You taught them how to tie their shoes and how to ride a bike. Now that they are heading off to college, you can teach your children the ABCs of money management.
The most important skill you can teach your child regarding money is how to create a spending plan and stick to it.
Whether your child receives money from scholarships, student loans, summer jobs or the Bank of Mom and Dad, they need to learn to be good stewards of their money.
Often, college is the first time a child has the responsibility of managing his or her own finances. Without proper planning, a lump sum of money saved for the first semester can easily evaporate before Halloween arrives.
Show your child how to create a budget by adding up all sources of income for the semester and then subtracting known and anticipated expenses. Help him or her allocate the money over the entire semester. As you are going through this exercise, it is a great time to talk about the difference between needs and wants. Textbooks are a need; pizza is a want.
Setting up the budget is the easy part. Sticking to the budget can be a learning experience. To help with this task, have your child download an app to track spending, like mint.com.
Setting up a banking relationship is a basic step of money management. For convenience, it is often simplest to have your child establish a checking account at a financial institution near his or her college campus.
Many campuses have bank branches in the student union, so students without cars can have easy access.
After setting up an account, help your child to understand all the fees involved with his or her checking account monthly fees, overdraft fees and the high-cost of ATM fees at foreign machines. Encourage your child to keep accurate records of all their withdrawals and debit card purchases to avoid overdrawing their account.
Also, have your child download their banks app, so they can use it to find local ATM machines, and as an additional tool to track their account activity.
These days, a good credit score can impact more than just the interest rate on loans. Explain to your child that a low credit score can affect his or her ability to rent an apartment, obtain car insurance and maybe even the chance of obtaining a job upon graduation.
It is important to build a strong credit history. Unless your child is at least 21 years old, he or she may not be able to independently obtain a credit card without a co-signer. You may want to co-sign on a low-credit-limit card with your freshman child, for two reasons.
First, he or she can get used to how credit cards operate under your guidance. Second, it can provide emergency funds if your child runs into trouble.
Just as it took a few times for your child to get the hang of riding a bike without training wheels, he or she may take a few financial spills while learning these new lessons.
So be patient with your new student, and be prepared to provide a sturdy guiding hand when needed, just as you did with the bike.
Laura Medigovich is a certified financial planner and vice president for MT Banks Hudson Valley region. The views expressed by the author are her own and are not endorsed by MT Bank, MT Securities or their affiliates.
WITHIN a week of announcing his retirement from the group he led for two decades, Michael Mark, Truworths CEO, cashed in 1.6-million shares, clocking up a R115.5m pretax profit.
The share trades, described as part of a rebalancing of Mr Mark’s investment portfolio, will reduce his holding in the retailer to 5.1-million shares and options.
This portfolio rebalancing exercise scored him R202.7m in the past year. In March, Mr Mark sold 700,000 shares in four transactions that generated R48.6m. And in September last year, Mr Mark disposed of an additional 500,000 and generated a pretax profit of R38.6m.
Despite this, Mr Mark still has a hefty chunk invested in Truworths. At R74 a share, his remaining holding is valued at about R377m.
But, given the outlook for the retail sector in general and credit-based retailers in particular, it is unlikely he will achieve the current share price level for any additional sales in the next year or so.
Analysts are jittery about the fact that 70% of Truworths sales are on credit, given the fallout from unsecured lending that recently hit African Bank. Some also contend that Truworths is vulnerable to the growing number of global retailers making inroads in South Africa.
The details of the share sale, announced late on Wednesday, highlight the extent of the strong performance achieved by Truworths under his leadership.
The shares sold were options granted to him in November 2000 under the company’s share incentive scheme at R3.66 each. Mr Mark converted 1.6-million of these options into shares and immediately sold them for R74 each.
He could have made considerably more money had he done the rebalancing act a year earlier when Truworths was trading above R100.
He did sell blocks of shares last August and September, again in a portfolio balancing exercise, but the top price he got was R84 a share.
Ironically, the ongoing share repurchasing programme implemented by Truworths has seen the company buy back shares at levels higher than Mr Mark was able to get for his shares.
A spokesperson for Truworths said executives are not allowed to sell shares at the same time as the company is buying back stock.
In last week’s results presentation, Truworths said it repurchased 6.2-million shares at an average price of R78.94 during its 2014 financial year.
