lack of knowledge is a lack of being taught proper financial principles in school and in homes.

If you are hoping to teach your kids budgeting and finance, here are a few pointers and important teachings to help make sure they can make smart financial decisions throughout their life.

Budgeting/Saving

Before teaching your children anything about stocks, bonds, or real estate focus on these basic principles. The ability to budget and save is virtually lost in a world where you can buy anything anytime you want with money that isn’t even yours, and not have to worry about consequences for years. While millionaires do make money through dozens of unconventional means, most developed saving and budgeting habits while young. These habits directly affected their ability to reach financial prosperity.

The Smarty Pig App is an awesome tool to teach both budgeting and saving. It makes it easy for kids to understand and save up for simple items and see the satisfaction that comes from doing so. Even if your kid is just looking for a new bicycle or the latest video game, let them use the app and develop a sense and habit of budgeting and saving.

Compounding Interest

Albert Einstein called compounding interest the “greatest mathematical discovery of all time.”  Teach your kids how money works. Teach them how inflation drives the value of money down over time (some great “when I was your age” stories will do the trick). Finally, teach them how putting their money away for a long time in smart investments can result in huge gains in the long run. Use Skittles or other candy to get the point across and help them to focus and listen.

Stock Market

The stock market is scary to a lot of adults, and many just avoid it. However, the stock market has proven to be an incredibly consistent builder of wealth in the long run. If parents don’t know about the markets they cannot teach their children. Take some time to read technical analysis books and gain an understanding of what drives the markets and how to safely invest. Most parents will find that they learn a lot of things they didn’t know and their own situation can be helped as well as their kids.

There are many other important things to teach kids about finance. Do not assume schools will teach them. Parents need to understand and apply smart financial principles and only then can they teach their kids the same.

Spencer is a graduate of Brigham Young University in Provo, Utah. He currently still lives in Provo doing marketing consulting for startups. He loves to write about entrepreneurship, passive income, and retirement planning, and currently contributes to several major sites in those niches.

Post-Recession Spend

 

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“People are placing more value on experiences, personal identity and what they have accomplished, and believe that tangible goods may not last forever,” Fiona O’Donnell, director, Mintel Reports, Multicultural, Lifestyles, Travel & Leisure, said in an MSN.com article this week. In 2015, the leisure and entertainment segments grew nearly 4% and 3%.  These and many other signs are showing that Americans are spending more money on experiences and less on material items.

Economists state this could be based on the change in post-recession spending. Americans are concerned they won’t always have “things” and instead purchase vacations and experiences to create lasting memories. Sadly, some Americans are still struggling with financial balance and a shocking 62% have less than $1,000 in emergency funds. I won’t argue that investing in experiences is a bad thing, but saving for those types of purchases with SmartyPig is key. You’ll come out with debt free memories!

Wishing you successful saving.

Sarah Foss, SmartyPig’s Media Mad Woman, SFoss@SmartyPig.com

Save Some Summer Cash

Summer

It’s June and that means, summer is here. Vacations top the list of most people’s favorite things to do over the warmer months. Yahoo Finance once again brings us a stellar list of ways to cut corners and save some dough this summer.

It’s not ideal for most planners, but waiting until the last minute to book travel can be a way to save money by shopping “fire sales” and other last minute travel-booking sites. Additionally, there are various sites to save money not travel methods and where you stay, too, like VRBO.com and imoova.com. These tips will save you some cash when it’s time to buy, but what about saving for that trip? Well, SmartyPig is the place. It’s easy and will keep you warm in December when you are craving that summer road trip.

Wishing you successful saving.

Sarah Foss, SmartyPig’s Media Mad Woman, SFoss@SmartyPig.com

Visualizing Your Goal with SmartyPig

“When it comes to mastering your finances, it’s not just about how much you earn, but also about how much you save.” Truer words have never been spoken. Well, in the personal finance space anyway. The bright folks at Credit Karma put together a list of ways to help you “effortlessly” save, so we had to read them, and boy we were excited to be included in that list. Because, saving can be tough so if you could make it easier, why wouldn’t you?

Credit Karma suggests three savings app to take most of the work out of reaching your goals and saving for the things you need or want. “SmartyPig can be a great tool if you want to save for something specific and visualize your goal.” SmartyPig allows you to set up auto contributions and receive gifts from your friends and family, too.  It’s a win-win for everyone wanting to save!

Thanks for the mention, Credit Karma.

Sarah Foss, SmartyPig’s Media Mad Woman, SFoss@SmartyPig.com

How Are You Using Your SmartyPig?

We asked users to tell us what they’re saving for right now, and here’s what we heard. We hope this inspires YOU to start a new goal!

A new T.V. for my “man cave”

New window for my 1924 home. My energy bills are out of control!

A vacation!

I’m not saving for anything particular. But saving just the same.

Our new baby. Probably daycare and diapers.

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