How To Give Your Children The Best Start In Life Financially

Teach Your Kids Good Money Habits

First Published Date: July 19, 2009

As the old saying goes “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” The same, or at least similar, applies to giving your children the best start in life financially. If your children are forever coming to you asking for money, it can be very hard not to give them a few dollars, especially if they have been well-behaved recently. However, this is something that should never become a habit. After all, you had to learn at some point that you cannot keep relying on other people. The message is that if you can save some of what you get from time to time, and find a (legitimate)  way of making to money it will stand you in much better stead for the future.

This is not a case of advising people to never give their children money. It is true that your children need to learn the value of money, but this is no more likely to be learned by giving them nothing than it is if you give them money every time they ask. All that you guarantee by withholding money every time is that they will one day start making money for themselves and rebel against everything you told them by spending like an heiress in a street full of boutiques. There is a sensible balance to be struck. If your child has a good reason for asking for the money, that scores a point. If they are not asking for much, that scores another. If they really do not ask all that often, then they deserve another point.

You can come up with your own points system, but do your best to make it fair while not being excessively flimsy. How likely is it that a child who knows they will get everything handed to them will grow up understanding that money needs to be earned. The old saying “Money doesn’t grow on trees” may be irritating, but it is also true. It has to come from somewhere, so it is worth encouraging your child – once they are old enough – to get a job which they can do on weekends earning just enough to pay for their leisure pursuits. This doesn’t mean you need to stop paying their way – it is even better if you top up what they earn with a little from your own pocket to show them that good behaviour is well rewarded.

There may seem to be some madness in the above stratagem, but rest assured there is method to it. Giving your child a decent appreciation of the benefits of working for money, a recognition that they cannot rely on someone to just hand it to them, and yet the reassurance that you will not turn them down if they really need help, is the strongest way of reinforcing the lessons of good financial behaviour, and your child will be more likely to thrive financially in times to come.

To streamline and minimize blog maintenance, I will be discontinuing maintaining the Canadapersonalfinancewebsite.com website (however, I will still hold the domain). I will gradually move all articles from this site to A Dawn Journal. This article originally published on the above website on July 19, 2009.

More Money Saving Tips

How To Save Money

First Published Date: March 21, 2009

We could all do with a little more cash in our lives. Be it due to rising energy costs, a desire for a big purchase or saving toward a holiday, there is always room for a few extra dollars. There are a few tips and tricks you can try to save yourself a little cash and invest it toward a better future.

To begin with, evaluate your outgoings. Look closely at the price plans you are on for energy and heating, as there might be a better deal available. Check comparison websites and if there is a saving to be made, switch immediately. Some people have reported up to $160 a year saving on energy bills purely because of this.

Next up, look at your home and cell phone bills. Again, there might be a cheaper tariff available. A neat trick is to telephone your current provider and inform them that you’re planning to leave and would like to cancel your contract. At this stage, you will be put through to a department – often going by the name of “Cancellations”, though they are anything but – who will try and woo you and persuade you to stay. They’ll offer deals on your plan that could save you hundreds of dollars a year, just to keep your custom.

Continuing along the same theme, check the interest rate you’re paying on any credit cards you may have. Many people remain with the same provider for years out of habit, never bothering to see if there is a better deal available. Nine times out of ten, there will be – apply for a new card with a better rating, transfer the balance and cut up your old card. Your monthly payments will reduce and you’ll be paying less interest.

With these things in check, you can move on to trying to cut your expenditure. One of the biggest, and often unavoidable, expenses is the price of gasoline. To begin, consult a website such as Gas Buddy, to find the cheapest gas station closest to you. These done, then try to fill up your tank on a Monday. Gas prices traditionally rise over the weekend and dip again at the start of the new week, with Monday being the cheapest. It might only be a small amount, but every little helps.

On more frivolous pursuits such as shopping, savings can also be made. One priceless tip to remember is that eBay is not just for used goods. Many big companies – such as IBM – run eBay stores as a way of clearing old stock. Many brand new items are available on eBay for huge discounts off their original retail price. While online and buying a new purchase, try the many comparison websites – like the aforementioned for credit cards and energy companies – to get the best price.

When it comes to health and beauty, you can also make savings. Most salons charge high prices, but will offer discount rates if a junior treats you or trainee stylist. This may sound risky, and no one wants to end up with bad hair, but a senior stylist will usually oversee the junior and if something does go wrong, they’ll fix it for free. You can also try making your own skin care products – a bottle of branded exfoliating lotion will cost anything up to $25, where a warm bowl filled with sugar and rubbed in firmly with a sponge will have the same effect.

