For All Ages Teaching Young People about Money: Tips for Parents and Caregivers

Money Tips for Parents and Caregivers 2

 

Tips to help parents, guardians and caregivers show a child — from a preschooler to a college kid — why and how to become responsible with money.

It’s never too early or too late to introduce everyday financial concepts to a young person. And, you don’t have to be a financial expert. Here are tips.

Engage in regular conversations about money-related topics: That includes discussing with your child what you are doing, and why, when you manage money at home, around town or with the bank. For example, consider talking about similar products that have noticeably different prices at a store, and how you decide what is a good deal. And, you can explain that having a savings account at a bank has advantages such as income from interest, peace of mind of knowing the money will be there when you need it, and FDIC deposit insurance coverage for each customer up to at least $250,000 if the bank fails.

“If you are using plastic to pay for purchases, consider explaining the difference between a debit card, which is like writing an electronic check, and a credit card, which requires the consumer  to make a payment in the future,” said Luke W. Reynolds, Chief of the FDIC’s Outreach and Program  Development Section.

Even with automatic transfers, such as direct deposit of your pay, consider using your bank statements to show how money can move in or out of your account.

And, special times of the year — like during tax time or your workplace’s “open season” for selecting health insurance — present  opportunities to explain financial decisions.


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Consider giving an allowance as a teaching tool.  It can be a positive way to teach kids, even those who are preschool age, about money management. But before you give the first allowance, help your child decide how much he or she will spend now and how much to save for future goals. Then, help your youngster see whether that target is being reached by looking at a bank statement online or a paper copy. Also talk through the tradeoffs involved with spending decisions, such as how buying one toy may mean forgoing going for the opportunity to purchase another item the child also wants.

“There are many approaches to how best to structure an allowance, particularly whether to tie it to work such as household chores, so each family will need to decide what is best for them,” Reynolds added.

Think twice before giving a child more money if he or she runs out of funds before the next allowance payment. That’s because part of the benefits of waiting to enjoy a bigger reward.

And, for younger kids, consider paying an allowance in smaller denominations to make it easier to learn counting and saving skills.

Help your kids develop a healthy skepticism of advertising and unsolicited inquiries: In general, teach children how to analyze advertisements; they need to know that “special offers” often are not the great deal they appear to be.

Even young consumers are targets for identity thieves and among the victims of scams and rip-offs. Information for parents on protecting children’s personal information from identity theft is available at www.onguardonline.gov/topics/protect-kids-online

Highlight Series – For All Ages: Teaching Young People About Money

  1. For Pre-K to Grade 2: Earning and Saving Right From the Start
  2. For Grades 3-5: The Creation of a Comparison Shopper
  3. For Grades 6-8: Tips for the Teen Years…and Beyond
  4. For Grades 9-12: It’s Like … How to Speak to High School Kids About Money. Totally!
  5. For College Students: Passing Big Tests on Money Management
  6. Computer Security Tips for Bank Customers: A Basic Checklist
  7. Changes Could Help Boost Credit Scores
  8. A New Way to Save for Children with Disabilities

A complete e-book series can be requested with our Concierge Services Form.  It will be emailed to you within 24 hours.

For Pre-K to Grade 2: Earning and Saving Right From the Start

Children in this age group are naturally curious about the world around them, including money. By introducing several basic concepts — and being a good role model — you can help them gain financial skills that can last a lifetime.

Learn about how money is made and used: Children can be introduced to money as soon as they learn to count. Even if you usually pay by credit or debit card, once in a while use bills and coins so your child can learn about the different values. Imaginary games, such as pretending to be at a store or restaurant, can help teach money concepts, too. Role playing with real coins can be especially advantageous because it can teach children the values of different coins, but remember that coins are a choking hazard for younger kids. The U.S. Mint has resources for parents to use at www.usmint.gov/.

Learn about how money is earned: Getting paid for little chores will allow your child to learn the value of working and earning. Consider making a chart for jobs your child can perform and include the payment amount for each completed task.

Start to save: Consider separating spending money from savings. Begin with clearly labeled jars or piggy banks for your child to divide up his or her cash. This will show your child that spending and saving should go hand in hand.

Understand the difference between needs and wants: For your child to make good spending decisions, he or she will need to be able to identify and distinguish needs (things you cannot live without, like food and shelter) from wants (toys and candy). One game you can play involves singling out items in your house and asking your child if it’s a need or a want…and why. You can try the same thing while shopping.

Borrow responsibly: Children at this age generally don’t understand the difference between buying and borrowing — they have to be taught how to be responsible for borrowed items and to return them on time. Help your child create and maintain a list of items he or she has borrowed from friends or relatives, along with the date due. Doing so will support the concepts of responsible borrowing and personal accountability.

