Five Money Management Tips

Five Money Management Tips | download free pdf
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IshaJohnson,United Kingdom,Professional
Published Date:31-07-2017
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Chapter 1 Your Family, Your MoneyFive Ways to Teach Your Children the Value of Money It is noble and good to teach your children that money cannot buy happiness. It is also noble and good to teach them enough about the value of money to empower them to succeed at whatever they choose to do in life. Here are some tips to help you teach your children the value of money. 1. Provide a modest allowance. Giving your children a small weekly or monthly allowance that they can spend as they wish will help them learn the value of money. If your wallet is always open for them, they’ll never appreciate what it means to budget or save. 2. Let them buy their own Xboxes. You will likely shower your kids with toys and gifts as they grow, many of which have genuine health benefits—like bicycles, skateboards or skis. There will be some things along the way that you and your children may disagree about their appeal, like video gaming systems. These are valuable opportunities to teach your kids about money. Let them save their allowance and work for the money to buy what they want. If you hire them to do chores, be sure not to pay them more than the neighbors would pay—the goal is to teach them the value of money and if you cheapen it, they will 3. Encourage them to make donations to charity. If you expose your children to genuine poverty and help them see how a small amount of their money can make a difference for someone who is struggling, it will help them not only appreciate the value of money, but adopt a kind and generous attitude. 4. Help them open a bank account. As soon as your children are ready, help them open a bank account. Then, they can begin to earn interest and understand how the financial system works. Don’t do it before they are eight years old. They won’t be able to understand the concept of a bank holding their money. Don’t wait past their twelfth birthday since teenagers have a dangerous ability to dismiss and ignore their parents. Do it while you have maximum influence and they are ready to learn. Make sure they learn how to make deposits and withdrawals all on their own. 5. Involve them with college savings. Even though your kids should contribute to their college education expenses, most parents recognize that the high cost of college effectively puts this burden on the parents. Open an account for each of your children and make contributions to each one equitably. Show them how their fund is growing—and how it compares to the cost of the education they want. Don’t put this money in their name unless you have extraordinarily high confidence in their judgment. You’d hate to see the college fund become a beautiful new car for high school or a frozen banana stand on the beach after high school graduation.Twelve Free Things You Can Do With Your Family Quality family time doesn’t have to be expensive. In fact, it can be free Consider these activities you can do with your family that can be absolutely free: 1. Visit the library. Not only is this activity free, you can help teach your children the value and fun of reading. If you haven’t been in a while, put this one on the calendar right now. 2. Go to the park. In a world of Xbox and Wii, there is no better way to show your kids what it’s like outside than to take them to the park. Your kids may be surprised at how much fun they can have without a screen. 3. Go to church. Even if you don’t usually attend, you’ll find yourselves welcome at virtually any church, mosque, synagogue, temple or other house of worship. Expand your cultural horizons and help your family appreciate and celebrate cultural differences. 4. Go for a walk. It doesn’t cost anything to usher the kids outside and just take a walk. Walking is great exercise and any time with your kids is quality time. 5. Visit a historical site. Not far from your home there is almost certainly a historical site —in fact, there may be many—just waiting for you to visit. Most are just landmarks with a short story. Visiting such a marker and then following it up with some simple internet research is a fun way to help your kids learn to use the Internet responsibly. 6. Go to the beach. Even if you don’t live near the ocean, a sandy beach along a river or beside a lake can be just as much fun for kids. 7. Build a snowman. This may not be an option everyday—neither is the beach. Your kids will never forget the time mom or dad helped them make the world’s biggest snowman. 8. Visit grandma. The relationship between grandparents and grandchildren is almost magical. Foster that with plenty of visits. 9. Attend community events. Most communities have a variety of events that happen every week at no charge, from concerts to book readings. There is always something happening. Make sure you’re on the email notification list for the community centers with activities near you. 10. Play a game. It won’t matter what game you play with your kids, from Xbox to Chutes and Ladders, your kids will cherish their memories of the times their parents played with them. 11. Just listen. Be there for your kids. Really be there. If you take the time to talk to them, especially your teenagers, you’ll be surprised by what you learn. They’ll appreciate the time as much as you will. 12. Play a sport. Take your kids out for a run, play basketball, kick a soccer ball around the yard, whatever fits their taste and ability do. Not only will you burn calories and teach them to do the same, you’ll have more fun than doing your workouts alone.This is a short list to get you thinking, but there are an endless number of things you can do for fun with your kids. Most will be more fun for them than going to the mall and they’re all better on your pocketbook.How to Create a Shared Financial Vision with Your Spouse Ideally, even before you get married you and your (future) spouse will sit down and talk about your vision of the future together. A centerpiece of that vision of the future should be related to financial things. Even things you may not consider financial, have deep financial implications. Use this article as a guide to help you harmonize your view of the future now to keep your relationship strong over the next 50 years. 