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Financial intelligence as important as IQ

News Herald – Juliann Talkington

Juliann

The latest Center for Microeconomic Data Quarterly Report on Household Debt and Credit revealed that total American household debt reached $13.15 trillion in the fourth quarter of 2017.

In addition, a recent bankrate.com survey suggests six in 10 Americans (61%) don’t have enough savings to cover a $1,000 emergency and four in 10 (39%) have nothing in their savings accounts.

At first glance, it is difficult to understand how so many Americans can be in such poor financial shape. After all, making wise money decisions does not require proficiency in particle physics or an understanding of Shakespeare.

The biggest challenges appear to be intense peer and marketing pressures. If friends and marketers can create this type of havoc in our personal lives, it is imperative that we make sure our children are aware of the pressures and have the tools to make wise financial choices.

Some of the key concepts and teaching ideas are:

Money is limited. Give your child a fixed amount of money. If he/she spends it all on candy near the store entrance, he/she will not have money to purchase a doll or toy truck a few rows back.

Money is earned. Rather than giving a child an allowance, issue money based on successful execution of tasks – emptying the dishwasher, mowing the lawn, folding the laundry, etc.

Spending beyond your means comes at a cost. Credit card companies are VERY good at marketing. It is critical for kids to understand that marketers play on their desire for immediate gratification. Whenever you spend money you do not have you are charged extra money. For example, if you put $100 on a credit card for a year, you will have to repay about $115.

Saving makes sense. Kids need to understand compounding. The sooner you start saving the more the money will grow. If you save $1000 this year and make 5% you will have $1050 at the end of the year. If you make 5% the following year, you will have $1102.50.

Cheapest is not always the lowest cost. Remind your child that there are more than immediate costs. If the $15 shirt falls apart in the wash after the first month, it would be less expensive to buy a $25 shirt that lasts a year.

Even though teaching children financial responsibility may seem overwhelming, it is imperative that children are aware of the marketing and peer pressures they will face and are empowered to make wise decisions with their money.

Innovation is a spirit

BAIDU WENKU – VioletYolanda

“Innovation is a spirit. Leaders can change the spirit of a country and this can be done especially in China……The western world is phasing out innovation and moving to services. Countries cannot survive on services unless they are rich in natural resources. And countries that sell natural resources often become dependent on it.”(more)