For Grades 3-5: The Creation of a Comparison Shopper

Kids in this age group are ready for meaningful lessons about saving and spending money wisely. Many also are ready to open their first savings account, if they haven’t already. Here are key concepts to teach.

Think before you buy: Continue discussing with children how to separate their needs from their wishes. Also help them think how to prioritize how they use their money. Consider, for example, making a household shopping list and asking your child to number the items in the order of importance.  Also use visits to the store to point out how advertisements can lead to unnecessary purchases or steer consumers toward products that are more expensive than alternatives.

Try to stick to a budget: Creating a simple spending plan at this age will teach him or her to set limits on expenditures, prioritize spending choices, and avoid running out of money. Younger kids may verbally agree to a spending plan, while older kids can write it down. You will likely need to help the child keep written track of spending so both of you can monitor the progress.

Consider opening a savings account with your child: Shop together for the account, and pay particular attention to the account balance needed to open the account and to maintain it without incurring fees. Also point out the interest rate, which will be expressed in advertisements as the “Annual Percentage Yield” (APY). Many banks offer special savings accounts for young people that can be opened and maintained for less money than a regular savings account.

Consider reviewing with your child one of the savings account statements that shows transactions. “If you also encourage your child to keep a log of the money in the account, that could be an opportunity for you to work together on a simple math exercise and learn the value of keeping track of money,” said Luke W. Reynolds, Chief of the FDIC’s Outreach and Program  Development Section.

And when you’re at the bank to open or access an account, ask a customer service representative to talk about what the bank does (it takes deposits, makes loans, and so on) and that money kept in a bank is safe.

Know that there are different ways to pay for things: Children can benefit from understanding where the money is coming from when people pay for purchases by writing a check or swiping a credit or debit card. Use your bank and credit card statements and ATM withdrawal receipts to explain that actual cash is either deducted from an account or it must be paid back by a certain date.

 

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Fair Market Rents – Section 8 Tenants – Update May 2015 – ALL States

HOME HUD

Fair Market Rents are established by HUD each year for the Section 8 Program. For more information about the annual calculation of Fair Market Rents, visit the HUD’s Office of Policy Development and Research.

HOME Rent Limit data are available from FY 1998 to the present.

Per 24 CFR Part 92.252, HUD provides the following maximum HOME rent limits. The maximum HOME rents are the lesser of:

  1. The fair market rent for existing housing for comparable units in the area as established by HUD under 24 CFR 888.111; or
  2. A rent that does not exceed 30 percent of the adjusted income of a family whose annual income equals 65 percent of the median income for the area, as determined by HUD, with adjustments for number of bedrooms in the unit. The HOME rent limits provided by HUD will include average occupancy per unit and adjusted income assumptions.

In rental projects with five or more HOME-assisted rental units, twenty (20) percent of the HOME-assisted units must be occupied by very low-income families and meet one of following rent requirements:

  1. The rent does not exceed 30 percent of the annual income of a family whose income equals 50 percent of the median income for the area, as determined by HUD, with adjustments for smaller and larger families. HUD provides the HOME rent limits which include average occupancy per unit and adjusted income assumptions. However, if the rent determined under this paragraph is higher than the applicable rent under 24 CFR 92.252(a), then the maximum rent for units under this paragraph is that calculated under 24 CFR 92.252(a).
  2. The rent does not exceed 30 percent of the family’s adjusted income. If the unit receives Federal or State project-based rental subsidy and the very low-income family pays as a contribution toward rent not more than 30 percent of the family’s adjusted income, then the maximum rent (i.e., tenant contribution plus project-based rental subsidy) is the rent allowable under the Federal or State project-based rental subsidy program.

The FMRs for unit sizes larger than 4 bedroom are calculated by adding 15 percent to the 4 bedroom FMR for each extra bedroom. For example, the FMR for a 5 bedroom unit is 1.15 times the 4 bedroom FMR, and the FMR for a 6 bedroom unit is 1.30 times the 4 bedroom FMR, and so on…

  • 5 BR = 1.15 x 4 BR FMR
  • 6 BR = 1.30 x 4 BR FMR
  • 7 BR = 1.45 x 4 BR FMR
  • 8 BR = 1.60 x 4 BR FMR
  • 9 BR = 1.75 x 4 BR FMR
  • 10 BR = 1.90 x 4 BR FMR
  • 11 BR = 2.05 x 4 BR FMR
  • 12 BR = 2.20 x 4 BR FMR

These HOME rent limits are effective June 1, 2015, and are applicable to new HOME leases and lease renewals after that date.

Attached is an update for state of California.  For other states, please sign-in and request for a copy for your state.

