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Simple Money 4 You: An Introduction to Money Matters for All Ages - Softcover

Hutcheson, Helen

 
9781452510392: Simple Money 4 You: An Introduction to Money Matters for All Ages
Softcover
ISBN 10: 1452510393 ISBN 13: 9781452510392
Publisher: BalboaPressAU, 2013

Synopsis

This well-researched and practical guidebook helps you make sense of money situations, use money, and make the best money decisions. Almost every decision you make has a monetary impact-whether you are choosing to buy a cake for morning tea, deciding to buy a house or rent, investing or saving for your future. This guide provides you with the knowledge to make the best decisions for your money. Helen Hutcheson offers short, easy-to-read chapters on specific topics such as holidays, savings, spending, interest, and budgeting. This enables you to investigate the area that currently interests you rather than reading the book from cover to cover. When you are spending your first pay, buying your first home, or planning for retirement, the information Helen provides can help you navigate through life's money minefield. Each chapter includes simple definitions and examples using both numbers and words to ensure you completely grasp the topic at hand. At the back of the book you will also find a number of worksheets to help you put your simple money plans into action. Make your money decisions with the best information possible, carefully assessing the benefits, disadvantages, penalties, and risks and make your money work for you!

"synopsis" may belong to another edition of this title.

Excerpt. © Reprinted by permission. All rights reserved.

Simple Money 4 You

An Introduction to Money Matters for All Ages

By Helen Hutcheson

Balboa Press

Copyright © 2013 Helen Hutcheson
All rights reserved.
ISBN: 978-1-4525-1039-2

Contents

Introduction...............................................................ix
Chapter 1 Personality and Money............................................1
Chapter 2 Children and Money...............................................9
Chapter 3 Employment.......................................................23
Chapter 4 Time Management..................................................33
Chapter 5 Money Management.................................................39
Chapter 6 Rules............................................................47
Chapter 7 Saving...........................................................53
Chapter 8 Spending.........................................................57
Chapter 9 Loans............................................................69
Chapter 10 Interest........................................................85
Chapter 11 Credit Cards....................................................93
Chapter 12 Banks...........................................................101
Chapter 13 Record Keeping..................................................111
Chapter 14 The Balance Sheet...............................................123
Chapter 15 The Income and Expense Statement................................129
Chapter 16 Budgets.........................................................137
Chapter 17 Cash flow.......................................................151
Chapter 18 Tax.............................................................157
Chapter 19 Review..........................................................171
Chapter 20 Insurance.......................................................177
Chapter 21 Filing..........................................................183
Chapter 22 Business........................................................189
Chapter 23 Fringe Benefits.................................................195
Chapter 24 Holidays........................................................199
Chapter 25 Investing.......................................................207
Chapter 26 Retirement......................................................225
Chapter 27 Superannuation..................................................237
Chapter 28 World Economy...................................................245
Conclusion.................................................................253
Helpful Websites...........................................................255
Sample Worksheets..........................................................257


CHAPTER 1

Personality and Money


Your Personality Influences Your Priorities, YourRisk Level and Your Decision-Making Skills


What Type of Person Are You?

Most people favour numbers or words. Which type are you?

Numbers-based people (left-brain thinkers) are linear thinkers.They are, logical, mathematical, and able to make quickdecisions. Things are right or wrong, black or white. Theydon't understand an illogical person's viewpoint.

Word-based people (right-brain thinkers) tend to be morecreative, intuitive, and conceptual. They like designing thingsand can appear illogical to their numerical friends. They oftenponder over a decision, weighing up all the pros and cons andcan sway between decisions.

Of course, many of us are a little bit of both, but we all favourone side or the other. Understanding what type of person youare can help you make better decisions about money. This alsoapplies to people you associate with. Working with people ofthe opposite type can help you make balanced decisions. If youneed more time to make a decision, don't be pushed around byan impatient numbers person!


