Financial Independence and Your Children – Part 2
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Teaching your children financial independence today will give them the skills they need for success tomorrow. Often we are raised to learn about a variety of other important issues but financial matters are frequently ignored. Our children grow up without fully understanding how to control their personal finances.
Our last entry discussed the importance of giving your children an allowance. It is easy to ask you for money but more difficult to figure out how much of their own money they need to get what they want. The next step to teaching your children financial freedom is to help them create their own budget.
If they have something they want to buy, give them a small notebook to tally their weekly allowance versus the cost of the item they want. When they spend a portion of their allowance on something else, have them enter it in the notebook. Your children will see how spending for a snack will take away from what they are saving for. They will also realize the value of saving when they see their notebook balance start to reach their goal.
This essential lesson will help your children understand how important it is to save for what they need or want. They will also have a feeling of accomplishment when they are finally able to save for what they wanted. A small victory such as this can fuel larger savings victories for your children in the future when they want to save for a car or house.
Tomorrow we will discuss more ways to teach your children valuable lessons about financial independence.
Tags:Financial Freedom Financial IndependenceFinancial Independence and Your Children – Part 1
We all want our children and grandchildren to have financial independence. You don’t want your daughter or son not financially independent and struggling with debt or to survive from paycheck to paycheck. But there is more to financial independence than building your own bank accounts and legacy. You need to make your children and grandchildren independent by teaching them the ways to attain financial freedom.
Our new series offers suggestions for teaching children about financial independence for a more secure, personally fulfilling future. The first way to teach your kids about money is to give them an allowance when they are young. Give them some cash to call their own and let them learn from the experience. While it’s easy to ask mom and dad for money for a toy or whim, it’s more challenging to save for it. Don’t be afraid to let your children develop a personal connection with money to learn from their victories and losses.
As children get older, you can even give them a pre-determined budget for necessary items such as school clothing. By giving your children a realistic idea of what everything costs, from essentials to luxuries, they can be better prepared for the future and how to spend their money wisely.
An allowance is a great way to learn about money. It is better to make mistakes about the wrong color shirt or a toy that doesn’t last than to buy a car or stereo as an adult that isn’t a wise purchase. Your children will learn how to protect their financial independence by getting their own weekly spending money and a bit of freedom.
Tags:Financial Freedom Financial IndependenceAchieving Financial Independence Frees You
Achieving financial independence may seem like a “pie in the sky” goal but what is the alternative? Being enslaved to debt and working for free to pay off your obligations at a much higher rate than they are worth.Every year more than $60 billion in credit card debt is charged off with over $2 trillion in revolving consumer debt being paid off. When you consider the amount of money spent on interest and fees for this debt, it is staggering.
When you are ready to use that credit card, think first. Is the interest charged worth paying it back? Do the fees add up to anything more than unnecessary additional expenses that rob you of extra cash? Do you feel comfortable living beyond your means and using credit to get by? If you answer no to any of these questions, you are already thinking for financial independence. Now you need to take action to free yourself of the debt that drags you down.
Tally your total debts. Figure out your current earnings. If your income is less than your output, it is time to get help from a financial advisor, debt counseling or financial planner who can show you how to make your money work for you. Get a copy of your credit report and figure out how you look on paper. Share all your information with the advisor so you can gain the necessary skills to handle your financial situation and achieve the financial freedom you crave. Every day you remain enslaved to debt, you cannot feel truly free.
Tags:Financial Freedom Financial IndependenceEl Cinco De Mayo and Five Ways To Financial Independence
On el Cinco de Mayo, we are thinking about financial independence and five ways to reach our goals. Though el Cinco de Mayo is about victory in battles that lead to the formal Independence Day in Mexico on September 16, many think of it as a freedom day.
A freedom day involves financial and personal independence, which are closer than you think. Here are five ways to get started:
Know what you owe. Get a handle on your expenses, bills, mortgages, loans, liabilities and everything you owe to everyone so you have a bottom line to work with.
Make a list, check it twice. Find out your assets, make sure you have insurance for them and list them so you know what you would need to replace in an emergency.