HOME_Rent Limits_State_CA_2015

Resources at Amazon Corner:

  1. Real Estate Investment
  2. Real Estate Finance for Residential and Commercial
  3. Buying Real Estate Without Cash or Credit
  4. Buying First Home: Tips, First Home Owners Grant & First Mortgage Guide, Home Buying Process

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Case Study: Sale-Leaseback Technique of Wendy’s and McDonald

Sale-leaseback

Wendy’s Refranchising 640 Stores

Following a pattern we’re seeing in the wider market, Wendy’s this week announced that they were going to sell as many as 640 stores to their franchisees. This on the heels of McDonald’s announcing they would do the same for 3,500 stores as part of their effort to boost the bottom-line.

It’s not exactly clear how many, but certainly some sizeable percentage of these stores may be candidates for sale-leasebacks by the Franchisees. Sale-Leaseback activity in the franchise space has been brisk this year and a flurry of new inventory of this type is exactly what the market is looking for.

With constrained supply and high demand, these franchisees would likely have no problem doing sale-leasebacks to help them finance the store purchases, particularly if the stores in question have a good sales history and the franchisee is substantial enough.

This refranchising trend has been increasing lately largely as a mechanism of the franchisors to trim corporate overhead costs.  [1]

Why and How?

Commercial real estate owner find ways to generate revenue and increase capital. A sale-leaseback technique unlock the equity a company has in its real estate and to convert that equity into cash. This involves selling the institution’s headquarters or branch offices and simultaneously leasing them back long-term.

In addition, many property-owners are recognizing the tax benefits and other advantages of these transactions. Finance adviser/consultant can advise clients on the benefits and help them find sale lease back providers.

In general by sale-leaseback its property, a property-owners can lower its operating costs and use that money to increase its cash flow.

Six benefits of sale-lease back transactions:

1)  Favorable Impact on Earnings.  A sale-leaseback transaction converts noncurrent fixed assets such as real estate into current liquid assets— i.e. cash.  It can generate a gain on the sale when properties’ market or appraised values are more than the depreciated book value. Property-owners often can improve their earnings by reinvesting the cash at a greater rate, retiring high cost debt funding mergers and acquisitions, expanding operations, or taking advantage of special investment opportunities.

2)  Total Facility Control. Simultaneously with the sale, the company leases back the property for an initial lease term — typically 15 years with renewable five-year options. In effect this gives the company control of its real estate for at least 40 years. This would be identical to ownership of the property’s normal useful life.

3)  Low cost of Money.  A sale-leaseback transaction can be a quick economical way to raise capital compared to the process of originating a new stock issue. Issuing new stock may result in an ownership dilution at unfavorable prices or with unwanted investors.

The leaseback is a low-cost technique that avoids these consequences as a rule, a sale-leaseback transaction should provide capital at an effective cost of 100 to 150 basis points less than that of long-term mortgage financing or the long-term conventional debt market. It should have no restricted covenants and no principal repayment after all lease payments.

4)  Recapture all costs. In a typical sale-leaseback transaction, the company would recapture all costs relating to the property’s current market value, including legal fees, surveys, architectural engineering, title, and any other closing costs or property- related fees. This contrasts to conventional long-tern mortgage financing, which is usually restricted to percent of the current market value.

5)  Regulatory Compliance. The cash a business receives from a sale-leaseback transaction can help it improve its primary and total capital-to-assets ratios The profit on a sale-leaseback transaction from depreciated value to current appraised value can increase a company’s net worth.

6)  Off-balance-sheet Finance. By carefully structuring an operating lease, the transaction would not require capitalization under Financial Accounting Standards Board is criteria.  In turn, this allows off-balance-sheet treatment, which in effect would have a more favorable impact on the company’s earnings and improve its financial ratios.

RESOURCES from Amazon Corner

  1. Principles of Real Estate Syndication: With Entertainment and Oil-Gas Syndication Supplements Included
  2. Maverick Real Estate Financing: The Art of Raising Capital and Owning Properties Like Ross, Sanders and Carey
  3. Real Estate Investment
  4. Real Estate Finance

Publication

[1] Wendy’s Refranchising 640 Stores


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Financial Planning is like garlic to a vampire

DAJK GROUP is the place where investors, business owners and entrepreneurs can research and find useful information, insight, resources, advice, guidance and inspiration for acquiring funds for their project, acquisition for their net lease commercial real estate, increasing their assets and running their profitable business.

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I would like to share with you our book reviewer from Ms. P. Fisher, “Garlic to a vampire“.

