In the last two issues of this eNewsletter, I've been summarizing some of the "best financial advice" ideas readers have submitted. Here are a few more. Mary Ellen pointed to these words of wisdom from her parents: "Don't spend money you don't have. Credit cards are fine as long as you pay them off in full as soon as the bill arrives." Following that advice has enabled her to pay cash for each car she has owned and to even pay off her mortgage early. For Chris, the advice to maintain an emergency fund and to have no debt except a mortgage has enabled his family to weather several months of unemployment without touching their retirement or college savings. And Brittany pointed to her father's encouragement to always give away at least 10 percent of her income. Doing so, she says, has been a constant reminder of God's provision.
Matt's View
Isn't it interesting that the best money management ideas are not very complicated? And here's one other take-away: Among the many readers who cited their parents as the source of the best advice they've received, it was clear that their parents not only gave specific guidance, but also "walked the talk." As someone counseled us when we had our first child, "more will be caught than taught." Many thanks to all who wrote to share the best financial advice they've ever received.
Brokerage house A.G. Edwards has introduced a new online game for kids interested in learning about managing money. As reported in the Chicago Sun-Times, Savings Quest
helps kids age nine and older learn how to allocate income for necessary expenses, deal with unexpected expenses, and save for future goals. Along the way they learn the hard reality that all of their income is not theirs to spend. Uncle Sam will always take his cut.
Matt's View
This is one of the better online games for teaching kids about money. However, in terms of excitement and "stickiness" (the ability to keep visitors on the site for a long time and keep them coming back), it pales in comparison to the most popular kid-oriented sites. The other downside to Savings Quest is that there's no encouragement for kids to give a portion of their income to charity. But have your kids give it a try and let me know what they (and you) think.
Last month I emphasized the importance of an emergency fund and recommended money market funds from Fidelity or Vanguard as good options for those with the minimum required deposits of $2,500 and $3,000 respectively. However, I've since learned of some alternatives that offer similar yields of around five percent for much lower initial deposits. According to the May issue of Kiplinger's Personal Finance magazine, the AARP Money Market fund
(you don't have to be "older" to be eligible) requires just a $100 initial deposit. Transamerica's Premier Cash Reserve
also offers an attractive return with a $1,000 minimum.
In addition, the article pointed out that a number of online banks are offering attractive rates on money market and regular savings accounts. Those mentioned included HSBCDirect.com
, E*Trade.com
, Emigrant-Direct.com
, and INGDirect
.
Matt's View
An emergency fund used to be the necessary but boring part of wise money management. Today, it's still necessary, but with rates topping five percent building an emergency fund is getting downright exciting.
Everyone knows that money is a prime source of disagreements in marriage, but the Wall Street Journal recently put a number to the issue: 75 percent of married adults in the U.S. quarrel about finances with their spouse. At least that's how many admitted doing so in a recent Journal/Harris Interactive online survey. The most common trigger points? "Irresponsible spending" and "not saving enough."
Matt's View
One of the best ways to minimize financial disagreements is to use a household budget. A budget encourages couples to work together in deciding how to allocate their income. And it can serve as a helpful reminder about mutually decided upon goals should one start dreaming of a time-share or bass boat.
Do you have a budget? If not, download my free Budgeting Quick Start Guide
. It's a lot less expensive than a marriage counselor!
