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What My Kids Are Saving For And How They Are Doing It

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We live in a fast-paced world.

We send texts to talk without having to wait for a call to be answered. We like our packages to arrive in 24 hours.

As great as this is, there are also downsides. It is teaching our children that they can have anything they want at a moment’s notice. They are not learning the gift of patience.

We are doing what we can to help our kids with this. We talk about what is important and when we can wait for something vs. when we need it right now.

One area we have covered is the desire for things. Sure, they want to get that bike or the new video game right now.

And yes, we could order it today and it would arrive tomorrow, but what does that teach them?  Honestly, nothing.

We are working with our kids to learn how to save their money now and have delayed gratification in buying what they need.

How did we get started?

To be honest, it began when our youngest wanted a new bike helmet. Hers was fine but it was a bit childish looking (it had a large unicorn horn on the front).

She was upset that she had to wear it as she no longer liked unicorns.

Rather than get upset with her about her desire to get something new just because her tastes had changed, we focused on teaching needs versus wants.

She was only 10 at the time and that was a hard lesson for her to learn. We had her make a list of everything she used each day – right down to her toothbrush.

Then, she had to look at each item and decide what she needed to live and those things that she did not.

Once that list was done, we showed her the photo of the girl our family adopted through our church. We had her look at the list of needs and share with us the items that little probably did not even have.

It was an eye-opener for her and she has learned that her needs are sometimes wants after all.

Teaching her to save

Once we finished talking about the needs, we focused on wants. We explained to her that it is OK to want things. We all have items we want to buy.

But, we wait. We do not rush out and get that expensive item right away.

Part of the saving also shows her that we sometimes think we want things we really don’t.  Once she had saved enough to buy that new helmet, she realized she did not want to part with her money for something so small.

She had worked hard and knew that the helmet was not that important after all.  She continued to save and worked toward getting a magnetic playset she wanted even more.

What our kids are saving for right now

All three of our kids have learned these lessons. They get paid for doing chores above and beyond those that are expected (yeah, no getting paid to take out the trash in this house).

They all know that they need to save for what they want for at least six months. That way, they can not only have the funds but they will know for sure they really want that item (as kids are fickle and change their minds on a whim).

My girls are not saving for anything right now. They continue to save their money as they know there will be something in the future they want.

My son, however, has his eye on a new camera.

He is obsessed with fishing and videos. He wants a camera that he can use to record his outings.

His phone works but he wants something better. We’ve told him we will not pay for it, but he can certainly save his money and buy it.

How is he saving

As I mentioned above, we do not do an allowance here. Our kids are expected to do what it takes to run our house.

They have chores. They help clean the house. They do what we ask to run our house.

What they do earn money for are the things above and beyond.

For example, my son helped my husband clear brush on our farm. He did it without complaining and was paid for it.

He then came home and noticed our front garden was full of weeds. He took the initiative and removed them without being asked. He earned some money.

Our son now looks around our house to see what needs to be done and does it before we ask.  When he can do that, then he can sometimes earn money (not always).

As a 13-year-old boy, he is limited with his earning abilities but keeps finding ways to make money.

He quickly saved enough for the camera. But, he has not yet bought it as he does not want to part with such a large amount of money.

I imagine he will buy it, but he wants to save more so he does not wipe out his savings account on something he wants, rather than something he needs.

Money lessons aren’t easy but if we don’t teach them to our kids, who will?

 

 

The post What My Kids Are Saving For And How They Are Doing It appeared first on Penny Pinchin' Mom.



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How To Pay For College: The Best Order Of Operations

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How To Pay For CollegeHow To Pay For College

Mountains of student loans are what most people think of when it comes to paying for college.

Student loans are a source of funding for most students but they should actually be your last option. Student loans accrue a lot of interest and take years to pay off. In fact, a study from the OneWisconsin Institute finds that it takes graduates of Wisconsin universities 19.7 years to pay off a bachelor’s degree and 23 years to pay off a graduate degree.

Knowing that students loans will likely be a source of funding, there is still an order of operations to follow when seeking out funding sources for college. After reviewing your financial aid award notification, you’ll have to think about how you’re going to pay for school.

In this article, we’ve provided the main groups of funding sources. Start with the top group and work your way down to the last (i.e., worse) option, which is student loans. By following this guide, there’s a chance you can reduce the amount of student loans needed to finance college. For a lucky few, they may find student loans are not even necessary.