1. Will you own a home? Take time to describe the type of home you’d like to have. Discuss the city and even the neighborhood where you’d like it to be. Talk about how much you’ll spend on your home. 2. How many children will you have? This decision may have already been made, but be sure to confirm with each other what you plan to do. Don’t let financial considerations determine how many children you have, let the number of children you plan to have guide your financial planning. There is always a way. 3. Will someone stay home with kids while they’re young? It is important to talk about your careers and how you’ll manage raising the kids. Specifically talk about how you’ll manage your roles as parents, providing for and caring for the children. 4. How much more education will you and your spouse pursue? You may be forty years old and still thinking about finishing college or going back to school for a graduate degree. Spend some time understanding one another so that you appreciate each other’s individual goals for education. 5. How much responsibility do parents have for their children’s college education? Some parents feel that their children are on their own after age 18 and others feel like helping their children through college is their responsibility. Still others help their kids all the way through graduate school, even if the kids are married. Make sure you’ve talked about your view of a parent’s responsibility for a child’s education. 6. Is debt to be avoided morally? Some people approach debt with purely practical thoughts. Others view debt as morally wrong. Be sure you and your spouse have talked about your views about debt so that you can develop either identical or at least mutually respectful approaches to borrowing money, using credit cards, etc. 7. What sort of cars will you drive? This seemingly trivial question may have a greater impact on your ability to achieve your other financial goals than any other question in this article. If always driving new cars is important to you, that will have implications. If you are content to drive old cars, that will have different implications. 8. Where and how often will you vacation? For many people, photos of family vacations are prized possessions and the memories are cherished treasures. For others, travel is a stressful burden. Talk about your view and how you’ll approach family vacations. Be sure to consider, at least briefly, how the dynamics of vacations will change as your children leave the nest. Will you expect your children to visit home with their families at the same time each year or just pop in when they can? 9. When and where will you retire? Not only do you need to decide when and where, but also how you’ll retire. What do you want retirement to look like? With careful planning, you may be able to retire much earlier than your peers. Some people can’t imagine retiring—some never do. Talk about what’s important to you. As you talk about your financial future together, your goal should not be to persuade your spouse of your view so much as it should be to really understand how your spouse feels about these issues. If you can both listen and understand where the other is coming from on each issue, it will be much easier to eventually reach agreement on a shared vision. With a clear, shared vision in place, you’ll want to create specific long-term goals for realizing the vision. Buying a home will require a down payment, helping the kids with their college expenses will require college savings, retirement, too. As you look at the big picture, start developing the specific, actionable and measureable goals that will allow you to realize your vision. Then comes the hardest part. You’ve got to develop the short term action plan—the budget—that will allow you to achieve those goals and realize your vision.My Marriage Is On The Rocks; We’re Always Fighting About Money. Help Fights about money predict divorce better than any other measure, according to one study. The first place to start in your marriage is with an agreement that your marriage and your relationship are more important than money. Now, let’s talk about some ways that couples can work on finding agreement about money in their marriage: 1. Start with a broad vision. Seek to find common ground for a shared financial vision of the future. Don’t worry about today at all in this conversation. You are seeking to find shared values about the future you’ll build together. Big questions like whether or not you’d like to own a home, what retirement might be like, and whether you’ll both work or whether one will be a breadwinner and the other a homemaker. It is important for you both to be honest with each other. While it might have been nice to have this conversation before you were married, have it now before things get worse. 2. Write down your shared vision. You’ll be surprised at how hard it is to write down a description of your shared vision. As you talk, you’ll often fall into the trap of hearing what you want to hear. The act of writing it down and getting agreement that what is written represents a shared vision will be critical to moving forward together. 