Decision Making

Decision making is all about information. If you have the rightinformation at the right time, you can make the right decision foryou. However, many people have trouble making decisions.

* Do you watch things happen?

* Do you make things happen?

* Do you wonder what happened?


Which One Are You?


Which One Do You Want To Be?


To improve your decision-making skills, consider:


Knowledge

The more familiar you are with how something works, thebetter equipped you will be to make a decision. Knowledge ispower. Research is critical for any big decision.


Practice Making Decisions

Making a decision is better than sitting on the fence. Practicemaking decisions—even if they are not spoken—to gain theconfidence to make more important decisions.


Don't Be Scared

We all make good and bad decisions so don't worry if you havemade a bad decision. Try to learn from the mistake and do notrepeat it the next time.

You can reverse many bad decisions.


Learn From Previous Decisions

Review all the decisions you make in the day and identify themas good or bad. Work out why you made that decision—andhow you can make a better choice next time.


Make Your Decisions

Do not choose something you do not really want. This does notmean you should not compromise, but ensure you are happywith your decision.

"Whenever you see a successful business,someone once made a courageous decision"

Peter Drucker, Management Consultant


Risks

People have different attitudes when it comes to risks. Knowingyour risk factors will help you and financial advisors assess thebest options for you and your money.


Examples of Risk

* How much do you spend on lottery tickets, pokermachines, gambling, etc.? How much are you preparedto lose without a guaranteed win?

* Do you like to save for big expenses? Do you borrow topay for them and then repay the debt?

* How do you operate a credit card? Do you pay it off assoon as the statement comes in—or do you pay it offover many months?


Risk is generally linked to trust—which is built over time.Therefore once you trust someone—or trust the outcome willbe repeated—you are prepared to do the same thing again.


Comfort Zone

People like to live within their own comfort zones; although theymay visit other zones, they will not stay there for very long.

If you dabble in risky areas—where the going is heated—youwill toss and turn over the decisions you are making. You willnot sleep well at night; however, if you do nothing and let thestatus quo remain, you will find yourself restricted and unableto sleep. Choose the right temperature for your personality andunderstand that everyone is different.

Correct Risk Level = Sleeping Well at Night.


Example: Investment

Using the simple test of hot and cold, we can group commoninvestments into risk areas as follows:

Casino winnings very hot
Speculative (unproven) share trading hot
Blue chip (proven) share ownership warm
Property ownership cool
Cash in the bank cold


When dealing with money decisions, you must be happy withyour decision—and you must be able to sleep at night. Nomatter what anyone else say.


You Need to Be Comfortablewith Your Decision.

Money is the major cause of stress in many relationships. It canbe aggravated because one person sleeps in a hot bed—and theother sleeps in a cold bed. Understanding money managementgives you the power and confidence to make financial decisionsthat you will be happy and comfortable with. It will also helpyou communicate your decisions with the people around youso they support rather than oppose the decisions.


Help

* Some people seek advice from professionals, books,friends, businesses, banks, accountants, or financialadvisers.

* Some people research and work things out themselves.The Internet can assist greatly; however, this processcan be slow—and you may draw wrong conclusions.

* Some people don't do anything. They just wait to seewhat everyone else does—and they copy them.


Timeline of Life

As we go through life, our wants, needs, family requirements,and goals change. The timeline of life is all about the changesthat are going on in your life. Many people do not succeed inbalancing their goals with the changing times—and having themoney to support them.

Why do our goals change?

* Health Status

* Wealth Status

* What you own (Assets)

* Knowledge

* Family Life


If your health is good, the next major hurdle is usually money.Good money decisions at the right times make future decisionseasier. When the time comes to change:

* Obtain accurate information.

* Consider the impact on your future.

* Assess your risk factors.

* Make a clear decision rather than sitting on the fence.


Today Is the Start of the Rest of Your Life.