Show me the money. Figure out if you have savings anywhere and how much you would be able to put together in cash for a rainy day.
The “b” word we all avoid. Make a budget and stick to it. Include all your expenses including clothing, food and gas as well as savings.
Get passive. For once, getting passive can work for you. Find ways to earn passive income through affiliate marketing, creative endeavors and other business ventures on the side so you can generate extra income.
Financial independence is something we can all celebrate once a plan in put into action.
Tags:Financial Freedom, Financial Independence Passive Income
Is It Ever Possible to Be Financially Free of Parents?
Is it every possible to be financially free of parents? Despite the honest efforts of many people to get debt help and attain financial independence, they still wind up having to ask their parents for help.
This trend is starting to affect people in their 40s and 50s, who are moving back home to live with their aging parents. With rising credit card debts and a slumping economy sweeping the nation, self-sufficient adults are finding themselves without a job and with little or no resources to survive the crisis. As a result, they wind up taking assistance from their elderly parents rather than claiming bankruptcy.
Financial planners are concerned about both ends of this situation. First, the younger generation has to take more aggressive steps to avoid financial peril. Cutting back, saving money along the way and having insurance policies are all ways to avoid financial ruin. Secondly, the older generation is not always equipped to take on the burden of adult children in their 40s and 50s. Often these seniors wind up in financial difficulty themselves when they try to help their family. In fact, Karin Maloney Stifler, a financial planner, states these well-meaning parents, “jeopardize their financial freedom by continuing to subsidize their children.”
Further, a recent AARP survey revealed a quarter of Generation Xers (people between 28 and 39 years old) get financial help from family and friends. The same survey found more than half the people felt they were “financially independent”.
Clearly, the younger generation needs to learn more about the real meaning of financial independence and their parents may need to exercise some tough love to teach them about it so they can finally become financially free of parents.
Tags:Financial Freedom Financial IndependenceFinancial Independence So You’re Not A Servant To Debt
Financial independence cannot be achieved as long as you remain chained to high interest debts. If you remember your history lessons, you will recall studying about indentured servants such as share croppers who worked for free to pay off an obligation. When your hard-earned money is allocated to high interest credit card and loan debts, is there much of a difference?
If you are drowning in credit card debt, you are not alone. There are literally millions of folks in America with a total of over 2 trillion dollars worth of revolving consumer debt. More than 60 billion bucks of credit card debt gets “charged off” as uncollected annually. Debt is like an epidemic sweeping the nation and taking control of more lives everyday. Are you on this distressing bandwagon? If so, it’s take to get off and start reaching toward financial independence.
Look realistically at what you owe and how much you’re spending on interest. Do you feel sick now? If so, it’s time to start making major changes. Stop using your credit cards and start paying them down. Earn extra money by starting your own passive income enterprise so you can pay more toward your outstanding balances. Create a budget and live by it without fail. Review your expenses and trim the fat wherever you can. When more money goes out every month than comes in, it may be time for professional financial advice from an accountant, debt counselor or financial planner.
Financial independence is an attainable goal for everyone, regardless of how much debt you are in. Figure out the damages and work toward eliminating them for a financially free future so you don’t feel like an indentured servant.
Tags:Debt Management Financial IndependenceTeaching Financial Independence To Children
Teaching financial independence to children is a key element to success. Many of us grow up with a myriad of misconceptions about earning money and becoming financially free. Giving children essential skills at an early age will prepare them for a more secure future.
Education – financial independence depends on it. So how do you teach your children about money? Give them an allowance and let them learn firsthand. By kindergarten or first grade, most children are ready to receive weekly allowances. If your little ones get upset, they can get a few shiny pennies until they are old enough to differentiate money and the various amounts. However, don’t hold the older children back for the little ones.
Allowance amount vary based on the financial needs and age of your child. Guidelines include $1 per grade level, starting at first grade. You can also pay an allowance equal to half the child’s age. Pay the money on a regular schedule. Set up expectations for using the cash, such as saving 10 percent and donating 10 percent. You can also have your children put 10 percent in college savings then allow them to spend the rest as they see fit.
