By Frank Conway – MoneyWhizz.org
Back-to-school expenses can place an excessive financial burden on families. So, it is important families are prepared; to budget effectively and where necessary, borrow prudently in the run-up to the back-to-school expenses rush.
With the right level of planning, back to school expenses can be managed and minimized
Following are some simple tips to help families prepare:
- Set your money target – work out how much is needed to cover costs
- Review your income – regardless of whether one is employed or self-employed, they must know their the financial bottom line especially their net take-home pay each month (plus any additional money received).
- Identify all expenses – this includes all costs, fixed (mortgage, car payment etc) and variable (groceries, entertainment etc).
- Set your timeline – if the target is to save €1,200 over the course of a full year (this is slightly more than parents pay in back-to-school costs) this works out at €100 per month.
- Stick to the plan – but be flexible. The best way of reaching a money goal is to build in flexibility. No month will ever be the same. Strive to save more than the target amount during months where cash is available as there will also be months where cash will be tight. Over time, it should all balance out.
Some parents have little choice but to use borrowings to pay for back to school costs, the following are some useful tips to help them borrow effectively.
- Credit cards – make the maximum payment, not the minimum. This way, users have the greatest chance of paying the least amount in interest charges and fees – which can add a significant financial cost otherwise.
- Short-term – longer term loans may offer the convenience of lower monthly repayments but they also cost much more in interest charges which increase the overall cost to the borrower.
- Check the APR, not the rate – the Annual Percentage Rate is the absolute measure of the cost of money and the best measure of the true cost of borrowing.
- Avoid late payment charges – those can really add up and make loan repayments crippling.
- Say no to money lenders – some charge up to 200% interest rates which cost borrowers significantly more over time.
With sufficient planning and the right amount of money knowledge, back-to-school expenses can be minimized ensuring parents have peace of mind.
PayPal and Visa have announced an extension of their strategic partnership to Europe.
A growing number of fintech companies are targeting consumers for day-to-day banking services.
PayPal, under its banking license in Europe, will join the Visa network allowing consumers to pay directly with their ewallet funds wherever Visa is accepted. The European partnership will also make it easier for financial institutions who accept PayPal payments to offer Visa checkout options too.
Businesses who accept either payment method will be able to offer both, allowing the two companies to grow exponentially on the European market.
Most importantly, PayPal will have the ability to issue debit cards to European consumers and businesses. In the future, this would make it possible for PayPal customers to use their ewallet funds wherever Visa is accepted worldwide. Furthermore, clients will be able to transfer funds to their debit accounts in real time across multiple markets.
Across Europe, a growing number of non-bank services and financial technology (fintech) firms are eyeing up lucrative market opportunities in the personal financial sector, including Facebook, Samsung and Apple.
By: Frank Conway
When the new CEO of Coca-Cola, James Quincey took over the reins of this mega-brand, one of his first announcements to staff was his ambition to foster a new corporate culture; where making mistakes was OK. According to Mr. Quincey, it is through mistakes that we really learn. The same can be said for good money management.
Teaching kids about money can provide a critical life skills
When it comes to learning about money, it is important to learn the essentials, including budgeting, planning, how compound interest works and the nuances of diversification. So getting kids in on the act from an early age and providing them an opportunity to learn from mistakes will reap many benefits.
Following are some essential tips parents can use to help their child learn about money…and how to manage it effectively:
- Let Your Child Make Mistakes
Sometimes the best lesson comes from a poor decision, especially when your child is young and the financial loss won’t be so great. Next time your child receives a windfall of money, let them do as they please. If they want to spend it all, let them! But when the money is gone, let there be no rowing back and giving them some more if and when they ask…let them learn the loneliness of being penniless…it can serve as a really powerful life lesson that might just make a world of difference later in life.
- Open a savings account and teach them about planning, interest and tax in one foul swoop. So, each time they earn a little interest on their savings account, tell them how this is a form of income and when we earn income, we also must pay taxes and this is where the lesson on deposit interest retention tax (D.I.R.T) comes in. D.I.R.T tax is currently set at 39%.
- Have a weekly money challenge – take them shopping and give them a token money allowance and challenge them to find the best value on 3 groceries. Make it a little fun by selecting the groceries they are most enthusiastic about; ice-cream, cereal, milk. Allow them the freedom to make their purchase but within the limits of their budget and after, review and compare their purchase decision with any store offers they may (or may not) have availed of.
- Money discussion time – when it comes to essential money decisions, like planning the next family holiday, use the opportunity to include your kids. Let them see that holidays involve planning and money, this will allow you to communicate the need to plan for important spends.
- Teach them the difference between needs and wants – sometimes, we can all be emotional when it comes to things we really want, but do we really need them? For example, while celebrities are often used to promote the most expensive products, less expensive ones be just as good. So, it’s important to teach your kids how they can buy more of the things they need by learning to ignore what celebrities want them to do.
Remember, money is a precious resource but the options to spend it are endless. Kids can learn some great life skills from a young age, these are lessons that will last, and benefit them for a lifetime! For more information, visit MoneyWhizz.org