6 Tips on Giving an Allowance for Kids & How to Avoid Any Problems

There is absolutely no doubt that raising a child is hard work. Among the most important things to give your kid, providing lessons about handling and managing money is at the top of the list. One of the most crucial points regarding the financial education of children is setting up an allowance for them. Even though having an allowance for kids is mostly a good idea, there are problems that can appear as a result.

With that in mind, the present guide will shed light over some of these problems. Additionally, it will provide valuable tips on how to do it in a way that is satisfactory for all parties involved.

a small pink piggy bank placed on a large pile of dollar bills

6 Tips for Giving Kids an Allowance

1. Make a Plan

Before anything else, it’s highly important to make a plan that rounds up every aspect of the allowance-giving process. This includes the amount, the frequency of the payments and the conditions that have to be met by the child in order to get a payment.

Additionally, it’s always a good idea to be clear regarding the kind of things that the child can buy with their newly-earned money.

2. Have a Sit Down

Once you have figured out all the details, make sure to have a conversation with the child explaining every aspect of the plan. Describe all the rules thoroughly and clearly while making sure to emphasize what the consequences will be if they are broken.

To avoid future problems due to miscommunication, provide a list of the things the child can buy with this money. Simultaneously, be sure to give your child another list detailing everything they can’t buy using their allowance money (for example, fireworks, candy or video games).

3. Use it as a Learning Tool

One of the most important reasons for having an allowance for kids is that it can be a great learning tool. Apart from valuable financial lessons, an allowance can teach kids about responsibility, common sense, self-reliance, organization, delayed gratification, and socialization in general.

Make sure to be firm in terms of enforcing your own rules. Of course, kids being kids, at some point they will make mistakes. Still, mistakes are an important part of the learning process, particularly when you are there to explain what went wrong and how to avoid it happening again.

4. Teach Spending, Sharing and Saving

Most experts that recommend setting up an allowance for kids agree that it’s a great opportunity for teaching them not to spend everything they have. With that in mind, it’s a good idea to have kids buy into the concept of spending only a part of their weekly allowance.

The part that is not spent can be saved in a piggy bank or shared with others, especially those who do not have the luck of getting an allowance.

a simple table with several chores for kids to receive allowance

5. What About Chores?

One of the most divisive questions regarding having an allowance for kids is whether they should work for it or not. Without a doubt, withholding the allowance whenever the child refuses to do chores will teach a lesson.

However, the impact of other important lessons that can be taught through having an allowance will be diminished. There is no easy solution to this conundrum. However, whatever you decide should depend on the kind of lesson you think is more important for your child to learn.

6. Consider a Bank Account

Besides teaching about basic concepts regarding finances and life in general, having an allowance for kids can be the first step in providing lessons about fiscal responsibility. Once your child reaches a certain age (around middle school) it can be a good idea to get them a bank account.

Having a bank account is guaranteed to teach your children lessons about investing, earning interest, balancing a checkbook, and creating a fiscal budget. Still, it’s important to make yourself the custodian of that account, eliminating the possibility of deception and early-life financial problems.

How to Avoid Problems When It Comes to Having an Allowance for Kids

There is no doubt that kids need to learn how to manage their money. By having and managing their own money, they learn important concepts such as saving, planning, setting up goals, and delaying gratification. Additionally, having a small amount of money each week allows kids to make low-risk mistakes and to learn from them.

several transparent jars for kids' allowance

1: Begin This Process When the Time Is Right

Having an allowance for kids is definitely a good idea. Nevertheless, it should be done correctly in order to function to the advantage of your family. One of the main things to consider is when to begin having an allowance for kids. Many families start when their kids are five or six years old.

Others like to wait until the children are older than nine or ten. However, psychologists agree that the best time to start giving your children an allowance is whenever they begin to comprehend the concept of money.

2: Provide the Right Amount of Money

Another important thing to take into account when considering an allowance for kids is the amount. Without a doubt, it is a figure that will depend on factors such as your income and the area you live in. However, it’s also important to have a balance.

For obvious reasons, you definitely do not want it to be too little. However, giving a child too much money can be dangerous as it will send the wrong message and paint an inaccurate picture of how life works.

Summing It Up

In conclusion, having an allowance for kids is considered by most experts to be a positive thing. However, it is something that needs to be properly if you want to achieve good results and a positive outcome. It’s important not to lose sight of the main goal: teaching kids how to be financially responsible.

By following a few basic rules, you can reward your little ones while providing them with valuable lessons that will last a lifetime. Do you have any tips of your own regarding having an allowance for kids? Let us know in the comments!