3. Take a break. If creating a shared vision of the future was stressful and painful, take a break for a day or a week or even a month. Remember the primary goal is to build a happy family not a fortune. 4. Set goals. Once you have a shared vision and you’re ready to tackle more financial conversation, try to set some specific long term goals. If your shared vision included paying for the children to go to college, set a specific goal for saving for their college. Set savings goals for retirement, for a home purchase, for your careers as you envision them. Be specific but focus on the long term and not today. Do not fight over who spent more for lunch today 5. Take a break. If you have written down some specific long term goals, you’re doing great. That is huge progress. You now have a shared vision and specific goals. If you’re having fun now, keep working, but if this is hard work and stressful, take a break for a few days or even a few weeks and come back to this when you’re ready. 6. Review. Now that you’ve had a chance to create a shared vision and specific long-term goals, review these together. Make sure that you are still on the same page. If doubts and concerns have arisen, deal with them. Remember that you value your marriage more than money. 7. Create an action plan. This is where the rubber meets the road. It is time to start talking about how you spend money today in order to accomplish the goals and bring about the shared vision. It is reasonable to say that we’ll take six months or a year to live out a dream—backpacking around Europe together, living in Colorado skiing in winter and hiking in summer, living in Mexico near the beach creating memories that you will cherish together forever. That said, it wouldn’t be wise to borrow the money to live for a year. If you’ve got it, spend it in a way that will bring you together. Then develop an action plan for accomplishing your goals and realizing your shared vision of the future. 8. Build a budget. A workable action plan likely includes something that looks an awful lot like a budget. If one of you objects to the term, call it something else. Spending guidelines, savings targets, discretionary spending limits all accomplish the same thing. Find language you can agree upon and then begin living by your budget, to realize your shared vision. 9. Remember, your marriage can still work even if you can’t make a budget work. Focus on your goals. Nothing is more important to the happiness of a family than the happiness of the marriage. Find your shared vision for the future and work together to bring it about. Once you’re fighting for the same thing you’ll stop fighting over the same old thing.Five Money Management Tips for Teens If you have teenagers, you have plenty to worry about, I understand. I’ve been there. As you try to have your last and lasting influence on them as they race toward adulthood, you’re worrying about sex, drugs, alcohol, college and so much more. Add money to the list. Here are some tips to help you teach your teens to be financially responsible adults: 1. Get a job. Teens have plenty to do these days, with school, sports, music lessons and all the rest. It may seem like a terrible use of time to have your teens work, too, but a job may provide some of the most valuable education they’ll get before they leave home. Having their own money—money you didn’t give them—is good for both parents and their teens for helping them to establish independence. 2. Open a checking account. You may need to cosign, but if your teens don’t have a checking account by age 16, help them get the account opened so they understand how it works. Take time to explain basic concepts like how to keep the register current, how it takes time for checks to clear so money may already be gone, and how to reconcile bank statements at the end of the month. 3. Open a separate savings account. Help your teens understand how to save, by helping them to open an account and put money aside for things they want to buy—this may require you to break your pattern of buying whatever they need. 4. Get a credit card. If your teens learn to manage a checking account successfully, opening a credit card account with a small limit and likely with a parent as a cosigner is a logical next step. It may both serve to give you comfort that your teens have some emergency money with them at all times and that they are learning to be responsible. It is important for you to monitor the usage, to see what your teens are buying and most importantly that they are paying the bill in full each month. Your goal is to teach your kids to be responsible adults, not to help them establish credit. Watch closely to ensure they don’t run up bills they can’t afford. 5. Prepare for college. Encourage your teens to plan and prepare financially for college. Most teens are in reality going to be responsible for some costs in college, even if it is just the money for socializing. Help them to set aside some cash and plan ways to earn money either during the summer or during the school year once they leave home. By working with your teens to open and operate bank and credit accounts and to work a part time job will help them as much as anything else you can do to become productive adults. Once they go away to college, your opportunity to coach and train will be largely gone, but you’ll still be their primary resource for money. Make sure they understand how money works before they’re gone.How To Get Your Kids To Work Like You Did Some parents who grew up in a world where they were expected to earn their own spending money as teenagers feel disadvantaged by the experience and then seek to deprive their children of the same privilege in hopes of helping their kids get ahead. What a disservice We live in a cruel world where people are universally expected to be productive members of society. Too