teaching kids finances

Teach your Kids about Finances during Lockdown

The pandemic has resulted in millions of parents around the world scrambling to find ways of entertaining their children such as home schooling, baking, arts and crafts, and various other activities. However, with finances being extremely tight in many households because of parents not being able to work, this can also present an ideal opportunity for them to teach their kids more about the household budget and finances in general. 

Below are some easy ways in which you can teach your children how to manage their money.

  1. Help them Set Savings Goals

Helping your child to set a savings goal for that must-have toy or video game will teach them that nothing in life comes for free. You can allow them to earn money by doing additional chores that aren’t part of their daily routine if they need to earn extra cash to save up for the item they want. If you can afford it, offer to match the amount of money your child saves.

Once your child achieves their financial goal, it will help them see the benefit of saving a portion of any money they earn going forward. This will also help set them on the path to long-term financial security when they are adults.

  1. Make Use of Money Apps for Kids

As more and more banking and other money-related services move over to digital platforms, children are being exposed to fewer physical checks and cash money. However, there are several fun and child friendly money management apps available that can help teach them about spending, saving, and investing wisely from a young age.

  1. Don’t Underestimate your Child’s Understanding of Finances

Although your children may be too young to start investing money on their own at the moment, it doesn’t mean that they don’t understand anything about finances. 

Children as young as three or four years of age can start being taught the basics of how to use and save some of their money. In many cases, you can open a Junior ISA for your children so that they can familiarize themselves with the ups and downs associated with investing money over time. 

  1. Let them Assist when Compiling your Budget

At present, money is extremely tight in millions of households across the country. This means that budgeting the little money you may have more important than ever. 

Letting your children assist with compiling your household budget plan will allow them to see what items such as mortgage payments, utilities, and groceries really cost compared to the amount of income you currently have to work with. 

Another great way to teach them about saving money is to encourage them to find ways to cut expenses around the house. You could even turn it into a contest to see which child comes up with the most ideas or even the most unusual money saving tips. 

If you’re keen to teach your children more about financial matters and are unsure how to go about doing so, contact one of our professional advisors today. 

 

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afford to retire

Steps to take when you can’t Afford to Retire

Although several individuals reach the age where they’d like to retire, many of them simply cannot afford to do so and think it’s too late to try and remedy their financial situation. However, there are a few steps that can be taken in an effort to solve this dilemma.

  1. Enlist the Help of a Reputable Financial Advisor

Trying to determine whether you’ll have enough money to retire with can quickly become overwhelming – to the point where many individuals simply give up and hope for the best. However, speaking with an accredited and reputable financial advisor should be your first course of action to take.

A financial advisor will take a look at your current savings strategies (if you have any) and then provide a plan of action that will involve you investing a predetermined amount of money each month into an appropriate retirement fund. 

  1. Consider Delaying your Retirement Date

Although you may have grown tired of taking part in the corporate rat race every day, you will have to ensure that your finances are in order before handing in your resignation. 

Delaying retiring for a few years will not only allow you to continue putting money into your retirement accounts; waiting a few more years before claiming Social Security will mean that your checks will be larger as well. For each year that you delay obtaining Social Security payments, you’ll receive an additional 8% in benefit payments – up to age 70. 

  1. Evaluate your Current Lifestyle

Being able to afford to retire can sometimes mean that you’ll have to make a few changes to your current lifestyle so more money can be saved. 

Take a look at your current budget to see where expenses can be reduced. For example, you might need to reduce the amount of money you’re currently spending on entertainment, meals out or even traveling. Now will also be the time to do everything you can to reduce or eliminate any debt you may have, such as credit cards and personal loans. 

Reducing these expenses will enable you to invest more into your retirement accounts each month. 

  1. Consider Part-time Employment

If your only sources of retirement income will be Social Security and whatever you’ve managed to save until now, you’ll most likely have seen that a lot more money will be needed. However, this need not be the case if you’re willing to consider part-time employment after officially retiring. This will not only benefit you financially; it will help keep your body and mind active as well. 

If you’re unfortunate enough to be behind on saving for retirement, it will mean that you’ll have to put in extra effort as soon as possible to try and catch up. Should you wish to discuss your retirement plans with a professional financial advisor, get in touch with us today. We look forward to helping you to better understand and manage your finances so that your retirement years can be something to look forward to. 

