My parents let me open a checking account when I was 15. I'm thankful they did because having that account - and having to balance my own checkbook and make sure I didn't bounce checks - helped me learn smart money habits at a young age.
Here are a few suggestions on how to turn a gift of money into a learning experience for your children.
1. Teach them good money habits by gifting money through a checking or savings account.
Setting up a checking or savings account is a great way to teach children how to balance a checkbook, budget, and the importance of saving for a rainy day. Parents of children that aren’t old enough to have individual accounts can open an account under their name and let their children treat it as if it were their own.
2. Turn college savings into a learning experience by gifting money through a 529 college savings plan.
Saving for college is something that most parents want to do for their children, so why not turn it into a learning experience? Children that understand bank accounts can relate to 529 plans as a “savings account" designed for a single goal: education. You can use a 529 plan to teach younger children about saving, and you can gradually bring them in on the investment selection process as they get older.
3. Help them get a head start on retirement by gifting money through a Roth IRA.
While it might be tough to convince a teenager to invest part of his or her paycheck, there isn’t a requirement that IRA contributions have to come from your child's earnings. As long as they have earned income, you can make the contribution for them up to the maximum they are eligible to contribute. This is a great way for kids to learn about investing and will give them a huge head start on their retirement.
4. Help them save by gifting money through a custodial account.
If you want to gift money to your child, but don’t want to dedicate it toward a specific goal like college or retirement, a UGMA or UTMA custodial account is a great option. These accounts are available at most financial institutions and allow the custodian – usually a parent – to maintain control of the assets until the child turns the age of majority, which is18 for UGMA accounts and 21 for UTMA in Texas.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
Sunday, April 22, 2012
Sunday, April 1, 2012
Car Buying Tips
My wife's Pathfinder turned 15 this year. Although it still started up every morning - and we've LOVED not having car payments on it for a decade - we decided it was time to replace it. I just hope that replacing her car after only 1.5 decades won't blow Simone's frugal street cred!
Here are a few car buying tips in case you find yourself in the market for a car:
Tip 1: Know the type of car you need.
Cars depreciate in value so start your search by determining the type of car that’s likely to fit your lifestyle over the entire time you’ll own it. For example, if you’re planning on starting a family soon, it doesn’t make financial sense to buy a two-seater sports car.
Tip 2: Know your credit score.
Your credit score will determine whether you’re able to get a loan as well as how low your interest rate will be, so review it ahead of time. You can get free copies of your reports at www.annualcreditreport.com. I prefer to purchase my score score directly from one or more of the credit bureaus, but you could also get a free score from www.creditkarma.com.
Tip 3: Get financing before shopping.
Being approved for a loan before you start your car shopping puts you in a much better bargaining position. You can shop for loans from a local bank or credit union or use an online service like www.myautoloan.com or www.up2drive.com. Credit unions generally offer better rates than banks.
Tip 4: Know how a car dealer makes money.
A car dealer can make money from (1) the price you pay for the car, (2) the amount they give you for your trade in, (3) the financing they arrange for you, and (4) add-ons like extended warranties, environmental packages, and fees. Being aware of all of the ways a car dealer can make money on the transaction can help you avoid paying too much.
Tip 5: Focus on the total price.
A low monthly payment doesn’t matter much if the interest rate is too high and the payments last too long. Pay attention to how much you’re paying overall – not just monthly – and try not to buy a car you can’t pay off in three to four years.
Tip 6: Consider buying used.
Most of the depreciation in value occurs during the first few years, so consider buying used, especially if you don’t keep your cars for long. If you prefer buying new cars, then it's best to plan on driving them for years, and years, and years, and years, and....
Tip 7: Do your homework.
As with most things in life, the more you know about buying a car, the better off you'll be. Use sites like Kelley Blue Book (www.kbb.com) and Edmunds (www.edmunds.com) to research car reviews and pricing. Another great website about car buying is www.carbuyingtips.com.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com
Here are a few car buying tips in case you find yourself in the market for a car:
Tip 1: Know the type of car you need.
Cars depreciate in value so start your search by determining the type of car that’s likely to fit your lifestyle over the entire time you’ll own it. For example, if you’re planning on starting a family soon, it doesn’t make financial sense to buy a two-seater sports car.
Tip 2: Know your credit score.
Your credit score will determine whether you’re able to get a loan as well as how low your interest rate will be, so review it ahead of time. You can get free copies of your reports at www.annualcreditreport.com. I prefer to purchase my score score directly from one or more of the credit bureaus, but you could also get a free score from www.creditkarma.com.
Tip 3: Get financing before shopping.
Being approved for a loan before you start your car shopping puts you in a much better bargaining position. You can shop for loans from a local bank or credit union or use an online service like www.myautoloan.com or www.up2drive.com. Credit unions generally offer better rates than banks.
Tip 4: Know how a car dealer makes money.
A car dealer can make money from (1) the price you pay for the car, (2) the amount they give you for your trade in, (3) the financing they arrange for you, and (4) add-ons like extended warranties, environmental packages, and fees. Being aware of all of the ways a car dealer can make money on the transaction can help you avoid paying too much.
Tip 5: Focus on the total price.
A low monthly payment doesn’t matter much if the interest rate is too high and the payments last too long. Pay attention to how much you’re paying overall – not just monthly – and try not to buy a car you can’t pay off in three to four years.
Tip 6: Consider buying used.
Most of the depreciation in value occurs during the first few years, so consider buying used, especially if you don’t keep your cars for long. If you prefer buying new cars, then it's best to plan on driving them for years, and years, and years, and years, and....
Tip 7: Do your homework.
As with most things in life, the more you know about buying a car, the better off you'll be. Use sites like Kelley Blue Book (www.kbb.com) and Edmunds (www.edmunds.com) to research car reviews and pricing. Another great website about car buying is www.carbuyingtips.com.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com
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