Seven Important Things To Teach Your Children About Finances

Starting your children off with a right view of finances is so important
these days - especially when debt seems to be a common way of life for so
many. Who knows if the young parents of today were ever taught such a vital
lesson in life as being able to properly manage their finances. Perhaps
their lives would have been so much different. We can never know - and can
never change it. We can, however, change the way our own children look at
money. Here are some important lessons to teach your children about such an
important subject - their money.

1. Money Does Not Grow On Trees

Children do not understand, at least not at first, that there is not an
unlimited supply of money at the bank, or on the credit card. If they see
something they want to buy, you will often hear "Why don't you put it on the
credit card?"; or, "Write a check!" To them, who only see you pay for your
purchases in this way, they do not understand that you have to pay for it
sometime. Explain to them the process that they can only buy what you have
money to pay for - somewhere.

2. Saying "No" To Some Unnecessary Things

One of the most valuable lessons a child can learn is to willingly choose to
say "No" to some purchases - even if they want it. One of the greatest
incentives a child can be given to do this is because something better can
be obtained if they will save a little longer for it - and wait. Do not give
them money every time they want it - this teaches them that there is a
bottomless supply - when there isn't.

3. It Is Important To Save

Besides saving for something that they really want, which is a good reason
in itself, teach them to save for unexpected things. For instance, if they
receive a regular allowance, or, are working after school and earning some
money on their own, teach them to put aside a regular percentage - say
10-15%.

4. Comparison Shopping

Let your children know that there is a vast difference in the quality of
similar products. There is also more than one place that sells most items,
and somewhere there may be a better deal. Show them that by looking around,
and waiting a little longer, they may be able to get the item they really
wanted, and be able to have a little money left over.

5. Establish A Budget

Once your child is receiving a regular amount of money, you will want to
show them how to plan for a wise use of that money. Help them to know how to
set money aside for basically three different things: money to spend now,
money for special purchases that require savings, and long-term savings.

6. Teach Them About Credit Cards

Credit cards and checking accounts are similar in that they provide ease of
purchase, but without the necessity of carrying cash. Your children only see
you handing over the plastic, or another piece of paper. But they never see
that cash is involved - it is behind the scenes to them. Show them how that
you must pay monthly for both and that you should never buy more than what
you can afford - except for some larger purchases - because the bills for it
will come!

7. Give Regularly To Good Causes

Probably one of the greatest joys that a child can have in the use of their
own money is the joy that comes from willingly giving their money to causes
greater than themselves. By learning to give some of their money often to
causes such as their church, or a charity, they learn that their money can
be a blessing to others, and it will prevent a stingy and selfish outlook on
life and on their money.

About The Author: Joe Kenny writes for the UK personal finance sites
http://www.ukpersonalloanstore.co.uk and also http://www.cardguide.co.uk

Reducing Your Loan Interest Payments

If you have a long-term loan with high interest, then you might find
yourself paying almost as much in interest payments as you are towards the
money you borrowed. If this is the case, then you should look at ways to
reduce those loan interest payments.
Reducing your loan interest payments will help you to pay off your loan more
quickly, and thereby save yourself money. Here are some tips on how to
reduce your loan interest payments.

Change your loan

One way to reduce your interest payments is to swap to a different loan
company. Refinancing your loan with another company might seem like a lot of
work, but if you can get a lower interest rate you could save a lot of
money. Shop around and compare loan prices to see if you can get a better
deal than you are now. Even if you reduce your APR by 1 or 2%, you could
save yourself a significant amount of money.

Bi weekly payment

Another method for reducing loan costs is to start paying bi-weekly. Instead
of paying your monthly amount, pay half of your monthly amount every two
weeks. There are 4.3 weeks in every month, so you will find that you pay
your 12 months'
payment in just 11 months. This will leave you one whole month of extra
payments, thereby reducing your loan amount and interest. This method can
save you a lot of money. If your loan company will not accept prepayment
every two weeks, then just pay 13/12 of your monthly payment each month,
thereby accomplishing the same as bi weekly payments. Although some loan
companies charge for overpayment, most lenders will be able to accommodate
this payment method.

Early settlement

Another way to reduce your interest payments is to pay off larger parts of
your loan at once. This will reduce the total amount you owe, and therefore
reduce your interest payments.
Some lenders charge for early settlement, although many allow you to pay
back up to a certain amount before charges take place. Even the smallest
extra payment can help to reduce your loan interest payments and save you
money. The more you pay, the quicker your loan will be paid off and the more
money you will save.

Using credit cards

To reduce your interest payments on a loan you can take advantage of credit
card 0% offers. If you can find a card that has 0% for 6 months, then use
this card to pay off part of your loan. Although you will pay much higher
interest once this time is up, if you can pay back the credit card in this
time you will save money on interest payments.