In its previous financial year, Truworths paid an even steeper price to repurchase shares. In March 2013, the company spent R316m buying back shares at R90 a share.
o This article was first published in Sunday Times: Business Times
LONDON: Euro zone money market rates fell to new lows on Tuesday and German Bund yields dropped below 1 percent as the regions weak recovery kept up pressure on the European Central Bank to maintain its ultra-loose monetary policy.
With a fresh round of tit-for-tat sanctions between Russia and the West in discussion as the Ukraine conflict rumbles on, investors are becoming increasingly certain that economic stagnation combined with low inflation will herald a prolonged period of low rates.
The ECB has already taken measures to keep borrowing costs low and ensure the euro zone banking system has ample spare cash, with new four-year loans (TLTROs) set to become available to banks from September. But strategists say current market prices are starting to price in further policy easing ahead.
Low rates are simply an expectation of continued ample liquidity from the ECB, certainly through the TLTROs but maybe down the line through additional initiatives, said Lars Peter Lilleore, the chief strategist at Nordea.
Money market traders now see an even 50 percent chance of an asset-purchase programme, known as quantitative easing, in the coming year, a Reuters poll found on Monday.
Excess liquidity currently stands at 134 billion euros which helped push the euro overnight lending rate to a record low of 0.006 percent at Mondays fix.
The ECB decided in June to charge banks to keep their money in overnight deposits, hoping that this would stimulate lending into the real economy. It also injected liquidity into money markets by abandoning a tender to sterilise crisis loans.
Strategists say these policies are helping to keep spot Eonia near zero, and could even result in an unprecedented drop into negative territory.
I wouldnt exclude the overnight rate dropping below zero, but I find it difficult to see banks charging negative rates on unsecured lending, said Benjamin Schroeder, a strategist at Commerzbank.
A higher-than-expected uptake at the ECBs weekly refinancing tender on Tuesday will partly offset LTRO repayments, keeping excess liquidity near current levels.
Forward money market rates are also at lows, pinned by Septembers upcoming cash injection. Looking further out the forward curve, Nordeas Lilleore said rates for 2015 suggest there will have to be negative daily fixings.
Longer-term rates are also near historic lows.
Yields on German 10-year bonds – the euro zone benchmark – fell back below 1 percent on Tuesday. They fell to a record low of 0.952 percent last week.
Germany plans to sell 5 billion euros of a new 2-year Schatz with a zero percent coupon on Wednesday.
Along with the Russian sanctions that have dimmed the outlook for the stagnating euro zone economy, a deflationary spiral is also a source of worry for the ECB.
German 10-year breakevens – the difference between yields on inflation-linked and nominal bonds – have dropped 25 bps in recent weeks, and at 1.2 percent are well below the ECBs target inflation rate of just below 2 percent.
What has really driven the market here is poor macroeconomic data, probably compounded by the sanctions and the implication that this might have on economic activity, said RBCs head of European rates strategy, Peter Schaffrik.
Elsewhere on Tuesday, Portugals 10-year yields dropped 9 bps to 3.42 percent. Ratings agency Fitch said partial approval by the countrys constitutional court of expenditure measures reduced a key near-term risk and kept the country on track to hit fiscal targets.
(The following statement was released by the rating agency)
Link to Fitch Ratings Report: South African Banks: Peer Review
DUBAI/LONDON, August 26 (Fitch) Fitch Ratings says in a new
special report that
the operating environment in South Africa acts as a cap to bank
Absa Bank Limited, FirstRand Bank Limited, Nedbank Limited and
Bank of South Africa and their relevant rated holding companies
Viability Ratings of bbb, which are effectively capped by the
environment at this rating level, says Redmond Ramsdale, a
Director in Fitchs
Financial Institutions team.
Four major South African banks have Issuer Default Ratings
driven by their
standalone strength, reflected by their Viability Ratings:
Limited, Nedbank Limited, The Standard Bank of South Africa
Limited and Investec
Bank Limited. The Issuer Default Ratings of Barclays Africa
Group Limited and
Absa Bank Limited are driven by support from their parent
Barclays Bank plc
The Negative Outlook on Absa Bank Limited, FirstRand Bank
Limited and The Standard Bank of South Africa reflects that of
the South African
sovereign. The banks ratings would be downgraded if the
downgraded. Investec Bank Limited is rated one notch lower at
bbb- and would
not be downgraded if the sovereign is downgraded by one notch.
Fitch believes the propensity to support banks is weakening in
South Africa with
the impending adoption of resolution legislation. But a moderate
support for systemically important banks will remain. Its
approach to factoring
in state support for systemically important banks does not
change, despite the
resolution of African Bank.
