Tuesday, 31 August 2010

Fun money tools designed for kids (but great for Mums too!)

Simonne asks:
While we're in back to school mode and thinking about financial education how would you like your kids to teach you about the stockmarket? 

Or to see them getting enthused by the idea of building wealth when they get older? 
Well, thanks to an episode of Radio 4’s Moneybox, I came across this fantastic site where kids can play at trading the stockmarket via a fantasy stock market game . It’s run through an organisation called OINK!  - a business newspaper for kids aged 7 to 12 teaching money matters to kids in a fun, off the wall, way. 
The game gives them the experience of buying and selling shares, keeping track of all their trades as well as the chance to win prizes.

Another great online game for teenage kids is 56 Sage Street. This gives teens the experience of making good financial decisions, using money wisely and avoiding temptations. Having arrived in the city with only £4, their mission is to progress through the game proving to the self-made millionaire owner of 56 Sage Street that they’re worthy of taking over his Empire! They have to make choices too, for example between a job that pays well or one that boosts their reputation. Great lessons for life- and ones that aren’t taught in schools.

by Simonne Gnessen

Monday, 30 August 2010

Turning out financial whizz-kids (the Sheconomics way)

September’s here and the new school term looms large.
And with it the end of summer. A prospect that can depress adults as much as the phrase ‘back to school’ freaks out the kids. One subject that’s likely to be missing from your child’s curriculum this autumn is ‘financial studies’. That would cover:
-        -  How to handle money
     - When to save and how much
     - Expensive mistakes to avoid
And the ultimate wealth manifesto: “It’s not how much you earn, it’s how much you keep”.

At Sheconomics we feel strongly about the lack of financial education. Oh, if only we’d had financial literacy classes at school. There’d be far fewer credit card dunces naively making minimum repayments. We’d be on time with our homework, starting pensions at 20 rather than 40. And we’d all be getting full marks for our wise investments.

But as a parent there are things you can do to make sure your child doesn’t get an ‘F’ for  finance.

Here are 3 vital lessons for kids of different ages:

LESSON for the under 5s: IT PAYS TO WAIT.

We are turning out a have-it-now generation. The psychologist Walter Mischel from the US showed how important it is to learn to delay gratification. He gave four year-olds a choice. They could have one marshmallow now. Or they could have two if they waited 15 minutes. Only one in three of the children he tested could hold out for the extra treat. When he followed all the children up at aged 18 the ones who’d waited were the ones who were also the academic high fliers. But children can be trained to wait. By saving treats for special occasions. By saving up for big purchases. Most financial disasters are the result of an impulse and inability to wait. And research shows that adults who can transcend impulsive urges are more likely to be high achievers.

LESSON for the under 10s: THE THREE-POT METHOD
We love the save-spend-share idea behind the moonjar - a three-sectioned moneybox that teaches  children that money isn't just for spending. As soon as your kids get pocket money, or birthday money, suggest they divide it between the three pots. Then they can  spend some on themselves but also put some away for a rainy day. A third portion is for sharing, either by giving to charity or buying something for somebody else. This imparts some valuable lessons about money.


Understanding compound interest is key to knowing how debt can get out of control. And, conversely, how savings can grow year on year.
Simply explain to kids that when someone else, like a building society, looks after your money for you they give you a bit of extra money at the end of the month (or year). It’s called interest.
In the second year, if you leave it there, you get interest on both your money and on the interest from the first year. In the third year you get interest both on your money and on the first two years' interest. Imagine you have a tiny snowball and roll it in the snow, that’s the way compound interest can turn a small amount into something much larger. 

HANDS UP if you need to swot up on how compound interest works – fool.co.uk has some handy revision notes suitable for grown-up kids. And, of course, we make finance simple and have tons of tips for teaching kids about money in Sheconomics.

Monday, 23 August 2010

Why getting rid of your TV will save you money.

I strongly believe that not having a TV is one of the most life-enhancing steps I've ever taken.
When I chucked out the telly I got my life back, even though I didn't watch it much.
There are money saving benefits, too:

1.   You’ll want less stuff. TV breeds greed. You think you’re immune to adverts and the celebrity lifestyle but they subtly worm their way into your desires and convince you to spend.
2.   You’ll free up more time. On average people watch TV for more than 22 hours a week. People waste money when they haven’t got their life well organised, having extra time (the equivalent of two extra 11-hour days a week!) makes that less likely.
3.   You’ll do other things. Breaking the TV habit means you cultivate other simple pleasures and hobbies. This dramatically alters your ability to notice and appreciate life’s small gifts.
4.   Your kids will learn to amuse themselves. TV makes kids passive and damages their concentration. TV stops boredom but bored kids learn how to keep themselves busy. They read more, know how to use their imagination and get creative.
5.   You’ll eat less. TV watchers have a higher BMI, on average, than non-TV watchers. Mindless eating goes hand-in-hand with TV watching. When you’re not watching TV you’ll be more active and snacking less.
6.   You’ll have more sex. TV-watching has a tranquilizing effect which is not conducive to arousal. Not sure how that saves you money - but if you’re happier you’re less likely to comfort-spend.
7.   You’ll have more conversations. This, and the point above, makes for better relationships, less chance of a costly divorce!