Here’s our take on the “best’ order of operations to pay for college. It’s important to note that this is more like a “pie” than a strict order. The more you can contribute from the “earlier” slices, the less you’ll have to borrow. And there is no “strict” rules here – but you should definitely use free money before other funds.

1. Scholarships and Grants

Gift aid is part of your financial aid award. This is money that does not have to be paid back. It includes grants, scholarships, and any source of private funding that doesn’t require you to pay it back.

Of course, it depends on getting your FAFSA submitted on time.

Some students might realize a large amount of scholarships and grants. Others might not be able to get as much. 

Don’t forget to apply for private scholarships and grants as well – don’t just depend on your school. This sounds crazy, but I recommend high schoolers apply to at least 50 scholarships.

To make it easy, we also have this guide to Scholarships and Grants By State.

Check out these guides:

2. Your Own Savings (as a student)

Saving for college requires planning. If you’re one of a small group who has accumulated money for college, it’s time to put it to work.

Maybe you’ve been saving your graduation money, or you’ve received birthday funds over time. Maybe grandma even left you some money to pay for college when you were younger.

If you have your own student savings, using it to pay for college is a great first step. 

3. Your Earnings (as a student)

Additionally, using your current income will help cut down on any loans you might need. If you don’t have any savings, use what you can from current income to help fund college.

A lot of people forget that they can earn money before going to school (i.e. the best summer jobs for college students), or even work full time during school.

I personally worked full time while going to university. I worked five days per week – Monday, Wednesday, and Friday nights, and during the day on Saturdays and Sundays. I tried to schedule my classes for Tuesday and Thursday, or if necessary, before work on the other days.

Don’t know about ways to earn as a student? Check out our 100+ Ways To Make Money In College.

4. Parents Savings For College

Next on the list is any money your parents may have put aside for school. This could be in the form of a 529 college savings account, or other savings vehicle. 

Many parents have started saving for college for their students at a young age. Leveraging money in a tax deferred plan like a 529 savings account can be a great way to pay for the majority of school (if the money is there).

Parents might also have other savings set aside for their child. It’s important to have conversations about parental contributions early, so that everyone involved in the “paying for college” debate knows what to expect.

5. Parents Current Income

Along with a student’s income, a parent’s income is also a primary source of paying for college. Even if parent’s have saved very much, they may be able to contribute a little bit towards the cost of college every year simply through their current salary.

Some parents may be able to contribute much more than others, but every little bit that can be sent in to avoid borrowing for school is a huge win.

Note: Some states give tax deductions or tax credits for 529 plan contributions. You can contribute and withdraw in the same year in most states – making it potentially worthwhile to use your current income to contribute to a 529 plan, then pay for college from there.

See our guide: 529 Plan Rules By State.

6. Fellowships and Assistantships 

If you are attending graduate school, a fellowship is a great source of funding. It is awarded to graduate students based on merit. It allows the graduate student to focus on their studies rather than having to work or teach. Fellowships do not have to be paid back. They also look great on CVs and carry a certain cachet.

“It’s basically the Harry Potter scar on your forehead indicating you’re an amazing scholar,” stated Meredith Drake Reitan, associate dean for graduate fellowships at the USC Graduate School.

“The fellowship program is about research potential,” she said. “Faculty members might say, ‘They’re not ready to apply to for the NSF Fellowship because their research hasn’t quite jelled.’ But that’s actually right where the NSF wants them — it’s designed to be an early career accelerator.”

The takeaway: don’t think you aren’t qualified for a fellowship. They are certainly worth applying to. Speak with your educational counselor or advisor about how and which ones may have the highest potential for successful acceptance.

7. Aid Through School Work-Related Programs

We continue down the list and come to work-related programs that are meant to provide a flexible schedule around your classes. At this point, you’ve exhausted all forms of funding that don’t require work exchange or loans. We’re now moving into funding sources that will require some sort of payback.

Work studies are common on college campuses. These programs are usually tied into your financial aid award. They allow you to work on campus within a flexible schedule. Pay is usually minimum wage, but you can’t beat the flexible schedule provided by these programs. While it is a smaller source of funding, depending on your class schedule, it might be the only type of job you can take on.

Assistantships are usually reserved for graduate students. These programs are similar to work studies except they are teaching positions. Often the student will teach lower-level classes in areas they are very familiar with.