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How to Pay Off Your Mortgage Quicker – 8 Ways

In order to teach you how to pay off your mortgage quicker, this guide will offer eight useful tips and strategies. The basic idea behind paying a mortgage early is fairly simple: send as much extra money to be applied to the personal balance as you can.

By doing this, you will be speeding up the payment process, resulting in its earlier conclusion. Of course, this will diminish the amount of money you will have every month for extraordinary expenses. However, this sacrifice will result in being debt-free earlier. At the same time, it entails finally being the proud and official owner of a home.

Here are some effective ways in which you can pay off your mortgage sooner than you might think.

the word mortgage on a green calculator placed on a desk

1. Make Bi-Weekly Payments

If you want to know how to pay off your mortgage earlier, making bi-weekly payments is a great method to try. Because there are 13 weeks in each quarter instead of 12, and there are 52 weeks in a year instead of 48, making bi-weekly payments allows you to complete a full extra payment each year.

2. Round Up Your Payments

If you don’t have too much extra money every month, a useful tip on how to pay off your mortgage is rounding up your payments. By adding a few dollars to each payment and reaching a round number, you will slowly but surely speed up your payment process. It’s important to note that these few extra dollars should go toward the payment of your main balance.

3. Make an Extra Payment Each Year

Some mortgage lenders do not allow bi-weekly payments. If this is the case with yours, ask if you can make an extra payment each year directly. In order to ensure you will have enough to make the extra payment, it can be a good idea to save up a twelfth of a full payment each month. After 12 months of doing this, you will have an extra payment ready to be sent.

4. Get Rid of Your Private Mortgage Insurance

If you are wondering how to pay off your mortgage not only faster but also at a discount, you will be pleased to know you can cancel your private mortgage insurance. This is an added charge that lenders require from anyone who obtains a home loan with a down payment of less than 20 percent. The good news is that this insurance can be canceled as soon as a mortgage balance is paid down to 80 percent of the original property value.

5. Set a Target Payoff Date Using a Mortgage Calculator

If you want to know how to pay off your mortgage by a certain date, it’s always a very good idea to use a mortgage calculator to know exactly how much you have to add to each payment. As always, make sure those extra dollars go to paying down your principal balance.

6. Refinance

Without a doubt, one of the most popular ways to pay off a mortgage quicker is to refinance for a shorter term or at a lower interest rate (or, even better, both). However, because refinancing is expensive, you need to be sure it will work to your advantage before taking the step. In order to be sure, you need to be vigilant of interest rates falling over one percent below what you’re currently paying.

a drawing of a house with a tree next to it and a symbolic pile of cash coming out of a drawer

7. Add an Extra Amount Each Month

Even though it may be the most obvious way to pay off a mortgage quicker, adding a bit extra each month is remarkably effective. Despite how much you add, if this is done continuously and rigorously month to month, the money will accumulate, bringing you closer to your goal. Be sure to put this extra money toward paying down your principal balance.

8. Use Your Windfalls

Even though most people pay their mortgages slowly and steadily, there is no law that prohibits you from making a big payment every once in a while. If you receive a large amount of money you weren’t counting on, it would be wise to put a big part of it towards an early payment of your mortgage.

How to Pay Off Your Mortgage on Time

1: Through Savings

If you want to know how to pay off your mortgage early, it’s safe to assume that you have an income that will allow you to do begin chipping away at your debt. Besides this extra inflow of money, it’s a great idea to have some savings. Ideally, these savings should amount to three to six months of your regular living expenses.

2: Through Fixed-Rate and Adjustable-Rate Payments

There are two basic types of mortgage payments: fixed-rate and adjustable-rate. Fixed-rate payments are divided between paying the debt and its added interest. The interesting part is that, initially, most of the payment goes to the interest and a proportionally inferior part goes to the debt.

However, this situation reverses as payments are made. For that reason, it’s a good idea to pay down your principal balance as quickly as possible, resulting in less accumulated interests and a faster conclusion of the payment process.

An adjustable-rate mortgage payment works differently: because it gets recalculated with each extra payment, the loan itself stays the same. Even though this prevents the term from decreasing, each extra payment lowers the interest on the remaining mortgage balance. This, of course, results in a faster conclusion of the mortgage payment process.

Summing It Up

If you read through this guide on how to pay off your mortgage quicker, you know there are various strategies you can use to get to your goal. Hopefully, you can apply one (or various) of them in order to become debtless and free. Even if it takes some time, it will undoubtedly be a huge step forward for you and your family.