Perhaps this cartoon sums it up nicely:

Monday, 16 August 2010

This old thing? I’ve had it for ages. No, really!

Have you got an old favourite lurking in your wardrobe? I know I have. 
It’s a gorgeous but simple black Vivien Westwood dress. I must have worn it over a hundred times already, but I'm convinced I'll be toddling off to get my pension in it in years to come. Topped with a plastic rain bonnet of course.

In these days where everything seems disposable and new items are in danger of going out of fashion before you get them home, some research from M&S* money is quaintly reassuring.

Apparently six million women hang on to their ‘LBD’ (little black dress) or its equivalent for an average of 12 years. 

These are what the researchers found are women’s top old favourites, with one in ten items dating back to the 80’s!

1 Shoes
2 Jacket/coat
3 Top
4 Handbag
5 Jeans

Most people surveyed said they hung on to the item because it was of a quality that stood the test of time. I wonder how many of today’s ‘cheap’ fashion items will last 12 years, or even 12 washes?
It does highlight what a false economy those quick-fix low-price Primark-type purchases can be. Clearly cost-per-wear - not actual price ticket - is the critical factor to take into account when buying fashion.

*M&S Money (the trading name of Marks & Spencer Financial Services) was founded in 1985 as the financial services division of Marks and Spencer Group plc, making 2010 the company's 25th anniversary.

The company is a top-ten credit card provider and the second-largest travel money retailer in the UK. M&S Money also offers a range of insurance cover, including home insurance and car insurance, as well as loans, savings and investment products.

Tuesday, 10 August 2010

Time for a financial health check?

What does being healthy mean to you?
A daily grind at the gym? An organic diet based on superfoods? 
Remembering to take multivitamins and meditate?

What about your financial health?

Money may be boring but it’s a fact that your psychological wellbeing is closely linked to your financial security. People who are in debt are more likely to suffer from anxiety and depression. Around 3.8 million people in the UK say money worries have kept them off work. When our finances are in good shape, we feel in control of our lives.

Give your finances a quick health-check by answering the following questions:

  1. Do you have enough savings to cover at least 3 month’s expenses?
  2. Do you pay off your credit card bill in full every month?
  3. Have you got a pension?
  4. Do you avoid shopping when you’re stressed, miserable or just plain bored?
  5. Do you find it easy to talk about (or ask for) money?
  6. Do you know how much you spent last month and what on?
  7. Do you have a good understanding of the money world?

How did you do?
Seven Yes’s and you’re doing brilliantly.
Less than seven isn’t so good and suggests you might not be in the full bloom of financial health. But you can do somehting about it.

Here are a four steps to take now to bring your finances back to fitness:

  • Save automatically. Sweep an amount every month straight into a savings account. You won’t miss what you didn’t have and you’ll have a back-up fund in case of emergencies. OK, interest rates aren’t great at the moment but simply labelling a pot of money ‘savings’ will make it psychologically harder for you to squander it. If your mortgage goes down or you get a pay rise, divert the amount and carry on as if you hadn’t had it.
  • Sort out you pension now. It is estimated that 70% of working women in the UK won’t have enough to live on when they retire. If your employer runs a pension scheme, opt into it. Every day you’re not in it you’re turning down free money. If you’re not employed or your company doesn’t run a scheme, get independent advice on how you can start your own pension. It needn’t cost the earth but the earlier you start the bigger the payout.
  • Be aware. Face up to debts. Stop hiding statements and start scrutinising them. Know where your money goes. Track your spending for a month. Note down any emotional spending triggers, so you know the danger signs. We have free worksheets you can download from our website.
  • Wise up. Browse financial websites, peek at the financial pages of the newspaper or just ask someone to explain the basics to you. It’s not rocket science and there are some very accessible sites out there.We have tons of links and resouces to help you on our website.

 Add financial health to all the other health-giving activities that put a spring in your step and make you feel in tip-top shape. Then you can get on with enjoying life today knowing that tomorrow’s taken care of.

Tuesday, 3 August 2010

The summer money meltdown!

Have you noticed how in summer money just melts away faster than an ice cream in a heat-wave? 
Holidays alone can put a huge dent in the budget. 
Then there’s the pre-holiday shopping, summer wardrobe, pedicure and the cost of keeping the kids from killing each other for at least six weeks. 

That’s before you’ve even splashed out for a Pimm’s!

So August’s Sheconomics newsletter features ways to cool the financial pain. Free trips for kids, special bargains and even free festivals. 
Plus some sizzling ways to stick to a budget when you’re away.

And our round-up of quirky facts about the psychology of money makes for some mind-bending holiday reading.

So all in all we’d say -a newsletter not to be missed.

Have you signed up for yours yet?