Image provided by: The Confederated Tribes of Warm Springs; Warm Springs, OR
About Spilyay tymoo. (Warm Springs, Or.) 1976-current | View Entire Issue (Nov. 6, 1987)
Page 2 Warm Springs OSU Extension Service November 6, 1987 Teaching Ltarnlng through Imitation Children are learning all the time, even when parents are not trying to teach. Children watch adult behavior and imi tate it. So, like it or not, your attitudesand hab its will rub off on your kids. Poor consumer habits are very conta gious. Parents must watch what they do as well as what they say. Learning by doing Having money to manage, through earnings or allowance, is crucial. Parents are often afraid that children will waste money, so they limit their choices by selecting what they can and cannot buy. But when adults Money: A family matter What example are you giving your children? Look at the way you handle the family's money. If you find you could use a little financial education yourself, teaching your children about budgeting could be the perfect opportunity for putting yourown house in order. Don't use the excuse of personal financial chaos to put off introducing the subject to your children. Few parents can expect perfection and shouldn't be afraid to make mistakes when helping their children. Here's an outline for some financial self-examination for parents, before you take on the kids. Budgeting Do you have a monthy budget? If not, make it a top priority to draw one up. Forms are avail able at the Extension office that will help you get started on a family budget. Children can learn by being involved in the process. Saving As a rule of thumb, 10 percent of your income should be set aside for savings of one kind or another. Divide your savings goals into short-term, medium-term and long-term projects. A medium term project might be a vaca tion for the family. You could post in the kitchen a chart that progressively shows savings approaching the amount needed to pay for the trip, thereby let ting your children share in the anticipation. If, on the other hand, you're not much of a saver, will you be able to afford the holiday at all? Women do have equal credit opportunities By law, women have equal credit opportunity and may not be discriminated against because of sex and marital status. How ever, this does not give an auto matic right to credit you must be "credit worthy". You usually need to have an income of your own to establish credit in your own name. Women sometimes have dif ficulty in establishing financial identity. Unlike men, who have fairly continuous employment, women sometimes are in and out of paid employment, because of the many roles they perform. When a women marries, she can lose her financial identity if she uses only her husband's name on credit accounts. U , , t N l .rArif lx ' y" t "it ?j 1 . tmi . . -" . . . tjm vi v . '' & . . 1 . - - - - ..... I- - Picking vegetables teaches your children how to save money. Gardening teaches how vegetables grow and offers new experiences. your children about money makeall the decisions, thechild will not learn which toy is the best value. But, if the child buys one that falls apart instantly, she or he will remember. Child ren learn by their mistakes, just as adults do. It is better to make $5 mistakes on toys now than Also, allow room in your sav ings for unexpected situations and emergencies. Most importantly, once you have a budget, stick to it. Revise it if necessary, but make budget ing a habit! How to handle money problems One month a family's income, outlook and spending are in line. The next month something unexpected happens sudden illness, a death, an accident, a job change, unemployment, or a change in the number of depen dents. What can be done about these financial problems? There are several alternatives to consi der. There may be ways to increase income to meet demands. The wage earner may be able to work overtime, find extra part time work or possibly a better paying job. If both spouses are not working, an additional full or part-time job in the family even temporarily can be a boost. Older children may be able to earn money through part-time jobs to relieve some of the pres sure. Try to cut living expenses to a minimum. Stop buying clothes. Omit non-essential food products (i.e., snack foods, pop, candy, cigarettes, etc.) from the groc ery cart. Switch to less conve nient foods. Use the car less to reduce gasoline costs. Cut enter taining at home and keep it inexpensive. But if income cannot be innrpacH enough to pay debts If she continues to work and to help pay the bills she should maintain her credit and finan cial identity by: Keeping at least one charge account in her own name. Having her own savings account in addition to a joint one. Making sure joint charge accounts with her husband are in both names (thus building up credit history in each separate name). If you recently married and wish to retain a separate credit file, write to your creditors and indicate your name change, if any, and indicate your prefer ence to keep the account in' your name only. $1,000 mistakes later. Learning together Parents shouldn't neglect the educational value of unpleasant family financial events either. Children