8. Federal Student Loans

We’ve come to one of the last option as a source for funding college. This is money that must be paid back, will accrue interest and often has some type of origination fee. For many students, it’s difficult to avoid taking on loans.

Federal loans have a fairly low interest rate, which often does not exceed the single digits. As reported by StudentAid.ed.gov, loans first disbursed on or after 7/1/20 and before 7/1/21 have the following interest rates:

  • Direct Subsidized (undergraduate): 2.75%
  • Direct Unsubsidized (undergraduate): 2.75%
  • Direct Unsubsidized (graduate or professional): 4.30%
  • Direct PLUS: (parents and graduate or professional students): 5.30%

In regards to loans for college, you aren’t likely to find a better deal anywhere else.

Don’t believe us? Check out the Best Student Loan Rates here.

If you need to get a student loan, here’s the process on How To Apply For A Student Loan (Both Federal and Private).

9. Private Student Loans

Private loans are another and final option. These may be loans from banks or other lenders that are non-government. They will have higher interest rates than government loans and won’t provide the same advantages such as hardship, forbearance, and fixed interest rates.

Private student loans should really be a last resort, and before borrowing, you should really do a full Return On Investment Calculation of your college expenses to even see if college is worth it.

We recommend students shop and compare private loan options before taking them out. Credible is an excellent choice because you can compare about 10 different lenders in 2 minutes and see what you qualify for. Check out Credible here.

You can also see the full list of private student loan options here: Best Private Student Loans.

Final Thoughts

Paying for college can be a challenge. It’s a huge sum of money, and there are a lot of different ways to go about it.

I like to think about it as a pie – each one of the steps above is a slice, and you can try to make some bigger to minimize others. 

The bottom line here is that you don’t need to borrow the entire amount for school. There are many different ways to pay for college if you work at it.

The post How To Pay For College: The Best Order Of Operations appeared first on The College Investor.



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Introducing Coverage Critic: Time to Kill the $80 Mobile Phone Bill Forever

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A Quick Foreword: Although the world is still in Pandemic mode, we are shifting gears back to personal finance mode here at MMM. Partly because we could all use a distraction right now, and even more important because forced time off like this is the ideal time to re-invest in optimizing parts of your life such as your fitness, food and finances.

Canadian Readers – we have also collected some recommendations for you at a new Canadian Mobile Phone recommendations page.

Every now and then, I learn to my horror that some people are still paying preposterous amounts for mobile phone service, so I write another article about it.

If we are lucky, a solid number of people make the switch and enjoy increased prosperity, but everyone who didn’t happen to read that article goes on paying and paying, and I see it in the case studies that people email me when looking for advice. Lines like this in their budget:

  • mobile phone service (2 people): $160

“NO!!!!”
is all I can say, when I see such unnecessary expenditure. These days, a great nationwide phone service plan costs between and $10-40 per month, depending on how many frills you need.

Why is this a big deal? Just because of this simple fact:

  • Cutting $100 per month from your budget becomes a $17,000 boost to your wealth every ten years.

And today’s $10-40 phone plans are just great. Anything more than that is just a plain old ripoff, end of story. Just as any phone more expensive than $200* (yes, that includes all new iPhones), is probably a waste of money too.

So today, we are going to take the next step: assigning a permanent inner-circle Mustachian expert to monitor the ever-improving cell phone market, and dispense the latest advice as appropriate. And I happen to know just the guy:

Christian Smith, along with colleagues at GiveWell in San Francisco, circa 2016

My first contact with Chris was in 2016 when he was working with GiveWell, a super-efficient charitable organization that often tops the list for people looking to maximize the impact of their giving.

But much to my surprise, he showed up in my own HQ coworking space in 2018, and I noticed he was a bit of a mobile phone research addict. He had started an intriguing website called Coverage Critic, and started methodically reviewing every phone plan (and even many handsets) he could get his hands on, and I liked the thorough and open way in which he did it.

This was ideal for me, because frankly I don’t have time to keep pace with ongoing changes in the marketplace. I may be an expert on construction and energy consumption, but I defer to my friend Ben when I have questions about fixing cars, Brandon when I need advice on credit cards, HQ member Dr. D for insider perspectives on the life of a doctor and the medical industry, and now Chris can take on the mobile phone world.