I recently read Daniel Nguyen’s Building a Finance Plan Geared to Growth, and have decided to keep this as my small business guidebook to finance management.  I am not an expert, hardly even a novice, when it comes to managing my business.  As a “creative” type, financial planning is like garlic to a vampire.  And yet, financial planning is essential to running a successful business.  I believe that part of my resistance comes from lack of understanding the definitions and how to do things such as create financial statements like profit and loss, cash flow, etc.  When we don’t understand how something works it becomes twice the job and, in my case, gets put on the bottom of the “To Do” pile.  What I really like about this guidebook on how to build a financial plan is that Mr. Nguyen explains what all of these terms mean. He gives us not just a textbook definition, but also shows HOW they work in relation to the overall picture of getting a small business loan, for example. He then shows a sample of what that financial statement should look like.  THIS I can understand!  He also tells the reader what to ask for –and what NOT to ask for.  There is information on establishing credit well in advance of going for a loan, things that I can do now to prepare for my possible or projected business needs in the future. He includes guideposts of ways to evaluate the progress and effectiveness of my current business needs, and then how to assess my possible future needs. Then, for when I am ready to go for a loan, I like the True-False test that he includes in the text.  This test allows me, as the business owner, to self-score how prepared I am to go meet with the banker.  This book is a wealth of good advice, resources and tools that I can use in understanding and applying good financial practices in my business.

I feel that if I follow the outline of this book that I could meet with a bank lender and not appear to be an idiot.  Mr. Nguyen has thought of not only the standard things that I will need to bring and think about beforehand, but also other possibilities that a lender might want to know.  For example, he writes that I, as a business owner, should have not one, but two possible repayment plans, to reassure the lender that I am a good risk. This is good, easy-to-understand information- he gets a score of “10” from me on a practical help scale.

Growing – Evolving and Pushing Forward!


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5 IRS Categories’ Audit Risk for Small Businesses

Always protect your investment against risks

4 fundamental Ways Really Increase Your Revenue and Asset in Business

Three recommendations improving your communication with business person

Top 6 Terms You Should Know Before Investing in net lease commercial real estate


 

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4 fundamental Ways Really Increase Your Revenue and Asset in Business

Make more money 8

Highlights:

  1. Sell more
  2. Sell bigger: larger accounts or large profit margin
  3. Spend less: strategically and intelligently
  4. Invest in your business

There are numerous of articles, systems, podcasts, videos, infomercials, webinars, books, and schemes all designed to show you how to do just that.  In addition, friends and family members are sharing the latest and greatest multilevel marketing organization, it’s someone showing you how to quickly buy and flip real estate, buy and sell stocks…etc.

In profitable business, the hard truth is that there are not many shortcuts. Business success and growth usually takes hard work and persistence. Let me suggest that if you are in business for yourself, there are really only four ways to make more money:

Make more money 9

  1. Sell more:

The bottom line is that you need to sell more of something to make more money. If you are a business owner, you don’t need someone to tell you that or to try and sell you his or her wares: You already have products and services to sell.

So the first trick is to expand the business you already have. There are a couple of ways to do just that:

  • Acquire more traffic/customers:  They key to getting more traffic in the door is to expose your business to new people. Market more, make more, it is (almost) as simple as that.  We pay for Facebook’s advertisement creating new prospect clients.
  • Create a new profit center: All great businesses figure out new products to sell and new services to offer. GE sells dishwashers yes, but it also sells jet engines and real estate financing. If you want to grow, you need to expand your offerings too.  Our products and service page just adds an Amazon Corner to serve more to our clients.
  1. Sell bigger:

It’s in two ways:

Make more money 2

First, you can sell to bigger clients and customers – in other words, those with bigger budgets. For instance, if you primarily sell to consumers and other small businesses, you might find that selling your wares to corporations and government entities will yield bigger revenues.

Second, you can sell products with a bigger profit margin. Even selling the same amount of such products will result in more net income.  For online business, you can start with selling someone else’ products which can be found on Amazon Corner; then later you create your own products.  The business did the same work, but made a lot more money.

  1. Spend less:

The important thing to keep in mind when cutting your overhead is to do so strategically and intelligently. You certainly do not want to cut back too much on those areas that generate revenue – advertising, for example.

From your annual budget review, there are probably many areas where you could cut some costs.  If you haven’t done an audit of your business expenses recently, consider doing so now.  Please contact us for a free budget analysis.

  • Insurance
  • Labor
  • Rent
  • Office supplies
  • Product line
  1. Invest in your business:

Naturally, investing is always a smart individual wealth-building strategy, but in this case, we are talking about investing in your business.

Make more money 6

Our physician client took an “expensive factoring” in an amount of $650,000 against his cash flow, $40,000 a month for 12 months.  This calculated risk generates more than $2 million revenue for his practice.  Please contact us for free consultation and business analysis.

In addition, our physician client invested in his office building.  He purchase entire building with 6 offices for $750,000.  He used to pay for his lease approximately $6500 a month.  After his acquisition, his net operating income (NOI) is approximately $8000 a months or his capitalization rate is about 12.8%.

In fact, by investing in your business, acquiring a commercial office building, be it remodeling the premises, paying off debt or buying new equipment, you increase its equity value. Eventually, that equity will become even more valuable down the road.

In conclusion, if you want to make more money from your business, you’ll have to do it, in the words of the famous commercial, “You will have to earn it.”


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