The South African major banks reported improved earnings during
2013, mainly due
to higher corporate loans and advances, and the banks African
South Africa (excluding Investec). Fitch believes this
however, be difficult to maintain due to slow GDP growth, a low
environment (although on an upward trend), a fairly saturated
lending market and
Near-term improvements in earnings may still be possible from
arising from the trend change in loan book mix, with growth in
personal lending and vehicle financing at the major banks,
In 2013 unsecured lending growth reduced significantly in light
of its emerging
weak performance. Due to anaemic domestic economic conditions,
we consider that
longer-term growth prospects are likely to be driven by
expansion into the rest
of Africa for the big four (excluding Investec).
The non-performing loan (NPL) ratios of the South African banks
improving since 2010 following a turn in the credit cycle. Lower
NPLs have been
supported by sustained low interest rates. In the medium term,
loan impairment charges for the major banks, excluding Investec,
to stabilise at
100bp-120bp of loans. The agency expects Investecs impairment
charge ratio to
remain stable at a lower level, due to its different loan book
composition as a
specialist bank and asset manager.
Fitch considers the major banks Fitch core capital ratios as
the operating environment.
The report, Domestic Operating Environment Caps South African
Bank Ratings, is
available on www.fitchratings.com or by clicking on the link
+971 4 424 1202
Fitch Ratings Limited
Al Thuraya Tower 1, Office 1806
Dubai Media City
PO Box 502030, Dubai
+44 20 3530 1618
Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153,
Additional information is available at www.fitchratings.com.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS
here. IN ADDITION,
ON THE AGENCYS
PUBLIC WEBSITE WWW.FITCHRATINGS.COM. PUBLISHED RATINGS,
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCHS
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE
FROM THE CODE OF
CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES.
DETAILS OF THIS
SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH
Lightbulb Crew has canceled their Kickstarter project two weeks into it, but not because its worried that it cant make its goal of 100k. Nope, its for a happy reason- it has secured funding!
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Charitable giving on the Vineyard has begun to see shifting trends, as competition for donor dollars increases amid a crowded field of nonprofits and an equally crowded summer calendar of fundraising events. There are capital campaigns in varying stages of completion and annual operating budgets to meet, and for most nonprofits, summer fundraising is the primary economic engine.
This year, the Vineyard Playhouse is winding down a campaign to renovate its theatre, while Vineyard House has secured funding for a sober living campus now under construction. The Marthas Vineyard Arena is looking to replace its roof.
The Marthas Vineyard Museum is leading a campaign to raise $21 million in private donations for a new museum site overlooking the Vineyard Haven harbor. About a third of that goal has already been committed through cash and pledges, museum executive director David Nathans said this week.
Cindy Doyle, who worked on a campaign to build a YMCA on the Island from 2001 to 2007, said the Y campaign did not get underway in earnest until the Marthas Vineyard Hospital had finished its $52 million capital campaign.
So I would suggest that your sense of security isnt coming from how much money you have in the bank. Instead, your feeling of security and well being is defined by the way you think about money and what you have.
2) Poor Communication: Blaming and shaming is a natural by-product of thinking that your security and well-being is linked to your money. If you or your partner is not managing your affairs all that well, it would make sense that if you see your finances take a hit, that you will feel insecure and blame the other.
But what if you were able to communicate about what is going on in a calm and generous manner? How different would your experience be?
In my own experience, being able to listen and get curious as to why the other person is doing what they are doing makes a huge difference. In fact, its not the content of the argument that kills relationships, but how the content is communicated.
The Top 5 Mistakes That Lead to Divorce
3) The Hidden Hamster Wheel: This refers to thought patterns such as, I will be happy when he/she changes his or her behavior or we would be so much more secure if he/she spent less money or gave me more money. What kills a relationship is wanting someone elses behavior to change and for things to be different.
If you live with the erroneous belief that your well-being and your feelings are coming from how someone behaves versus your own thinking, you will want them to stop the behavior.
Once you can see that your feelings of insecurity and frustration dont come from how they behave but from what you are thinking, you will have peace of mind.
Next time you find yourself embroiled in an argument or a fight. STOP, take a moment to reflect on what is creating this experience for you. I guarantee that it will be your thinking in that moment versus it being about the other person and finances. After all, its the meaning we ascribe to our situations that create security or take it away.