many kids today finish college without having had any real work experience and don’t know what it’s like to show up to work on time, take direction from a supervisor or to be responsible for accomplishing a task by a deadline. Chances are that you worked as a teenager, babysitting, waiting tables, delivering newspapers, or mowing lawns. Maybe you hated it. But the experiences of work helped to make you the productive part of society that you are today. Encouraging your kids to earn their own spending money teaches them the value of money and how to be good employees. The key to motivating your kids to take responsibility for earning their way in the world is to limit the amount of spending money you give them. It isn’t a bad idea to give your kids a modest allowance. It’s best if the allowance is tied to doing chores around the house. Even then, be sure to limit the amount of money you give your kids. The whole idea is to leave the kids wanting more money than you give them so they have the desire to earn some money on their own. It seems unwise to give teenagers exclusive access to a car for which they have not paid. If you choose to give your teens cars, consider requiring them to be responsible for the insurance, gas and maintenance so that they learn responsibility along the way. In most cases, it would be better to encourage them to save for a car or simply use public transportation. If you dare, you can also let them borrow your car—so long as they gas it up for you once in a while. The more pressure teenagers feel to earn money for their own expenses, the more responsibility you are teaching. Some parents worry that they are depriving their children of valuable study time and that working will lead to lower grades and fewer opportunities in the future. Of course, there needs to be a balance, but a college graduate with straight A’s through high school and college who has never had a job will be at a great disadvantage in the workforce. Similarly, a high school graduate whose grades are not good enough for college will be at a great disadvantage in the workforce. Help your teens find the right balance.How To Make Family Vacation Memories That Last On A Budget Family vacations do have an important purpose. Really. They help to bind families permanently with shared memories of great experiences. A week in Disney World, Hawaii or Paris would certainly do it. Can you create powerful memories of a shared experience without spending as much as a car costs to do it? Absolutely yes. Around the world there are national parks organized by national governments (modeled on National Parks in the United States) where families can stay in their own tents (or RVs) for 15 per day or less. Some National Parks feature low cost cabins or more comfortable lodge accommodations at reasonable prices. Once inside a park, there will be plenty to keep you busy for a week. All parks feature nature trails of varying difficulty, some of which will challenge even the heartiest and others that can easily accommodate a stroller or small children. Wildlife abounds in the parks. Bring your camera to get photos of the scenery and the critters scampering over, around and through it. Most parks feature places for fishing. Basic equipment from Wal-Mart and required state licenses add up, but most families would find fishing fits the budget—especially if you eat what you catch. The lakes and rivers in the parks also provide opportunities for boating. If you don’t have a boat, you may be able to rent canoes or rafts in or near the park—be sure to check it out in advance. Many parks also feature historic sites that you can visit at no additional fee with your family. Tour guides will explain the history and significance of the site. Junior Ranger programs available at some parks will also keep your school age children learning and having fun during their visit. A quick internet search for national parks and the country you hope to visit will provide instant resources for a low cost trip. One challenge for enjoying a trip in a national park is to have the right equipment for the weather. Parks like Yellowstone in Montana and Wyoming will be cold at night even in the summer. In addition to a tent, you’ll need warm sleeping bags and equipment for cooking your food. You’ll want to start planning your trip early. Make reservations for the campsite you want—some are very popular and are reserved well in advance. Instead of saving up for the trip each month, as you prepare, you may want to buy some of the gear you need so that by the time the trip comes, you’ve got everything you want without a big balance to pay on a credit card. The actual cost of the trip, gas, food and park fees will be quite modest (at least compared to a Caribbean cruise). Depending on your lifestyle, you may find that because so many things are free inside the park that you’ll spend less on vacation than you do in a typical week at homeHow to Make a Family Staycation as Fun as a Family Vacation The financial realities of our times are that expensive family vacations will be rarer and more difficult for some families. If your family is in that situation, a staycation (a vacation planned at home) can be just as much fun as a vacation. Here are some tips for a fun and successful staycation: 1. Treat your staycation like a real vacation. Make sure that everyone in the family is free of all commitments, with no one going to work, no one going to school and no soccer games. You’re all on vacation. Dispense with as many chores as possible. Clean the toilets and do the laundry when you get back “home.” 2. Think of your home town as the destination. Get online and research all of the tourist destinations for your home town and vicinity. Focus on sites that you can visit cheap or free and places you’ve never been. Most native New Yorkers I’ve asked, say they’ve never visited the Statue of Liberty. Your town likely has sites as important to your town as the Statue of Liberty that you’ve never visited. Now’s your chance. Visit your home town with the eye of a visitor. 