Try to understand and accept change as a means to a betterfuture—and do not be afraid of doing things differently.Change is all around us. Enjoy a new beginning every day.Accept that you have the ability to produce a new ending.


What Will Your Ending Be?

CHAPTER 2

Children and Money

Teaching Children about Money


As children strive to be independent, they need to understandand manage their money in order to help them achieve theirgoals.

Talk to your children about money, its value, what it can buy, andhow to save it. Explain and demonstrate how you use money,(cash, cheques, credit cards, and electronic banking). Discusshow to shop, borrow, and lend money. Show them what a bankstatement and a loan document look like. Children who watchtheir parents will repeat what they learn.

Children do not need real money because their parents arein charge of buying meals, birthday presents, keeping themdressed and interested with toys, sending them to school andtaking them on holidays. As they grow older, these thingsbecome their responsibilities. How they handle money willdepend on what they learned as children.

Below are some general guidelines for teaching childrenabout money. Children are different, and families are unique.Customize the amounts and rewards in this guide to suit yourfamily. Remember to ask the children for suggestions too.


First Steps

Children under the age of 3 do not need to know about money—exceptthat it is not a toy. Do not let them play with real money.If they understand your wallet and your money are importantto you, they will value it in the future.


Starting School

Once children start school, they are exposed to a wide rangeof other children. They see firsthand what they have and don'thave. They also start wanting things of their own.

"I want...." may become a child's favourite saying.

Rather than saying "no" to your child, teach them about money,savings, goals and consequences.

Once they understand how useful money can be, they will learnquickly and soon have bargaining down to a fine art!

During early school years (when children are between 5 and10), parents can start teaching them about money by simplyhandling the various coins and notes. They will learn howto count at school. These skills can be practiced with realmoney—adding and subtracting money at shops shows savingand spending. Children can learn how to find out the price ofgoods, how to pay for goods at the checkout and how to checkany change they receive. At this point, for simplicity, it is bestto deal in cash only. Lessons must be simple, real and easy tounderstand. They can be presented as a game to encouragechildren to participate. Explain the relationship between goingto work and earning money. Some children:

Think money grows on trees.Others believe there is a never-endingsupply of money in Mum's wallet.Many think parents can just go theATM to get more money.


Pocket Money

How much pocket money a child receives is not as important aswhy the child receives money. Parents need to remember thatpocket money is about teaching children how to use and thevalue of money. It should be given as a reward. Each familycan set perimeters for the rewards. Involving the children in thetasks and the rewards will help keep them interested.

Some families have jobs that need to be completed withoutreceiving any rewards. These family jobs apply to all membersof the family, including Mum and Dad. These include keepingyour room clean. Extra jobs such as cleaning the kitchen canbe rewarded with money.

Payment for jobs can be given as:

[check] An amount per job completed

[check] A set amount each week

[check] A bonus system for good effort around the house and/or at school


The system each family agrees to will depend on the individualfamily. It is not supposed to be a huge task to administer; keepit simple. Be prepared to adjust the system depending on theage and personality of the child.


Earning Money

What can they do with money? There are 2 choices.


Spend Your Money Right Now.Or Save it for Later.

Savings should be rewarded, usually in the form of somethingbigger than what can be afforded today.


Saving Should to be Fun.

If you use a see-through money box for saving, the child can seethe money grow. This will encourage them to save more.

Show children that you support their savings plans. Help themwrite down their saving goals—and their plan for achieving them.Sometimes it is worth matching your child's saving—dollar fordollar—or creating extra ways they can save for a special item.

Children will learn by watching others, including siblings,parents, extended family and friends. Learning usually involvesmaking mistakes. It is important to make money decisions andmistakes while the amounts of money are relatively small. Thisallows children to learn and gain experience. Be careful not topenalize your children's mistakes early in life while they learnto manage their money. Instead, clearly explain what wouldhave been a better way to handle their money.

Mistakes can be fixed by parent intervention.Poorly spent money can be replaced, by a parent, for acuddle or a cup of tea.