Secured loans

Although they are more risky, secured loans generally have lower interest
payments. If you refinance to a secured loan, you could save a lot in
interest payments. However, you need to make sure that you can afford the
payments, as otherwise you risk losing your home. If you follow at least one
of these steps, you will reduce your interest payments and save yourself
money.

About The Author: Peter Kenny is a writer for The Thrifty Scot, please visit
us at http://www.loanwize.co.uk and http://www.thriftyscot.co.uk/Loans/

Understanding What Are Interest Rates And How They Work

One form of interest familiar to most of us is on our credit card purchases.
We are charged a monthly interest rate on our unpaid balances. If you spend
$100, you will be charged interest each month for the portion of the
original loan remaining. If you pay $20 on the loan in the first month, you
will reduce the loan to $80. The next month, however, you will have to repay
$80 plus the monthly interest.

The Federal Reserve Bank sets the interest rates. These are raised when the
economy is "heating up." This has the affect of decreasing consumer spending
by adding greater interest to financed purchases. When the economy begins to
slow down, interest rates may be lowered by the Federal Reserve Bank to
increase consumer spending. With lowered rates, consumers tend to use their
credit cards more often and finance more purchases of major appliances and
cars.

Interest rates vary. You may have a fixed rate of interest.
This where the lender sets the rate of interest when the loan is made. The
rate never changes over the length of the loan. If you borrow, $100, you
agree to repay $100 plus interest, 10% for example, over a fixed period of
time. The total amount of the loan would then be $100 plus 10% interest or
$110.

There are also variable interest rates. Here you agree to repay a loan, but
the interest rate is subject to change and the amount of interest is
calculated on the monthly balance. If you borrow the same $100, you will owe
$100 the first month. You pay $10. In the next month you will owe the
remaining amount of the bill, $90, plus the interest for that month, 10% for
example.
In effect, you will now owe $99, despite the fact that you have paid $10
against your loan. If you repeat your payment of $10 the following month,
you will now owe $89 plus 10% or $97.9.
You can see that after paying $20 on your loan, you have only lowered the
amount by $2.10. This is why you should not keep high balances in variable
rate accounts.

The lender sets the rates for your loan. This is because he/she sees you as
a risk. Interest rates depend on your credit history. If you have good
credit, the interest may be lowered.
If you have bad credit, then the risk is greater and your interest rate is
going to be higher. Lenders can quickly learn your credit history by looking
at your credit report.

The length of the loan affects your interest. Financial institutions are
likely to offer you lower interest rates if you obtain a loan with a longer
repayment time. Instead of repaying your $100 plus 10% over one year ($110),
the bank might give you an interest rate of 8% over two years, costing you
$116. While $6 interest may not seem like much, you can imagine what the
interest would be if the loan was for $1,000 or $100,000.

There is also interest paid on investments. One of the most common forms of
investment is a savings account. Here interest is calculated on the amount
of money you invest and how long you leave it untouched. If, instead of
borrowing $100, you put it into a savings account and left it there for one
year, you will have $100 plus the bank's interest rate. If the bank paid 5%
interest, you would have $105 at the end of the year. If you left the money
in the bank for another year, you would have $105 plus 5% interest or
$110.25. The more money you place into a savings account, the greater the
amount of interest the bank will have to pay you.

About The Author: Read more from Joe Goertz at:
http://www.finance-mag.com

Cleaning Up Your Credit Report

Feel like cleaning up your credit report is an impossible task?

There are many companies out there that offer to clean up your credit report
-- for a fee. But most of them do nothing that you can not do on your own.
The process of correcting errors on your credit report takes time and
patience. Some companies make the claim that they'll clean up your credit
report and improve your credit rating immediately. This is almost
impossible, so don't take their claims at face value.

Here are a few tips that will help you maintain a good credit
rating:

1. Pay bills promptly
2. Minimize credit inquiries
3. Leave cleared credit accounts open
4. Pay off credit cards monthly
5. Do not hold more than two major bank cards 6. Ensure your oldest credit
account is in the credit report.
7. Switch to credit cards with lower rates

If you have anything negative on your credit report due to an error, you
should get it removed immediately. Getting just one or two errors can
improve your score dramatically. You don't have to pay a fortune to get the
errors removed, either. The advantage of the Fair Credit Reporting act is
that the consumer can demand verification of any entry on his or her credit
report.

Identity theft is now a major issue with credit reporting. Keep a close eye
out for this type of fraud, as it can devastate your credit. Make it a point
to take advantage of your free credit reports so you can be aware of
identity theft as soon as it happens. Keep your finances in order -- it's
harder to dispute an entry on your credit report if your affairs are not in
order. You need to provide documentation for any dispute.

No issue with your credit can be resolved overnight. Be patient and
persistent, it will be worth it in the end.

About The Author: Robert Davis writes for several web sites, such as
http://dicez.com and http://rosuf.com