3. Avoid the routine. During your staycation, don’t get trapped in your old routine. Don’t go to the same old restaurants or fast food joints. Even if all you do is switch from McDonald’s to Burger King for a week, you’ll make your time together feel more like a vacation and less like a lame week at home. 4. Pick a day trip or two. During your staycation, you can plan a day or two where you travel outside your home town, preferably to a place you’ve never been or rarely visit. A day or two outside of town, even when you return home to bed, will give your staycation more of the feel of a vacation. 5. Go to a movie—in the daytime. Not only will you pay less to go see a movie in the daytime, going to the movies when you normally work or are in school will feel even more vacation-like than going in the evening. 6. Fill the time. A staycation needs to be fun to be memorable. Having time to relax is important on vacation, but it’s risky when you’re on staycation. Time spent just relaxing at home may start to look a lot like just being at home, with the kids playing their familiar video games, Facebooking, and watching TV on the same old sofa. Plan lots of activities that are unusual for your family so that you come home every night exhausted and ready for bed. Treat your home less like a base of operations and more like a cheap motel you’re trying to avoid by having fun away from it. With a little planning, your staycation can save you a fortune on travel expenses and lodging and still allow you to have more fun than you’ve ever had on vacation before.I’m Planning A Vacation Abroad, How Do I Avoid Currency Related Problems? Travel abroad is exciting, fun and scary. There are so many new things to worry about: language, traffic patterns and signs, delicious food, strange food, and colorful money. Virtually every currency in the world, except U.S. currency, is bright and colorful. Figuring out how to use the beautiful, colorful money without overpaying in country or being charged high fees along the way takes planning. The following are currency related issues that you should plan for when traveling abroad: 1. Exchange rates: Exchange rates, the price of foreign currencies in terms of U.S. Dollars will vary from one day to the next. In fact, they vary from one moment to the next, though in most retail exchange locations you won’t see changes happen throughout the day. On the internet, you can watch exchange rates fluctuate moment to moment. The rates you’ll see on the internet will always be better than the rates you can get when you are exchanging currency. There is no easy way for consumers to hedge or protect themselves against painful swings in currencies while planning for or going on an international vacation. 2. Exchanging Money: As a general rule, you want to exchange money as seldom as possible. Do some research and careful budgeting for your cash use on the trip and exchange once at the beginning of the trip all the cash you plan to spend so you won’t have to frequent money exchange services, banks or ATMs with frequency. Generally, the best rate you can get is to use an ATM in the airport when you arrive. Daily or per transaction withdrawal limits set by the ATM operator may force you to pull out cash more often than you’d like. There will be fees, but the exchange rate should be superior to the rate you’ll get at the bank (either at home or in the foreign country) or at your hotel. Experienced business travelers should note that leisure travel generally requires more cash than business travel as many tourist spots deal strictly in cash. Try not to get too much cash; exchanging it again when you get home is expensive. 3. Credit Cards: Before you leave, call your credit card companies to find out what fees they charge for using the card abroad (while you’ve got them on the line, tell them where you’re going so your card isn’t deactivated the first time you use it). Use the one with the lowest fees. Some cards charge no fee for foreign transactions. 4. Avoiding Theft: Using credit cards abroad is generally safer than cash. If a card is stolen, most major card issuers can replace the cards in country within a few days. No one can replace stolen cash. When traveling as a family, split up the credit cards between spouses so that neither spouse is carrying all the cards. If one spouse loses the Visa card, the other, supposedly, will have a MasterCard. One call to the Visa issuer to alert them to the theft will quickly end the worry and the fun continues on the MasterCard. 5. Debit Cards: Debit cards lack some of the theft protection rules that apply to credit cards; guard them carefully and use them only for withdrawing cash from the ATM. With these simple issues covered, you can travel abroad and have a ballPlanning a service vacation for your family In Your Mark On The World I shared the story of the Smith family from Idaho, traveling around the world doing service on a four month service adventure. Most families simply couldn’t afford such a trip. Virtually every family can afford some sort of service vacation as an alternative to a traditional vacation one year. Here are some tips to help you plan your trip. 1. Identify your budget for the vacation. Before you go on your service trip or even get serious about planning it, you need to understand your budget. Full service, international trips can easily cost 5,000 per person. Such trips have the potential to change lives, both the lives of those you serve and your children’s lives. There are opportunities right in your own community where virtually your only cost would be the time you commit to the project. Every other budget in between will be an option. 