Whatever strategy you use, paying your mortgage earlier demands sacrifice and discipline. However, the reward is one of the sweetest ones there are: Being the rightful owner of a home. Do you have any tips for paying off a mortgage faster? Leave a comment!

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How to Set Up a Trust Fund for a Child – Steps & Tips

Setting up a trust fund takes enormous consideration and responsibility, but it is an extra-effort step in financial security that will ensure your child or children has what they need when they need it. Trust-fund kids are often the brunt of jokes about financial wealth, but trust funds are not necessarily for the wealthiest of the wealthy. Families from modest backgrounds can learn how to set up a trust fund for a child without a net worth in the millions. The steps and tips below will help you get started.

the words trust fund written with a thick dark blue font and color on a white background

1: Decide Where to Begin

The beginning of learning how to set up a trust fund for a child starts with choosing where you want to start. You will first need to determine how much and what kind of property goes into the trust. You can start with anything. Trust funds do not need to have tens of thousands to open. They also do not have to contain large pieces of property.

2: Select a Custodian and Trustee

While you are learning how to set up a trust fund for a child, you must select a custodian and trustee. The trustee can be you, but for the most benefits, you should choose someone who is not you. This will create an ideal trust that is irrevocable. A custodian manages the trust disbursements in the way you outline it.

a pile of 100 plenty of dollar bills close-up

3: Decide What Financial Institution to Use

When you are learning how to set up a trust fund for a child, you will need to make big decisions about the kind of financial institution you will start the trust with. This requires attention to detail and market research. Comparing the benefits of each financial institution is necessary before making a decision. Once you have opened the trust, it is difficult to switch to another bank and should be avoided.

4: Decide on the Terms

The next step of learning how to set up a trust fund for a child is to decide the terms that the trust will be released on. If it is all money, the trustee can release funds at a specific date. The funds can also be tied to specific events that are outlined by you and written into place by an attorney or someone else who has extensive knowledge about financial assets.

Choosing these terms and solidifying a plan is not something that is done quickly. People often plan trust funds for their children before the child is born or in early childhood.

a cute tiny newborn baby sleeping in a basket

5: Consider What Benefit You Want

Money placed into a trust cannot be taxed. Physical assets in a trust cannot be taxed. If you have placed the trust completely in the hands of a trustee who isn’t you, then you will receive maximum benefits, but you will need to pay the trustee in most cases to protect those assets and uphold the specifics of the terms.

6: Have a Contingency Plan

If something happens in the child’s life that bars them from accessing the funds or property at the right time, then have a contingency plan so that those funds can be appropriated elsewhere or for a different purpose.

If your terms say that twenty-thousand dollars should be released upon marriage, but your child decides not to marry, then there should be alternatives for that money. Your child should not necessarily know the specific terms that are outlined in the trust to avoid them trying to circumvent the terms surrounding the trust.

7: Ensure Protection

With appropriate legal guidance, a trust can be protected from the child’s spouse or creditors. Gifts of money or property do not have the same protections. This is one of the primary reasons to get a trust in the first place, and you should make all of the effort possible for learning how to set up a trust fund for a child that affords them protection from losing property or money to someone with bad intentions.

8: Obtain the Proper Documents No

Trust documents are safest and strongest when an attorney writes them while guided by your intentions. However, you can save money by writing your own documents using a trust-document kit that teaches you how to set up a trust fund for a child. You can take your written documents to an attorney for review and modifications.

the words college fund written on a transparent jar full of dollar bills

9: Fund the Trust Wisely

You can funnel money into a trust using long-term investments, and this is generally the soundest way to create an ample trust that continues to grow through your child’s life. Do not make all contributions to the fund long-term investments. In the event of an emergency, there should be funds available for your child’s care. This isn’t possible with long-term investments that need to reach maturity.

10: Leave Out Personal Items

Do not make a trust fund more complicated and unnecessarily bulky by adding personal items like cars, homes or other types of property. While a trust fund can contain these items, it requires more documentation about managing that property over the life of the trust.

cute yellow baby slippers placed on the ground outdoors

11: Do It Yourself When You Can

If you have knowledgeable friends or family you can hire cheaply, use their skills and services to learn how to set up a trust fund for a child. When you can use a more affordable option for managing a trust, do so. If you cannot do it well with the help of people you know, stick to the experts.

Bottom Line

A trust fund can be set up at any point in your child’s life, but starting one early is going to serve your family better and give it time to develop. Trust funds can help you financially as well, but they should not be created for the sole purpose of evading taxes.

In order to be the most trustworthy and reliable, a trust fund should be irrevocable and completely for your child regardless of whether you change your mind.