So we decided to team up: Chris will maintain his own list of the best cheap mobile phone plans on a new Coverage Critic page here on MMM. He gets the benefit of more people enjoying his work, and I get the benefit of more useful information on my site. And if it goes well, it will generate savings for you and eventual referral income for us (more on that at the bottom of this article).

So to complete this introduction, I will hand the keyboard over to the man himself.

Meet The Coverage Critic

Chris, engaged in some recent Coverage Criticicism at MMM-HQ

I started my professional life working on cost-effectiveness models for the charity evaluator GiveWell. (The organization is awesome; see MMM’s earlier post.) When I was ready for a career change, I figured I’d like to combine my analytical nature with my knack for cutting through bullshit. That quickly led me to the cell phone industry.

So about a year ago, I created a site called Coverage Critic in the hopes of meeting a need that was being overlooked: detailed mobile phone service reviews, without the common problem of bias due to undisclosed financial arrangements between the phone company and the reviewer.

What’s the Problem with the Cell Phone Industry?

Somehow, every mobile phone network in the U.S. claims to offer the best service. And each network can back up its claims by referencing third-party evaluations. 

How is that possible? Bad financial incentives.

Each network wants to claim it is great. Network operators are willing to pay to license reviewers’ “awards”. Consequently, money-hungry reviewers give awards to undeserving, mediocre networks.

On top of this, many phone companies have whipped up combinations of confusing plans, convoluted prices, and misleading claims. Just a few examples:

  • Coverage maps continue to be wildly inaccurate.
  • Many carriers offer “unlimited” plans that have limits.
  • All of the major U.S. network operators are overhyping next-generation, 5G technologies. AT&T has even started tricking its subscribers by renaming some of its 4G service “5GE.”

However, with enough research and shoveling, I believe it becomes clear which phone companies and plans offer the best bang for the buck.  So going forward, MMM and I will be collaborating to share recommended phone plans right here on his website, and adding an automated plan finder tool soon afterwards. I think you’ll find that there are a lot of great, budget-friendly options on the market.

A Few Quick Examples:

Mint Mobile: unlimited minutes, unlimited texts, and 8GB of data for as low as $20 per month (runs over T-Mobile’s network).

T-Mobile Connect: unlimited minutes and texts with 2GB of data for $15 per month.

Xfinity Mobile: 5 lines with unlimited minutes, unlimited texts, and 10GB of shared data over Verizon’s network for about $12 per line each month (heads up: only Xfinity Internet customers are eligible, and the bring-your-own-device program is somewhat restrictive).

Cricket Wireless: 4 lines in a combined family plan with unlimited calling, unlimited texting, and unlimited data for as low as $100 per month (runs on AT&T’s network).

Ting: Limited use family plans for under $15 per line each month.

[MMM note – even as a frequent traveler, serious techie and a “professional blogger”, I rarely use more than 1GB each month on my own Google Fi plan ($20 base cost plus data, then $15 for each additional family member). So some of these are indeed generous plans]

Okay, What About Phones?

With the above carriers, you may be able to bring your existing phone. But if you need a new one, there are some damn good, low-cost options these days. The Moto G7 Play is only $130 and offers outstanding performance despite the low price point. I use it as my personal phone and love it.

If you really want something fancy, consider the Google Pixel 3a or the recently released, second-generation iPhone SE. Both of these are amazing phones and about half as expensive as an iPhone 11.

——————————————-

Mobile Phone Service 101

If you’re looking to save on cell phone service, it’s helpful to have a basic understanding of the industry. For the sake of brevity, I’m going to skip over a lot of nuances in the rest of this post. If you’re a nerd like me and want more technical details, check out my longer, drier article that goes into more depth.

The Wireless Market

There are only four nationwide networks in the U.S. (soon to be three thanks to a merger between T-Mobile and Sprint). They vary in the extent of their coverage:

  • Verizon (most coverage)
  • AT&T (2nd best coverage)
  • T-Mobile (3rd best coverage)
  • Sprint (worst coverage)

Not everyone needs the most coverage. All four nationwide networks typically offer solid coverage in densely populated areas. Coverage should be a bigger concern for people who regularly find themselves deep in the mountains or cornfields.

While there are only four nationwide networks, there are dozens of carriers offering cell phone service to consumers – offering vastly different pricing and customer service experiences.