2. Research opportunities. Projects abroad (among others) is a web site that connects people and families looking for international service opportunities to their projects. You can also start with the web sites for service organizations that have missions you support. You can travel with them. UBELONG is an international development organization that exists solely to place volunteers around the world on an affordable basis. 3. Plan your own trip. You don’t have to arrange your trip through a group of any sort, nor do you need to travel internationally to have an impact. You can plan your own trip, as the Smiths did, researching opportunities to serve in a place you’d like to go—whether that is on the other side of the world or across town. 4. Involve the whole family. However you approach the trip, early in the process you’ll want to include all of the children as well as your spouse in the planning. By getting everyone involved, you ensure that the trip will be a success. You want all of your children to come home glad they went, having learned something about giving back and having gained a perspective about their relative prosperity. 5. Focus the family on the goals. Help everyone in the family to share goals for having an impact during your service vacation. Use the months leading up to the trip to get everyone focused on the results you hope to achieve, the good you’ll do and what you’ll learn. A service vacation can and should include some fun activities, but most of your time will be spent doing service. Make sure that everyone is ready for that. 6. Record the trip. Make sure that everyone in the family records the experience. Some may want to blog about it; others may want to keep a private diary. Others may want to be snapping photos all the time. Whatever form it takes, encourage everyone on the family to make a first-hand record of the experience. A service vacation can and should be the trip your family talks about for years to come. The lessons learned and the impact you have on others will make this trip different than any other vacation you’ll ever take.The Most Important Financial “To Do” This Year Over the next twelve months there is one thing that is the most important thing you can do financially. Chances are you can either complete it or make great progress toward its completion over the next twelve months. What it is depends on your circumstances. Consider the following to help you decide what it most important for you. 1. Build a plan: If you feel like your finances are just a mess, you don’t know what you have, what you owe or where things are, this may be the year to get it all organized. Figure out what you have and what you owe. Set some goals and develop a plan to achieve them. 2. Credit card debt: If you have credit card debt that has been frustrating you financially for the last few years, you may be wise to focus this year on significantly reducing those balances so you can get completely out of debt, buy a home if you don’t already own one and start saving for your children’s education and your retirement. 3. Buy a home: If you don’t yet own a home and you have a job, you may want to make this year all about saving for the down payment. It will take sacrifice, but you can save enough for the down payment on a modest home in one year. 4. College savings: If you have several kids and no college savings, this may be the year to kick start the college fund by making that the key financial focus of your year. If your kids are in high school, this would be a very good idea. You can’t fund four years of college for four kids in one year (it’s almost impossible to fund one year of college for one student in one year—which is why we save for college) but you can make a big contribution in one year. By getting a big start this year, you’ll start earning interest on your savings which is a bit like having the wind at your back. 5. Retirement: Everyone needs to have retirement savings, but if your kids are all gone and you’re still working, now would be a good time to focus your finances on your retirement savings. The key rule for retirement savings is the sooner the better. Making an extra-large deposit in your retirement savings years before you retire will have a bigger impact than saving the same amount of dollars over the remaining years to retirement. 6. Estate planning: If you have accumulated a net worth (assets minus liabilities) of more than 1.5 million (congratulations by the way) you may need to talk to an estate planning attorney to help you organize your wealth for the most tax efficient way to move those assets to the next generation. 7. Charitable giving: Of course, you can and should make charitable giving a part of every year’s financial planning. If your retirement is funded, the kids have completed college and your estate is in order, this year may be about organizing major charitable giving, to leave a legacy of having made the world a better place. Not just this year, but every year brings a new set of challenges. Take the time every year to set goals and priorities for the year to fit into your long-term goals so that you can achieve your financial objectives and retire when and how you want.Financial tips for buying an engagement ring Listen, I’m not the guy to ask about style, diamond quality or color. I’m just the guy to coach you on buying the engagement ring. The only thing you’ve likely purchased that will be more expensive than the ring is a car—and only if you’ve bought a nice car Two to Three Months’ Salary: There is an old convention that a ring should cost two to three months’ salary. It isn’t fair. It may not be wise. It is absurd. But you may be feeling