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early retirement

Points to Consider before Taking Early Retirement

While some individuals are forced to take early retirement due to job losses, deteriorating health, or unexpected family responsibilities, others may choose to retire early so that they can spend more time engaging in activities that they enjoy such as traveling, volunteering, or spending time with friends and family. Regardless of why you may be considering retiring early, it’s essential to consider the following pros and cons before pulling the plug on your job. 

Pros of Early Retirement

  1. It can be Beneficial for your Health

When you no longer have to rush to work each day, you’ll be able to get the sleep you truly need, spend more time out in the fresh air and sunshine than before and generally enjoy a more relaxed pace of life. 

  1. You’ll have Time to Travel

Having more time on your hands will also mean that you’ll be able to travel more – no more limitations due to only having a few vacation days per year at your corporate job. The earlier you’re able to retire, the more time you’ll have to see as many places as possible before age-related health issues arise. 

  1. You Have the Chance to Embark on a New Career

If you’ve been considering changing careers, doing so sooner rather than later will allow you to stand more chance of being noticed by potential employers. You may even be considering starting your own business, and the earlier you can do this, the more chance you’ll have of making a success of it. Launching your own business at age 55 could provide you with intellectual stimulation for at least another 15 to 20 years.

Cons of Early Retirement

  1. A Smaller Social Security Benefit

The earlier you take Social Security, the smaller your payments will be. For example, if you were born in 1960 or later and you start taking benefits at age 62 (the earliest age you’ll be eligible to do so), you will receive payments that are 30% lower than if you had to wait until age 67. For every year that you don’t take Social Security from age 67 to 70, your payments would be 8% higher each month. 

  1. Retirement Savings will have to Last Longer

If you retire at 50 or 55 and live to age 90, your IRAs and other retirement accounts will need to have sufficient balances in them to support you for 35 to 40 years. However, if you retire at 70 or 75, these funds will only have to last for between 15 and 20 years. 

  1. You’ll have to Foot the Bill for Health Insurance

In many cases, you’ll have to cover the cost of health insurance yourself until you become eligible for Medicare when you turn 65 – and premiums can be double or even triple of what you were paying while working.

Deciding when you should retire is not just a matter of making up your mind and handing your notice into your boss. If you would like to learn more about making the most of retirement, contact us today. 

 

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covid savings

Coping Financially during Lockdown

COVID-19 has left several families scrambling to try and make ends meet because of not being able to earn their regular incomes. If you have been unfortunate enough to not be able to work over the past few months, the tips below could help ensure that you stretch each dollar as far as possible. 

  1. Don’t be Tempted by Sales

After lockdown is lifted, several retailers will most likely have a glut of stock that they need to move from their inventories. This will result in there being a number of sales that advertise along the lines of, “Once in a lifetime opportunity,” or “final clearance.”

Regardless of how good a deal seems to be on an item, resist purchasing it unless you can afford to cover its cost in full. Chances are that similar items will be sold at reduced prices later in the year again. 

  1. Start Saving

Households that were able to plan ahead by having an emergency fund to cover at least one to two months of expenses will experience less financial stress during this time.

Although you might be thinking that it’s counterintuitive to start saving now, this is not the case. Starting with a small amount such as $10 to $15 per week or $50 per month may not feel like a lot of money, but the truth is that it will add up over time and come in handy if you’re suddenly unable to earn an income again. 

  1. Cut Expenses wherever Possible

Most individuals are familiar with the standard ways of reducing expenses such as not purchasing new clothing, cutting back spending on takeout’s and restaurant meals, and not taking vacations. However, during these unpredictable times, your cost cutting may sometimes have to become a little more drastic until such time as you’re earning wages again. 

While subscriptions such as Netflix Spotify may provide entertainment, you may need to consider cutting them for a few months. Any gaming group or other club memberships you may have should also be canceled, as they are not genuine necessities. 

  1. Repair and Repurpose

At a time when you’re receiving little to no income, the saying, “Use it up, wear it out, make it do or do without” can be a budget lifesaver.

Refrain from purchasing items until what you have has already been used up as much as possible. Don’t purchase clothing or shoes unless an existing item has genuinely worn out or been outgrown. If a clothing item has a small rip or other minor damage, consider repairing it before tossing it in the trash – several YouTube videos are available that can teach you the basics of clothing repair. 

Drastically cutting your expenses during this time could make all the difference with regards to being able to pay your rent or mortgage and put food on the table for your family. While you and your family may feel deprived during this time due to decreased spending, keep in mind that these difficult times will eventually pass.

 

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