need to know how to deal with a sudden loss of income or an unexpected debt. Children will need sound finan cial skills all the more In such circumstances. In these eco nomic times, when so many families are so hard pressed, opportunities to demonstrate the effects of heavy spending and heavy borrowing will undoubt edly arise. Many adults have learned their skills the hard way, but are deter mined to protect their children from financial hardships that they raise sons and daughters who never acquire the discipline of money management. Daughters need financial edu cation just as much as sons. All children need to learn to take care of themselves financially. Love and money On a deeper level money may take on dangerous significance for children because they easily associate it with affection and and obligations, or expenses cannot be reduced sufficiently, outside help is required. If you are in a situation where you want to pay but cannot do so at the moment, you can most likely resolve the problem within the credit system itself. Most creditors, if they know the facts surrounding your problem and are convinced of your good will and intent to pay, usually are understanding and willing to help. They may defer payments or refinance the debt to reduce the size of the monthly payments. It may be possible to return mer chandise bought on time before repossession is necessary. But it is important to go to all your creditors before payments are overdue, or as soon as possible thereafter, to see what arran gements can be made for fulfil ling obligations. The worst thing you can do if you are not able to meet payments on schedule is to avoid your creditors. ' What if obligations are too great to be handled by tempor arily deferring or reducing pay ments? It may be necessary to find a willing lending agency who will arrange a loan large enough to pay off all other bills and arrange one lower monthly The solution to money problems is not necessarily more money. Sometimes it is an understanding of how to get more for the money you have, plus the patience, energy and self-discipline to do it. It is common for young individuals and couples to be tempted to buy more than they can afford. You can become so over-committed to debt payments that other demands on your income suffer. And your inability to repay debts now can hurt your chances for obtaining credit in the future. Balance sheet reveals Have you ever asked yourself, "If I sold everything I own and paid off all my debts, how much (if anything) would I have left in dollars and cents?" A net worth statement could help you answer that question. A net worth statement, also known as a balance sheet, is a record of your assets and your liabilities; the difference between the two is your net worth. Assets are those things of economic value that you own and liabili ties are your debts. Most net worth statements are calculated at a point in time. Your net worth statement tells you the fair market value of your assets today, and the balance of yourdebts today. If you prepare a net worth statement about the same time each year, you will see how your assets, liabilities, and net worth change from year to year. Net worth statements are a useful tool for measuring pro gress toward meeting long-term financial goals, such as paying off major debts, financing your own or your chldren's educa tions, saving for yourown home or saving for retirement. Before you formulate a plan on how to meet one or more of these goals, you need to know what resources you already have. A net worth statement visualizes your financial re sources. Net worth statements are also useful as summaries of finan cial information. You may be asked for this financial informa tion when you apply for credit, a car loan or have an income tax audit. Net worth statements approval. Parents must be care ful not to let this simplistic con nection bloom into an Inflex ible cause-and-effect relation of love with cash. ("You won't buy me that bike because you don't love me anymore!") Gifts of money and toys show your affection for your child quite legitimately as long as they're not the ONLY way you show It. Plenty of verbal approval, lots of hugs and kisses, and above all, attention to your child's con cerns andd accomplisments are crucial to development; money isn't. Values and money Sometimes parental bribery distorts the value of family and individual responsibilities. The real reasons parents want children to do the dishes, study hard or clean the car have nothing to do with money, so why bring it into the discus sion? Payment for these efforts creates the impression that every good deed has its price. Instead, children should learn there are unpleasant tasks in life that must be done and there can be satis faction in doing a job well. payment extended over a longer period of time. This is called a consolidation loan. While such a loan is a legitimate way to make monthly payments more manageable, it can only work effectively if you forego addito naf credit purchases and get a spending in line with income. Lowered monthly payments do not mean you have more money to spend they just alleviate some of the pressure. In addition, con solidation loans can be more