like you need to live up to that standard. If you are early in your career, you are likely earning around 3,500 per month, depending upon your career, that would give you a budget of 7,000 to 10,500. For your sake, I hope you didn’t just finish your cardiac residency—three months of a cardiac surgeon’s salary would get attention at Tiffany’s for sure. To heck with convention: While you should want your future spouse to recognize the symbol of your love for her as a sacrifice, you may want to consider whether or not some of the money you might spend on a ring could be better spent on the down payment for a new home. Don’t Borrow: Nothing says I don’t really love you that much like borrowing the money for the ring. If you marry a girl who discovers about the time of the wedding, that along with her beautiful ring she has acquired a 50 percent interest in a 10,000 loan to a jeweler (or a 10,000 balance on a credit card) you’ll lose all the points you think you’ve won with the beautiful ring. Shop Around: Whatever you do, do not buy the center diamond for a ring with your fiancé-to-be with you. You may look at styles and talk about tastes, but don’t put yourself in a situation where you are negotiating price in front of your future wife. Nothing says “you don’t matter to me” like walking out of the jewelry store in the middle of negotiations. Most jewelers have some flexibility. Leave your girl at home, so that if you don’t find what you like at the price you think is fair at one store, you can get up and walk away. You can always come back and pay the asking price. Diamond and Ring May be Bought Separately: If your future wife has a specific idea in mind for what the ring should look like, you may be locked in to buying the ring from that store. That said, if it has a large center diamond as many rings do, you are free to buy the diamond elsewhere if you can find a better deal. The ring jeweler will discourage you, certainly, but you may be able to save enough to overcome any penalty he may wish to apply. A Note About Guy’s Rings: Rings for guys are not traditionally so expensive or elaborate. A simple gold band will satisfy most. As a result, the issues about shopping for diamonds, financing and most of the other concerns are eliminated. A simple gold band costs just a few hundred dollars. Just be sure to pay off the credit card before the weddingHow to Set Financial Priorities When You’re Just Married Life may never seem so full of potential as on your wedding day. Your wedding celebrations and honeymoon quickly transition to a new normal full of struggles, remarkably similar to the challenges you had before you were married. Taking time to set financial priorities can help to ensure a long and happy marriage. Consider the following financial priorities and discuss them with your spouse: 1. Buy a home. If your education is complete, your first priority should be to get into a home. Owning a home, staying in it for a long time, and raising a family there will likely have a greater influence on your children than any other financial decision you will make as parents. Over the long term, home ownership tends to strengthen families financially as well. Making this your top priority is a good way to launch your lives together. 2. Save for your children’s college. If this is a first marriage for both of you, chances are there are no children involved at this point so you may think it is premature to start saving for college. It’s not. If you hope to have children someday, do yourself a favor and start saving for college now. By saving earlier you radically reduce the pressure to save later. Eighteen years is not a long time to save for college; by starting now, you may get 25 or even 30 years of saving done before your youngest children will start college. 3. Save for retirement. If you are in your twenties, with about forty years before retirement, you have an extraordinary opportunity to start putting money away for retirement. One dollar you save today will likely become 15 by the time you retire. If you contribute a dollar ten years from now, that dollar will become just 7.61 when you retire. If you wait twenty years and contribute a dollar it won’t quite become 4.00. If you wait until you’re in your mid-fifties, just ten years before retirement to contribute 1, it will become a mere 1.97 in ten years. Start saving now for retirement, even if it is only in modest amounts. 4. Save for a rainy day. It will rain. A major appliance will break. Someone will need surgery. The car will need a new transmission. You or your spouse will be out of work. Don’t worry; something will go wrong. One day it would be nice to have a full year’s expenses in savings as a cushion against almost any foreseeable disaster. For now, work on getting 2,500 set aside specifically for a rainy day. That emergency cushion can turn the vast majority of life’s challenges into financial nuisances. When you use the rainy day fund, be sure to replenish it. 5. Save for a car. If you have a car payment now, commit to each other that it will be the last. When the car is paid for, keep making the payment into your savings account. Drive the car as long as possible and then use your savings to buy a replacement. Keep saving for the next car. If you focus on these priorities—in the order presented—you’ll find that you’ll empower your lives with a combination of discipline and dividends that will make your lives together as happy as you hope.Five Tips to Help You Involve the Whole Family With The Household Budget Making ends meet and putting something away for the future each month is a real challenge for virtually all Americans. Our consumption-driven culture makes saving socially difficult—or at least makes spending too easy. So here are some tips to help you and your family get together on family finances: 1. Get the parents on the same page. Sit down with your spouse right away and make sure that you share the same financial goals. You may find out that you’re not on the same page. Together, you can fix that. Remember that your marriage is more important than money and seek a way to compromise so that you can get synchronized, making the messages you send the kids so much more consistent. 