Practice Makes Perfect

Many parents forget to stop buying their children things asthey grow and become financially independent. It is importantfor a child to gradually take over the payments of their ownexpenses. Children should be encouraged to earn money, savemoney, and pay for goods themselves. This is fundamental tothe child's understanding of the value of money decisions. Ifchildren receive money for no reason—and never need to buyanything themselves, because they ask Mum or Dad to buyit—the money they earn has no value. There will be no needfor them to earn money. Earning money becomes a game; theycan play it when they want and not play if they don't want to.Some children say,

"I can always get money from Mum or Dad!"Discourage this behaviour early.

Most children are far less keen to part with money they haveearned than they are to spend someone else's money.


Younger Teenagers

This is the age of independence, and understanding money isan important area of all teenagers' lives. Between the ages of10 and 15, younger teenagers are susceptible to peer pressure.The lessons learnt in earlier years will help them through thisnext learning phase. At this time, it is important for the youngerteenager to be held accountable for their money decisions.Independence comes with responsibility. The money gamesfrom earlier years need to be phased out. The value of savingshould be continued as they learn to earn money and save forsomething special—something Mum or Dad won't buy them.


What is Something Special?

Below is a guide to parent purchases and child purchases(something special). The basic rule I have used is:

Necessary items are parent expenses.Luxury items are child expenses.


Parent Purchases and Child Purchases

Food—Parents pay for regular meals and events the wholefamily joins in. For example, everyone receives Easter eggs atEaster. Children pay for treats, lollies, and desserts.

Clothing—Parents pay for regular clothes, school clothes, andspecial clothes the whole family receives. If you go on a holiday,everyone receives a new T-shirt. Children pay for special items,such as badges or caps (something only they receive).

Toys—Families will have many ideas about when and howmuch to spend on toys for their children. In our family, toysare usually only given for birthdays and Christmas. This giveschildren a large area of special items(toys) to buy, and it makes birthday andChristmas presents more special. Try toremember that toys are not necessitiesin life. Do not give in to your childrenby buying gifts all year round.

School Supplies—Parents should buythe necessary purchases for the school year. The first year atschool can be quite a large expense. For second and subsequentyears, review last year's supplies to see if any can be used forthis year (scissors) or need to be replaced (an unused writingbook). It is not always necessary to buy all new items eachyear, although it is a good time to refresh old items. This alsoencourages recycling. Children pay for the special items, suchas fancy pencils.

Activities—It helps to have a general rule (2 activities perweek), which can be bent if something special comes along.This will help you budget money and time. The number ofactivities may depend on the number of children you have.Parents with only one child have more time than a family with 4children. Use the general rule to ascertain what items within theactivity are parent costs and what are paid for by the children.Uniforms and club fees may be parent costs, but a special hator badge is a child's cost.


Helen's Tip:

Do not underestimate a child's ability to earn andsave. Encourage these habits; they are lifelongtraits.


Older Teenagers

Older teenagers, (15 to 20 years) are able to apply for jobs, earnmoney from outside the family, and make decisions about moreimportant expenses.

Parents need to step back and let older teenagers learn themoney lessons slowly. Mistakes will be made—and money willbe spent and wasted—but it is important that older teenagerslearn from their mistakes rather than be criticized. Every personwill spend money on different goods; let your older teenagermake his or her own decision about what to buy and when tobuy it. Encourage them to ask for your advice, but do not forceyour advice on them. They must make their own decisions andbear the consequences.


(Continues...)
Excerpted from Simple Money 4 You by Helen Hutcheson. Copyright © 2013 Helen Hutcheson. Excerpted by permission of Balboa Press.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

"About this title" may belong to another edition of this title.

Publisher
BalboaPressAU
Publication date
2013
Language
English
ISBN 10 
1452510393
ISBN 13 
9781452510392
Binding
Paperback
Number of pages
284