Essentially, there are ways to save money on everything. Utilize the Internet, as it genuinely does offer some spectacular deals if you have the patience to look for them. In the same vein, learn to haggle when in store – many retailers price their items with mark ups that allow for negotiation. 99 times out of 100, you can find a discount on something – all you need is a little clear thinking and a large amount of patience.

To streamline and minimize blog maintenance, I will be discontinuing maintaining the Canadapersonalfinancewebsite.com website (however, I will still hold the domain). I will gradually move all articles from this site to A Dawn Journal. This article originally published on the above website on Mar 21, 2009.

Canadian Bankruptcy

Filing Bankruptcy In Canada

First Published Date: March 14, 2009

Sometimes, no matter how much one wants to prevent it, personal finances can spiral out of control. You can find yourself struggling to make debt repayments, worrying constantly about the future and what it may bring. If you ever reach the stage where you freeze in terror every time the phone rings or the doorbell goes, it may be time to face the state of your finances.

When it comes to personal debt, the word bankruptcy is particularly terrifying. To many, it signals the end of life as they know it, and as well as the financial implications there is something of a social stigma attached to it. Yet sometimes, if debts are substantial and you aren’t earning enough money to cover your outgoings, it is the only reasonable option to free yourself from the never ending cycle of debt. Bankruptcy is the last resort and should only be entered in to with the knowledge that all else has failed, but it’s part in helping resolve finance issues is irreplaceable.

In 2007, more than 100,000 Canadian nationals filed for bankruptcy, so you are not alone. If you have decided bankruptcy is the only option left available to you, you begin the process by filing for bankruptcy via a trustee for bankruptcy. To find one, check your provincial advice pages or even just check the Yellow Pages.

When you file for bankruptcy, an automatic stay is granted to you. This means that, during the bankruptcy process, your creditors cannot make moves to seize assets and should stop making collections calls.

For a first time bankrupt, the term of the bankruptcy is nine months. This increases if you have to go bankrupt more than once. At the end of the nine months, the bankruptcy is discharged. During those nine months, you are required to make payments to your creditors and to the trustee you petitioned for bankruptcy with. Depending on the size of debt, these payments vary, with a national standard of $200 per month for the nine months. You will also need to pay around $85 for financial counselling as a condition of discharge. At the end of the nine-month period, the bankruptcy is discharged and in all but a few rare cases the debts are erased.

Bankruptcy does not automatically mean you will lose all your asset s, as in most cases there are certain limits that you can own. For example, In Ontario, you can keep up to $5,650 equity in a vehicle, $11,300 worth of household goods, and up to a value of $11,300.00 worth tools you use to earn your living . Your trustee, who will advise the best course of action, which may involve selling items, makes the decision on any amounts over these for each particular area.

When discharged, the bankruptcy will remain on your credit file for up to six years. During this period, it may be difficult – though not impossible – to get credit. However, this should not be too much of a deterrent; as if you are in a situation where bankruptcy is the only option; your credit file is going to be damaged hugely anyway. At least with bankruptcy you gain a clean slate in six years, something that would be hard to do struggling to make repayments on any large debts.

Overall, if you have reached the end of the line and creditors are hassling you non-stop, bankruptcy may be the most efficient and effective method of getting out of trouble. If you are having difficulty paying your debts and/or considering bankruptcy, I suggest you contact a Canadian Bankruptcy Trustee licensed by the federal government to discuss your situation. To find a trustee in your area, search on Google or Yahoo using these keywords: Bankruptcy, Trustees, Your Area.

To streamline and minimize blog maintenance, I will be discontinuing maintaining the Canadapersonalfinancewebsite.com website (however, I will still hold the domain). I will gradually move all articles from this site to A Dawn Journal. This article originally published on the above website on Mar 14, 2009.

The World’s Top Richest People

World’s Top Ten Billionaires 2014

First Published: March 2014 ADawnJournal.com

Forbes magazine recently published its annual ranking of global billionaires. Microsoft’s founder Bill Gates is on the top spot, pushing down Carlos Slim, who was on the top last year. Here are the top ten global billionaires for 2014:

The Top 10 billionaires

Bill Gates ($76B)

Carlos Slim Helú ($72B)

Amancio Ortega ($64)

Warren Buffett ($58.2B)

Larry Ellison ($48B)

Charles/David Koch ($40B each)

Sheldon Adelson ($38B)

Christy Walton ($36.7B)

Jim Walton ($34.7B)

Liliane Bettencourt ($34.5)

Source: Forbes.com

Here are some highlights from the ranking:

– There were a record number of 1,645 total billionaires.