This guest article originally appeared on YourTango.com: Are You So Worried About Money That You Cant Be Intimate?
I suggest a weekly session to deal with your finances, including: banking as needed, monitoring your online bill payments and other financial accounts, paying paper bills, any miscellaneous financial to-dos that crop up during the week, and filing of your financial documents. It may sound like a lot, but if you do this every week it doesnt take that long since not much really happens in just one weeks time. I can typically accomplish this in about 30 minutes, including balancing the checkbook, and putting stamps on the envelopes to mail out anything as needed.
The daily work takes even less time. It requires you to have consistent habits in place to put paperwork, including bills, receipts and other items you accumulate and receive during the week, such as in the mail or as you make a purchase, in one place so that you can deal with it during your weekly session. This will typically take someone two minutes at the most daily, if you actually do it daily.
(Flanery offers a free printable bill organizer on her website that can help track due dates, to make sure you pay bills in plenty of time and avoid late fees, and to plan how much money you need in your account at various times of the month.)
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Put Bills in Their Place
Sorting through stacks of stuff is what takes lots of time. Touching it once and putting it into the right place for later action takes hardly any time at all.
Have a designated place for all paper bills as they are received, and put them there right away. Dont allow yourself to set them down somewhere absentmindedly. When you sort your mail daily, put bills in their designated place until you deal with them during your weekly session during which you will pay them, or calendar them for payment during another weekly session if their due date allows (be sure to account for mailing time). Then file the paid bills and any other financial documents you received that week, once youve reviewed them and/or taken any needed actions on them.
Similarly, have a designated folder in your email for all pending electronic bills that you will review and deal with during your weekly finance session. When you receive the email move it to that pending weekly session folder immediately. During the weekly session, open those emails and deal with them one by one, then move them from the pending folder to a different folder for record-keeping (in case you need to reference them later). Similarly, during the weekly session log into your online bill paying system and review what has happened, to confirm payments have been made for the right amount, and that you have adequate money in your account for paying these bills.
Taming the Paper Trail
For receipts, keep an envelope or two in your purse or wallet and place all receipts, as you receive them, into the envelopes. I use two envelopes because I have both personal and business expenses and I find it easier to separate those immediately, but for many people one envelope will be enough. During your weekly paperwork session you can pull out all those receipts and quickly deal with them. For business receipts add the information from them, as necessary, for your bookkeeping and tax needs into a program like QuickBooks, and then separate out any receipts you need for business or tax purposes and file them accordingly. Most personal receipts, except for large-ticket purchases, can almost immediately be tossed, and should be.
The same idea should be used for tax documents, many of which come right at the beginning of the year. As you receive tax documents, just place them immediately in the correct pending tax file folder so you have them together when you are ready to work on your taxes. Once youve filed your returns, all the information is already together and ready to be filed for your records.
Receipts: Keep or Toss?
When filing paid bills I find a simple system works best because realistically there are few instances that you need to reference paid bills again. If you need to keep certain bills for business or tax records, separate those out from those that are purely personal, so that you can save them for as long as needed.
Otherwise, get a 12-pocket January-December accordion folder and place paid bills in the appropriate month in which you paid them do this at the end of each weekly financial organization sessions. When the same month rolls back around the next year, empty the last years bills from the accordion file and toss them (you may want to shred them, depending on what financial information is included on them), and put the current months bills in its place. That way you always have a rolling file of the last years paid bills, but not excess paper clutter. You can see photos of Flanery’s “tickler files” – and examples from her readers – here.
The weekly session, supplemented with the daily habits mentioned, will allow you to accomplish all three goals of financial organization without much time input. It allows you to keep on top of all the paper you receive, so you never get buried under piles of it. You will not miss deadlines, since you will review everything weekly, calendar as appropriate, and deal with items as the time comes. And finally, when you file as you go, at the end of each of these sessions, youll be able to find whatever financial information you need easily, without searching for hours upon hours for the proverbial needle in the haystack of your paper piles.
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Organize Your Credit Too
Everyone should be checking their credit report consistently, because errors on your report can cost you a lot of money in higher interest charges; not to mention you need to be monitoring for identity theft.
You can get one free credit report a year from each of the three major credit reporting companies on AnnualCreditReport.com. You can choose to get all three reports at once, but I suggest spacing them out approximately four months apart to monitor your credit throughout the year in regularly timed intervals.