2. Have the kids help make decisions about their activities based on the budget. Kids these days are often highly programmed, running from soccer practice to music lessons and from there to Girl Scouts. Sit down with your children and show them how much each activity costs and how much is available for those activities and let them help make the decision about which activities stay and which go. 3. Set a savings goal, measure progress publicly and celebrate milestones. Together as a family, set goals for putting money into savings each month. Monitor progress. When you reach the goal and put the target amount—or more—into savings, celebrate in a fun but budget appropriate way. Everyone in the family has an interest in spending money, but if everyone understands and shares a savings goal, you can shift the excitement from spending to saving. 4. Plan family activities together with the budget in mind. If you have just 20 for an evening’s activity with the family, let the kids help decide how to make that a fun evening. Just a little creativity can make that into a splendid evening picnicking in the park or eating a pizza while watching a DVD. 5. Plan your family vacations together with a budget. Together, you can make choices between camping and staying in motels, amusement parks and beaches, long drives to far away locations and quick trips to neglected nearby sites. By involving your entire family in your financial goals, you can increase harmony and happiness. A child told he can’t do this or that fun thing because there isn’t enough money, may be frustrated and angry. One who views herself as part of a team trying to save money for college and other goals will be excited about helping to do her part. Ideas for doing fun things on the cheap are likely to be improved by having more people involved in the planning, too. Your kids will think of things you never would and you may just have more fun yourselfFour Insurance Policies You Shouldn’t Be Without As you roll happily through life, saving for the future and doing your best to build a happy family, the right insurance policies can make all of the difference in your life. There are four policies that are critical to maintaining the financial health of your family. 1. Auto insurance: states require that you have insurance if you have a car so it is likely that you have an auto policy. Most states, however, do not require that you have enough so if you only have the minimum required by your state, you may not be adequately covered. Your policy will likely cover the risk of totaling someone else’s shiny new Chevrolet, but it may not cover the possibility that your bad luck has you totaling a Lexus or a Lamborghini instead. Check with your agent. 2. Homeowners insurance: your mortgage lender will require you to have and maintain a homeowner’s policy, but your landlord won’t. If you rent, you still need a policy, typically called a renter’s policy, to cover the value of your belongings and the cost of being displaced. Both policies will also cover theft and other losses that may occur in or around your home. 3. Health insurance: while this topic has become politically charged in recent years, the fact remains that the cost of health care is beyond anyone who is not listed on the Forbes 400 when things really go wrong. Many employers make insurance for spouse and children very expensive. (In the olden days, I remember when insurance was so cheap that two working spouses often maintained dual coverage through both employers just so that every single penny of health care expense would be covered. This rarely happens today because employers share so much of the cost with their employees.) Even if your employer makes health insurance expensive for you, it is likely cheaper than anything you can find on your own. That said, it may be worth checking for a policy at ehealthinsurance.com where you can shop for individual policies. 4. Life insurance: life insurance is necessary as soon as you have dependents. Both parents should have a policy, even if one of you isn’t working outside the home. That said, the policy on the primary wage earner should be larger, providing enough money to provide income through the balance of your kid’s education. If you are saving for your kids’ college education, your life insurance should probably include enough to cover that. For households where one spouse doesn’t work outside the home, spouses should talk about whether or not to buy enough insurance to allow a spouse to stay home with the kids or if, in the alternative, part of the plan would be for the surviving spouse to enter the workforce. Remember, even if you decide that a stay-at-home spouse would return to work, he or she may not earn as much as the primary breadwinner has been. Life insurance will be needed to close the gap. Every day you wait, the more expensive life insurance becomes. In addition to these policies, families with high incomes should also consider “umbrella” policies that provide significantly expanded liability coverage and “disability” policies that insure income if you can’t work (social security provides modest protection for disability but it isn’t adequate for high wage earners). Don’t expose your family to risks that others are willing to take on for a reasonable fee. You owe it to your family to protect them.

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