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How to Organize a Yard Sale – 14 Effective Tips

Learning how to organize a yard sale will help you reach maximum profits and success. Getting rid of clutter and excess belongings is easy when you have a yard sale that is organized efficiently and properly. These effective tips for how to organize a yard sale will give you the tools you need to sell your excess that may otherwise be donated or thrown out.

a sign with the words Yard Sale written on a white background

#1. Gather Your Items to Sell

Gathering your sellable items is the first step in learning how to organize a yard sale. You should make sure everything is clean. Goods that are not clothing should be wiped down and tested for working condition.

If electronics or similar goods are not in working condition, make sure they are labeled correctly. This will make it easier for you to put items out on the day of your yard sale.

#2. Advertise Appropriately

A week before your yard sale, you should make sure that you are making effective advertisements. Social media has become a major way to advertise to hundreds of people at no cost. Utilize social media outlets to their maximum.

Your local newspaper will also have a section for yard sales, and you should submit an ad to the paper. Finally, you will need to post signs near your home that advertise your upcoming sale.

a woman looking at a table full of different items during a yard sale outdoors

#3. Boast Bigger Items If You Have Them

You can lure people to your yard sale by advertising bigger-ticket items you may have for sale. This includes furniture, appliances, game consoles and brand-name items. If people are coming for those specific items, they are likely to check out other things you have for sale too.

#4. Combine with Neighbors

If you want to learn how to organize a yard sale, combine your efforts with neighbors. A yard sale with multiple families hosting it is more successful because people have the incentive to come to a neighborhood that may be out of their way. Customers get more options when shopping, and you get more foot traffic.

#5. Make Your Yard Sale Look Good

In case you have been to a yard sale where home goods and clothes were thrown everywhere on tables, then you know this is not how to organize a yard sale. Instead, you want to organize your items on tables in a neat and orderly fashion.

If you do not have time to do so, at least group items together in similar categories. Don’t mix children’s clothes with adult clothes. Don’t have DVDs strewn across different tables. Keep things together so shoppers can clearly see what you are offering.

#6. Use Labels and Signs

Labels and signs help you organize effectively. Labeling individual items or tables is helpful for your own records as well as for the people who are shopping. Having people ask for the price is tedious. If a price is not listed, people are less likely to make a purchase.

#7. Allow Haggling

When you are learning how to organize a yard sale, you also need to know a bit about haggling. It’s a fun part of hosting a successful yard sale. Make sure shoppers know that best offers are acceptable.

They will feel more comfortable making offers, and you are likely to sell more. In order to haggle effectively, you should set your prices slightly higher so that you still get what you expect from items you are selling.

several people searching for valuable items during a large yard sale

#8. Research Items of Value

If you have valuable items to sell, you should research their value before making price determinations. Learning how to organize a yard sale takes time and effort.

When you research items beforehand, you are discovering useful details about the market value of goods and pricing accordingly. This helps both parties: the buyer and seller. You know what your goods are valued at, and buyers can get a fair price.

#9. Be Clear

Be clear about what you are offering at your sale. Clarity helps buyers decide whether they are going to stop at your yard sale. You don’t want to attract disgruntled customers who thought they were getting something they are not. False advertising is a lose-lose situation for everyone.

#10. Have Change on Hand

Use a box for cash. Keep change on hand for buyers. If you do not have change, people are less likely to buy. Having plenty of quarters, singles, five-dollar bills and so on will help you organize an effective and successful yard sale. Rookies always make the mistake of not having change beforehand.

#11. Protect Your Home

In the event of large sales, people may mistake your home as a place where they can wander or use facilities. Post signs that make it clear your home does not have a public restroom. Lock your doors and windows. Keep shades drawn for safety.

#12. Let Kids Have a Bake Sale or Lemonade Stand

Kids love helping out at yard sales. If you have children, you may consider letting them sell small snacks and beverages. This gives them something to do, and it also helps make a few extra bucks. Snacks and coffee in the early morning are usually exciting to people hunting yard sales.

plenty of clothes on hangers displayed at a yard sale

#13. Hang Nicer Clothes

It’s not realistic to hang all of the clothes you have for sale, but nicer clothing items should be hung up for better presentation and protection of the garment.

#14. Be Ready for Opening

One of the biggest mistakes people make when learning how to organize a yard sale is not opening on time. If your advertisement says six A.M., be ready at that time.

Wrapping It Up

Hosting a successful yard sale is easy once you know how to efficiently organize and advertise your sale. Yard sales take a lot of effort before the day of the sale, but it pays off by the end of the day of your sale. You will make more money with the above tips, and your customers will be happy. Everyone wins and has fun in the process.

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