Obviously, if you need to deal with an issue it will take you more time, but youll be happy to know youve got something that needs to be cleared up instead of living in the dark until some negative consequence occurs because of it. This method ends up taking just a few minutes and costs you nothing except the time necessary to set up your reminders to do it at regular intervals.
The Step You Can Take Today
Reviewing Flanerys steps, I see things I am doing well I have one of those accordion folders for receipts already, for example. I also see others I can improve upon namely setting aside a few minutes a day to deal with these tasks so the papers dont pile up.
And after hearing from so many consumers who have dealt with credit mistakes or problems, I cant agree more that finding and fixing credit mistakes now is a lot less stressful when you’re not dealing with loan rejection or other setbacks. In addition to checking your credit reports for free, as Flanery suggested above, you can also get your credit scores for free along with an action plan for your credit at Credit.com.
More Money-Saving Reads:
- What’s a Good Credit Score?
- What’s a Bad Credit Score?
- How Credit Impacts Your Day-to-Day Life
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Credit card lenders around the country are beginning to salivate as college students head to campus — though not as enthusiastically as they once did. Young adults used to be a powerful debt-generating machine, and banks took full advantage. Then the CARD Act of 2009 made many of the old practices that lenders used to lure and keep college students in debt illegal. However, even with those changes, college student credit cards carry some of the highest annual percentage rates in the country, rivaling those of store credit cards.
The CARD Act Didnt Eliminate the Problem
Pre-CARD Act, college students could simply sign up for a card at age 18. Now, individuals younger than 21 cannot be offered pre-approved credit cards. They must have proof of income or a co-signer older than 21. But these restrictions dont make it hard for the average college kid to obtain plastic.
Post-CARD Act, credit card companies were largely banned from their old tricks of handing out free T-shirts, pens, tote bags or Frisbees to entice naive students. Instead of offering tangible goods, lenders moved to using rewards to lure college students to spend, spend, spend their way into owing money at cripplingly high annual percentage rates.
Analyzing the APR of Student-Targeted Credits Cards
A college student handling his or her first credit card is likely to pay an average annual percentage rate of 21.4 percent, according to a study of the top 50 US banks by MagnifyMoney.com (where I work).
This is not much lower than the average retail credit card APR of 23.23 percent, which was noted as some of the highest in the country, according to a recent survey from CreditCards.com.
Bank of America (BAC) offers the lowest possible APR on a no rewards college student card, starting at 10.99 percent, but with a high of 20.99 percent. Its cash and travel rewards cards start at 12.99 and 14.99 percent, going up to 22.99 percent.
Cards like Citis (C) ThankYou Preferred Card for College Students offers 2,500 bonus ThankYou points after spending $500 within the first three months of owning the card. The card also features double ThankYou Points on purchases for dining at restaurants and on entertainment. With a 23.99 percent APR, this card could easily lead college students into overspending to rack up 2,500 points for a measly $25 gift card to Chilis (EAT).
Many college students dont enter university with an established credit score. Lenders see someone with a lack of established credit history as a higher risk, so lenders are likely to be applying the highest APR to those students credit cards.
Cost of Not Paying off a Card with a High APR
The guiding rule of a credit card is to only spend on the card what you can afford to pay off, on time and in full each month. Banks want to trick you into being a borrower and spending more than you can afford.
Unfortunately, many consumers – college students or not – fail to follow the pay-in-full rule and end up paying only the minimum due on the card each month.
This mistake is costly. A student who charges $1,000 on a credit card with a 21.4 percent APR and only pays the minimum due will end up paying a lender $1,941 for the privilege of borrowing a grand. It will also take 7.6 years to pay off the debt, according to a calculation by MagnifyMoney.com.
So, Why Should a College Student Have a Credit Card?
Responsible college students can use the four years in school to develop their credit score. Unless they can afford to make it through their entire lives without renting an apartment, getting a mortgage or taking out any loans, credit history will play an important role in their financial lives.
Using a single credit card in college, keeping the utilization ratio low and paying the bill off on time and in full each month can help a young adult achieve a healthy credit score before even tossing his or her cap at graduation.
The caveat: irresponsible young adults who easily fall into impulsive indulgences need to avoid the temptation of a credit card.
Oops, I Already Have Credit Card Debt
Paying the crushing APR on credit card debt can keep consumers in the red for years as their payments primarily go toward paying off interest instead of the principal. The process of digging out of debt can be expensive and time-consuming, but reducing the interest rate on debt can save consumers both time and money.