Expensive services running over a given network will tend to offer better customer service, more roaming coverage, and better priority during periods of congestion than low-cost carriers using the same network. That said, many people won’t even notice a difference between low-cost and high-cost carriers using the same network.

For most people, the easiest way to figure out whether a low-cost carrier will provide a good experience is to just try one. You can typically sign up for these services without a long-term commitment. If you have a good initial experience with a budget-friendly carrier, you can stick with it and save substantially month after month.

With a good carrier, a budget-friendly phone, and a bit of effort to limit data use, most people can have a great cellular experience while saving a bunch of money.

MMM’s Conclusion

From now on, you can check in on the Coverage Critic’s recommendations at mrmoneymustache.com/coveragecritic, and he will also be issuing occasional clever or wry commentary on Twitter at @Coverage_Critic.

Thanks for joining the team, Chris!

*okay, special exception if you use it for work in video or photography. I paid $299 a year ago for my stupendously fancy Google Pixel 3a phone.. but only because I run this blog and the extra spending is justified by the better camera.

The Full Disclosure: whenever possible, we have signed this blog up for referral programs with any recommended companies that offer them, so we may receive a commission if you sign up for a plan using our research. We aim to avoid letting income (or lack thereof) affect our recommendations, but we still want to be upfront about everything so you can judge for yourself. Specific details about these referral programs is shared on the CC transparency page. MMM explains more about how he handles affiliate arrangements here.



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Four career benefits of training to become a CFA, and how you can start now

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This article was created by StackCommerce. While Postmedia may collect a commission on sales through the links on this page, we are not being paid by the brands mentioned.

Most of us may only think about CFAs when tax season rolls around. Chartered financial analysts are finance experts who can help you land that perfect tax refund, but they’re also a lot more than that. Becoming a CFA can be a major career boost to those already employed in the financial sector. For those who aren’t, learning what it takes to be a CFA is a good way to dip your toes into the world of finance. Ultimately, learning the skills and know-how of a CFA is good knowledge for any person who cares about their money.

If you’re interested in receiving a CFA certification,

The All-In-One CFA Level 1 Exam Certification Prep Bundle

is the perfect training material to prepare you for the first level of the exam. After this bundle—which is only $39.99 USD—you can decide whether to pursue a CFA further. Here are four reasons you should consider becoming a certified CFA.

It opens networking opportunities

Around the world, there are more than

156,000

CFA charter holders, many of them employed by some of the top investment firms. You’ll be able to find another CFA anywhere, which can help you propel your career forward in the field through networking. There’s nothing better than a global opportunity, and a CFA offers you that. The prep bundle even has a course on Ethical and Professional Standards, which may prepare you for mingling with your peers.

CFAs enjoy higher salaries

Who doesn’t like more money? Because so many CFAs work for global institutions, they often have higher salaries, too. If you’d rather work for a smaller firm, the pay is also exemplary because CFAs receive better-paying projects due to their skill level. A CFA charter holder can expect, on

average

, to earn $104,000. Financial professionals hoping to push their career forward would really benefit from

The All-In-One CFA Level 1 Exam Certification Prep Bundle

as it can open the door to this salary increase should you decide to take the exam. The bundle includes courses on corporate investments and equity investments to help refine those skills to succeed.

Don’t get hit with that FOMO

You can face some disadvantages if you don’t have that CFA title. While it was a rarity back in 2003, many professionals in the field now have it, giving them a distinct edge over those who don’t. You don’t want to look like you’re less than what you are because of a simple certification. More than 227,000 candidates are working on securing that certification, and you can be among them by taking these essential lessons. For some, this certification is about status. You don’t want to feel left behind.

It’s a better investment than an MBA

MBAs can be a substantial investment. Not only can they take a year or two, but they often come with thousands of dollars in debt. Taking the exams to secure your CFA won’t only cost less money, it’ll take you less time. Let’s face it: Sometimes, time is worth more than money. A CFA can cost you anywhere between $3,000 to $9,000. An MBA, on the other hand, can cost you a

whopping $50,000

. You don’t need an MBA to prove your financial knowledge. With a CFA, you can show your boss what you’re about and move forward in the industry.

The

All-In-One CFA Level 1 Exam Certification Prep Bundle

has got 62 lessons on everything you need to ace that first level exam. And if you wind up not liking it, at least you spent only $39.99 USD instead of the thousands you’d spend on the exam itself.



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