– Bill Gates ranked #1 in 15 of the last 20 years.

– Due to Facebook’s recent $19B accension of WhatsApp, its founders Brian Acton and Jan Koum became 551th and 202th on the list.

– The US continues to dominate the list (492 billionaires), then Europe (468) and Asia (444). Country-wise, China (152) and Russia (111) have the most billionaires after USA.

– Some new countries were added for the first time: Algeria, Lithuania, Tanzania, and Uganda.

– More than 30 Canadians made it to the list.

– About 1000 people dropped off the list and 16 passed away.

– 1080 billionaires were self-made, 207 were inherited, and 352 were partly inherited.

– A record number of 172 women billionaires (up 25 percent from last year) made it to the list. Total new 268 billionaires were added to the list.

Should You Give Your Kids An Allowance?

Kid’s Allowance Teaches Money Management

First Published Date : April 13, 2011 ADawnJournal.com

Prelude

An allowance is an amount of money you give to your kids on a regular basis to cover their expenses. Experts have always debated over whether kids should get an allowance or not. One group says giving an allowance teaches kids nothing and it might even ruin their finances in the future. Another group says an allowance teaches children money management skills (through responsibility and discipline) and prepares them to better handle their finances in the future. I believe in allowances and if used properly, it can be a great tool to teach your kids finances at an early age. Today, I will present my perspective and will provide you some tips on this debated topic.

Why Kids Should Get An Allowance?

Responsible parents look after the family and meet its members’ needs. An allowance helps to meets family members’ needs. An allowance is an example of parents’ responsibility. A lesson kids are practically observing right here – responsibility.

An allowance nurtures the children’s ability to think and act independently. Don’t expect them to always spend their allowance properly. The objective here is to make mistakes and teach them to correct themselves as they go along.

Once kids have their allowance in their hands, it tells them something very important – money is not unlimited. This reinforces the idea that they have to spend it wisely (i.e., it teaches how to best make choices between many things) once they know that each time they spend on something, they will have less than they did before. You will see a significant reduction in their “I want this” items. This is how kids learn the concept of “discipline” and “money is limited.”

At What Age Should Kids Get An Allowance?

Kids start showing coin recognition and interest in basic money concepts as early as four. Depending on your kids’ interest and your comfort level, parents can start giving an allowance as early as age three to five.

How Much Allowance Should Kids Get?

There is a common approach on deciding an allowance – a weekly allowance representing a total amount equal to $1 for every year for age. For example, a four year old would get $4 every week.

However, I think this basic approach will not work in most situations as there are many other allowance deciding factors coming into play. You should consider the following factors when deciding on an allowance:

·    Your Income – Only you know what you can afford to give and what you can’t.

·    Your Kid’s Age – As they grow bigger, the allowance amount should increase as well to cover additional cost kids need to handle every year.

·    What The Allowance Should Cover – Be clear on what it should cover and what not, and then add all expenditures to check if this allowance amount is realistic enough. A good way to do this is to make a list of all items you think their allowance should cover and discuss it with your kids; this ensures that no important items are missing and that your children are kept involved in the process.

·    Where Do You Live? – You may want to consider the neighbourhood you live in when deciding an allowance amount. Do you think a kid living in Red Lake should get the same allowance as a kid living in Toronto? I would keep this is mind while making a decision.

Allowances and Chores Should Not Be Tied

It is not recommended to link allowances and regular household chores. Chores are regular family responsibilities and should not be tied with allowances. However, kids can get paid for special projects for which you would normally seek outside help such as cleaning the backyard, painting jobs, etc.

Keep Clothing Allowance Separate

You may find some type of allowances, such as clothing allowances or book allowances, are not easy to blend into regular allowances. An easy way to handle this is to keep these separate. For example, give your children a clothing allowance in the winter for winter clothing, give them money to buy books when the needs arise, and so on.

Do Not Give an Allowance without Proper Guidelines

The basic purpose of giving an allowance is to teach kids money management skills. If you just throw some money at your kids without proper guidelines, instead of teaching them money management skills, it will teach them indiscipline and bad money management skills. Always give the allowance with proper guidance – show them how to spend it and break it down into small pieces, such as 10% should go to the piggy bank, 10% for a science magazine, 10% for charity, and so on.

Last Word

Money skills are not taught in school. Giving an allowance in a responsible way can open up endless possibilities to teach kids money skills and financial responsibility, and the lifetime results are immeasurable.