costly than paying off debts indi vidually, depending on the total finance charges in both cases and the length of the extended repayment period. Consolidation loan will not da mage your credit history as chro nically late orskipped payments certainly will. Watch for Is an increasing percentage of your income going to pay off debts? Are you near or at the limit on your lines of credit? Are you extending repayment schedules paying in 60 or 90 Name: Assets Cash on hand Checking account(s) Savings account(s) Money market funds Money market deposit accounts Time deposits Savings bonds Stocks Bonds Mutual funds Real estate Home Other Automobileother vehicles Money owed to you by others Partnership and business (nterests Retirement accounts IRAKeogh Employee retirement fund Cash value of life insurance Cash value of annuities Home furnishingsappliances Sports and hobby equipment Antiques, art, collections Jewelry, furs. etc. Other Toultssrts summarize information in a format that is familiar to ac countants, tax specialists and insurance agents. Should everyone calculate net worth? Not necessarily. If you Ever wonder where all your Do you wish you could save money to reach long-term goals, but all your funds seem to be used for everyday living ex penses? Amonthly Expense State ment can help you discover where your income comes from and where It goes. These statements (also known as personal income or cash flow statements) are a record of your finances. By listing your sources of in come and expenditures over the past month, you see how you spent your money. And that can be the basis for deciding if you want to spend the same way, or, if not, what changes you want to make. This helps you compare income and expenditures to your values and goals. Some items or activi ties are not as important to you as other items. You want to use your money for those Items and activities you consider important. Some goals, such as down payment for a home or college Setting up a monthly or weekly budget This will aid you In establishing spending guide and helping you Total Income ijljrv . wacet, irom-u. Sial Sttumv, other) Leu all withholding Take-Home Pay Fixed Expcntci Rent or mortgagr payment Inturancr pavme mi: Automobile Life Property Medical Inn all merit pavmenti Emerpencv fund Sauitfr and invetmcnt Anv other Hexible expemet FHd Hi hi writ '1 J Mipplie Repair and maintenance Cktthmp and peronal Mcdual. dental Rci re;itior. Othrt Trampnnanon Utilmr (ther chars? at count Savtnu and investment Othei Total Expenses these danger signals days bills that you once paid in 30? Can you only make the min imum payments on your revolv ing charge accounts? Are you paying bills with money earmarked for something else? Are you borrowing to pay for items you used to buy with cash? Are you chronically late in paying your bills? Is your savings cushion inade quate or nonexistent? Do you take out a new loan before the old one is paid off, or take a new one out to pay off the old loan? Do you put off medical or dental visits because you can't afford them right now? Are you threatened with rep your financial worth Net Worth Statement Dale: Liabilities Past due bills for services, rent, etc. Credit cardscharge accounts Consumer installment debt Automobile Other Real estate debt Home Other Insurance premiums Taxes Pledges: charities, churches, etc. Other Total hahilnm Total assets Lets total liabilities Neli are struggling just to meet daily expenses, budgeting may be your first priority. Young fami lies with few assets or debts may easily determine where they are financially without using a $$$ goes? education, require a long-term saving plan. A monthly Expense Statement is a tool for deter ming where to trim expendi tures In order to Increase funds for saving or spending. Yourstatement might indicate, for example, that you spend $200 on clothing last month. Saving money for a home might be so important to you, that you should decide to spend only $100 on clothing next month, and put the balance into savings. A monthly Expense Statement is not the same as a Net Worth Statement or a Budget. A Net Worth Statement calculates your financial status at a point in time. A monthly Expense State ment, In contrast, is a record of your income and outgo over a month. A personal budget is a plan for future expenditures and in come. A budget controls spend ing for a week or a month. a budget, serving as a personal make the most of your money. Planned expenditure Actual expenditure ossession of your car or credit cards, or with other legal action? Are you working overtime just to make ends meet? If you lost your job, would you be in immediate financial difficulty? Are you unsure about how much you owe? Do you worry a lot about money? A "yes" to any of these ques tions should give pause for thought. While a single red flag is not a sign of impending doom, it is an indication that you need to proceed with caution for a while revise and update your spending plan, cut back on credit and be alert for other signs of overspending. net worth sheet. However, before family members make decisions about increasing debt, purchas ing insurance or making invest ments, they should know their present financial situation.