An allowance should be separate from chores, which should be performed regardless of pay. Parents can offer inspiration by paying extra for children completing chores outside their regular scope of daily responsibilities. This also teaches your children how to be enterprising and earn extra money when they need it. Avoid lending money ahead to your children – after all, we want to discourage credit. If your child needs to borrow money for an important reason, such as a school trip, make sure the money is promptly repaid on a schedule or withhold a portion of their allowance until the debt is covered.
You can encourage your children to save more by offering to meet their savings, sort of like their own little investment or pension plan.
Finally, if your child spends money on a toy that breaks the first time they use it or wastes their allowance on candy the first day then can’t go out on the weekend, these are learning experiences. Instead of “I told you so” let your child learn from their mistakes to become a wiser consumer.
Teaching financial independence to children starts with a weekly allowance and how its handled.
Tags:Debt Management, Financial Freedom Financial Independence
Financial Independence Through Real Estate – Part 3
The final entry of our financial independence through real estate series will discuss the formula to determine if a property is a good investment. To become financially free, you need to establish sources of passive income such as owning profitable real estate.
First, figure out the total income you will get when you own the property. Consider all rentals and sources of income and add them up. Now consider expenses of owning the property such as gas, electricity, maintenance, taxes and your mortgage. Some of these expenses will have to be estimated, such as utilities or taxes, because they vary from year to year. Subtract the expenses from the income to see your immediate profits for owning the property. Also consider that expenses rise but the value of owning property usually rises too. As you pay off the property, you will build larger equity and more wealth.
Real estate is a solid investment and provides an ongoing source of passive income as you build wealth. Choosing the right property can help you attain the financial independence you want. Working with honest real estate agents and financial planners can help you reach your goals for a financially free future.
Tags:Financial Freedom, Financial Independence Passive IncomeFinancial Independence Through Real Estate – Part 2
In the second part of our series about financial independence through real estate, we will explore types of real estate investors. There are several reasons to invest in real estate, depending on what your goals are and what you hope to accomplish financially.
The first type of real estate investors are savvy about finances, usually work with a financial planner or accountant and invest in properties for capital gains advantages. This type of sophisticated investing is a topic for later down the road, once you have established yourself as a financially independent entity with experience in real estate investing.
The second type of real estate investor is looking for cash flow. Quite simply, the investor wants to purchase property or properties that will yield an income, either by renting or selling the property. The third type of real estate investor is looking for a combination of the two.
When you start out, cash flow is the most important element and should be your focus. You need to buy a property that will not represent an immediate loss but a quick profit through rentals or a profitable sale. The property may require a bit of cosmetic work that you can do yourself to realize a profit in just a short couple of months. Working with a good real estate agent and carefully examining properties before you buy are key elements to success. Have the property inspected to make sure there are no hidden surprises that could cost you thousands of dollars after the sale occurs.
Tomorrow we will discuss the financial formulas to figure out of a property will help you attain financial independence through real estate.
Tags:Financial Freedom Financial IndependenceFinancial Independence Through Real Estate – Part 1
Financial independence from the wise purchase and sale of real estate has been the basis for many millionaires’ success. Our new blog series will help you understand the basic concepts of investing in real estate to you can get rid of debt and get on the path to financial freedom.
Today we will cover a few basic definitions to prepare you for the entries ahead:
-capital gain is the increased value over time realized on your real property;
-cash-flow is the income you make from real estate investments after you pay all the expenses;
-cash on cash return is the percentage return on your real estate investment, also called CCR;
-expenses are the costs related to owning real estate such as the maintenance, mortgage and insurance;
-gross operating income is the total amount of money you earn, such as from collecting rent or having a fee for parking or storage on the premises also called GOI;
-net operating income is determined by taking the gross operating income and subtracting your current total expenses;
-proforma is an analysis of how real property is expected to perform; and
-vacancy rate is the amount of time the property will not be occupied.
With a basic understanding of the terms used to describe real estate properties when you are investing, you will better comprehend our future entries about attaining financial independence through real estate.
Tags:Financial Freedom Financial Independence