Thursday, August 31, 2017

Challenge Yourself to Save $100 in 30 Days


Want to have $100 in 30 days? Complete the 30-Day $100 Savings Challenge. You will follow a schedule of gradually increasing savings deposits ranging from $1 per day to $5 per day. The exact Challenge format is saving $1 for five days, $2 for five days, $3 for five days, $4 for five days, and $5 for the final ten days. When you’re done, you’ll have $100 saved to use any way that you want.

 

No special preparation or registration needed to participate in the 30-Day $100 Savings Challenge. Just start saving on whatever day you designate as “Day #1” and follow the savings calendar for 30 days.  Deposits can actually be made in any order throughout the month to reach the $100 goal.  For example, some people have more money to save at the beginning of a month than at the end or on weekdays vs. weekends.

Want to save even more money for emergencies or future financial goals? Complete the Challenge every month for an entire year and you’ll have $1,200 saved, plus interest, if you deposit your $100 monthly savings into a bank account. Challenge yourself to save!

 

The eXtension Military Families Learning Network Personal Finance team is sponsoring the 30 Day Challenge nationwide in September and offering a series of support services for savers. I encourage you to register to receive daily motivational messages and information about MFLNPF Facebook Live events and webinars.


Friday, August 25, 2017

Questions to Ask a Financial Adviser


Looking for a financial advisor (e.g., financial planner, counselor, or coach)? Here are some questions to ask according to the Association for Financial Counseling and Planning Education (AFCPE):

 

  • What experience do you have? Ask for a brief description of financial professionals’ work experience and how it relates to their current practice.
  • Is there an oversight body requiring ongoing education and ethics? Ask about the credentials a professional holds and learn how he or she stays up to date with current changes and developments in the personal finance field.
  • What services do you offer? Asks about credentials, licenses, and areas of expertise that determine the services a financial professional can offer.
  • What is your approach? Make sure a professional's philosophy and approach aligns with your needs and values. You also may consider your financial professional’s personality and communication style and personal compatibility. 
  • What types of clients do you typically work with? Some financial professionals prefer to work with clients whose assets fall within a particular range or are of a certain age.
  • How much do you charge?  A financial adviser should provide an estimate of possible costs based on the work to be performed.
  • How will I pay for your services? Financial professionals can be paid in several ways (e.g., fees and commissions). As part of a written agreement, an adviser should make it clear how they will be paid for the services to be provided.
  • Do others stand to gain from the financial advice you give me? Ask the professional to provide you with a description of any conflicts of interest in writing.

Consider requesting a referral. Also ask whether an adviser has ever been disciplined for any unlawful or unethical actions.


Saturday, August 19, 2017

“Balloon Test” Your Investment Risk Tolerance


Want to test your investment risk tolerance level in a fun and creative way? Go to The Balloon Test web site https://www.investmentphilosophy.com/behavioural-finance/your-attitude-to-risk/the-balloon-test. Click “Start.”

 

Decide when (i.e., for how long?) to keep pumping a balloon to earn 50 points for each pump. This is like earning money on an investment. Decide when to stop pumping to collect your points, ideally before the balloons burst. This is like selling an investment for a profit. At any time your balloons can burst, however, and make a loud popping noise (if sound is turned up on your computer). This is like losing money on an investment.

Play the game for five rounds. This is like investing for the long term where investment results can vary. Compare your total points to the baseline data and answer the following questions:

  • What was the highest and lowest number of points that you received on the five rounds of play?
  • How did you feel when your first balloon burst?
  • Did having a bubble burst change your behavior on subsequent rounds of play (i.e., future decisions)?
  • Did having a “good run” without balloons popping change your behavior on subsequent rounds of play?
  • How would you assess your risk tolerance as an investor?
  • What did The Balloon Test activity teach you about investing in stocks or stock mutual funds?

For more information, here is a list of the steps involved in using this interesting interactive activity.


Wednesday, August 9, 2017

Investing For Your Future


Saving is typically done for emergency funds and short-term goals and usually has a known, but generally low, rate of return. Investing is done for long-term goals and capital appreciation (growth) of money over time and has a higher potential rate of return. What saving and investing both have in common is that savers/investors must “live below their means” and set money aside today to have available in the future.

People invest money for a variety of reasons including:

  • To achieve financial goals (e.g., a new car and the purchase of a home)
  • To increase current income (from dividends, interest, and capital gains)
  • To achieve financial independence and have funds available for retirement
     

There is no such thing as a “perfect” (risk-free, tax-free, high return) investment. All investments involve trade-offs and some type of risk. In addition, investors cannot expect to have characteristics of savings (e.g., predictable returns) in an investment product. However, if investors teach themselves to recognize and evaluate investment risks, they will be better able to balance their investment objectives and risk tolerance.

Need more information about investing? Check out the Cooperative Extension basic investing home study course, Investing For Your Future.

Friday, August 4, 2017

Effective Financial Education Strategies


I’m just coming off a road trip leading two full-day Financial Education Boot Camp workshops attended by over 100 New Jersey teachers. A lot of valuable information was shared about personal finance content and engaging learning activities. Here are some insights that resonated with me:

 

Watch Your Language- Common words that financial educators use can be intimidating. Instead of talking about “the future” to people (especially students) who live day-to-day, use words like “now’ and “later.” Instead of focusing on goals, which seem intimidating and formal, focus on instilling good habits.

 

Tell Powerful Stories- Stories make difficult changes seem possible. One Boot Camp participant put it this way: “students want to know someone who has gone through it or is going through it.” The most important part of a story is not the happy ending but how people overcame obstacles between Point A and Point B.

 

Use Engaging Activities- Engage your students’ creative juices and senses. At Boot Camp, teachers shared financial advice on index cards and posted them online. I am pleased to share some of the results of their efforts.

 

How to Become More Future Minded

In an earlier blog post , I cited research by Morningstar behavioral economist Sarah Newcomb that links a focus on the future wit...