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Seven Things to Do Before Year End

Posted on December 22, 2011 by Khooppres 3 comments

It is hard to believe that we will be ‘ringing’ in the new year in less than two weeks. If you’re like me, you’re probably wondering what happened to 2011. Over the course of the next week, many of us will spend time with family, give and receive holiday gifts, and take a break from our normal work schedule. During this time, each one of us has an opportunity to perform those administrative tasks that we often put off by saying, “I’ll get to it later.”

As we prepare to say goodbye to 2011, performing the following seven tasks will help you transition to 2012 with ease:

1. Purge Old Mail – This is definitely on my to-do list. I have a difficult time ‘releasing’ mail. I often keep it with the intent of reviewing it or filing it. Because this is a task that I dread, I have procrastinated to the point that I now have a significant amount of mail to shred! If this is your fate too, set aside a day during the holiday and just do it. I will be joining you on this journey. I am looking forward to the sense of accomplishment that I’m sure I’ll have once my kitchen counter is cleared of its current clutter.

2. Review Your Flex Spending Accounts (FSAs) And Use Remaining Balances – This is something that you should do right away. If you have elected to participate in the FSAs offered by your employer, you’re more than likely aware of the spend it or lose it policy. Make it a point to review any remaining balances, and if needed, schedule your final dental or doctor’s appointment for the year. Additionally, review the list of eligible expenses and take advantage of those as well. For those of you that haven’t taken advantage or are not familiar with this type of account, an FSA allows you to set aside a portion of your pre-tax earnings to pay for qualified expenses. FSAs are most commonly used for dependent care or medical expenses.

3. Prepay Your Mortgage – I’m sure that most of us are familiar with the term mortgage interest. If your payment is due January 1, why not pay it before the end of December to ensure that your mortgage interest is captured on your year-end statement for tax purposes?

4. Clean Out Closets And Make Final Donations – Similar to the purging mail concept, get rid of those items that you no longer wear or need. I know that we’ve all heard the phrase, “One person’s trash is another person’s treasure.” During this time of year, it’s important to consider those that are less fortunate; it’s the right thing to do, and it’s also a tax deduction. Don’t forget to request a gift receipt for your records!

5. Make a Contribution to Your Retirement Account – If you have an IRA, you have until April to contribute for tax purposes, but if you are contributing to your employer administered 401k, the deadline is year end. There may still be time to contact your benefits department to increase or make a final contribution for the year. The IRS communicated that the annual maximum contribution for 401ks is $16,500 for those under 50 and $22,000 if you’re older. If you’re contributing to an IRA, the IRS reported that the maximum contribution is $5,000 for those under 50, and $6,000 if you’re older.

6. Review Your Beneficiaries – While you’re making your final contributions for the year, take a moment to ensure that you have beneficiaries listed on all of your investment accounts. This is extremely important. If your company has an open enrollment period and you’ve added or confirmed the beneficiaries on your life insurance, you may have assumed that it also covers your retirement accounts; it doesn’t. Check each investment vehicle separately and verify that you have at least one beneficiary listed.

7. Write down Your Achievements for the Year – No matter what’s happened to you this year, you’re still here, which means you still have opportunity. Life is a journey that is filled with ups and downs. Before you celebrate a new year, take an opportunity to reflect on those things that went well for you in 2011. Perhaps you didn’t achieve every goal, don’t waste time thinking about what you didn’t do; take a moment to ‘pat yourself on the back’ and say, “job well done.” Make a commitment to become your own cheerleader. You are worth it!

I hope that this blog post has given you some ‘food for thought.’ This is indeed the most wonderful time of the year. As you enjoy your time with family and friends, make a commitment to complete some of the administrative tasks that we often put off. While it is important to ‘handle our business,’ I ask that you make a commitment to be ‘present.’ As I close, I’ll leave you with the following quote, “Yesterday is history. Tomorrow is a mystery. Today is a gift. That’s why it’s called the present.” ~ Unknown

From my heart to yours, Merry Christmas!

Financial Gift Ideas for Teens

Posted on December 14, 2011 by Khooppres 4 comments

Last week’s Post focused on financial gifts for young children. As I reviewed the hits on my blog and the terms that people used in search engines, I realized that a post on financial gift ideas for teens would be beneficial as well. For most teens, a gift card or money is a welcomed gift, but what happens when you ‘fork’ over the cash? While I guess it qualifies as a financial gift, in most instances, the gift does not last beyond the holiday break.

I’ve lost count of the number of times that I’ve heard parents say their teens do not have good money management skills. As a parent of a young child, I will admit that I don’t have the personal experience of raising teenagers. However, I do believe that parents often contribute to their teens’ money habits through the act of setting boundaries or giving in to their every whim. If you’re looking for ways to teach your teens about money and investing, the following gift ideas may be helpful:

Contribute to a 529 Education Savings Plan or purchase a Certificate of Deposit (CD). If asked, your teen will likely say, “Give me the cash now!”, but this type of monetary gift will serve as a lesson in understanding the ‘big picture.’ As your teen prepares to transition to college, I am a firm believer that they should have some ‘skin in the game.’ Even if you have invested and planned for your child’s education, it’s important that they understand and appreciate the sacrifices you’ve made on their behalf.

A 529 education savings account is a tax deferred investment account that is designed to help families save for future education expenses. If you haven’t set one up, there’s no time like the present. If you decide to purchase a CD, it’s important to shop around. A CD is a type of account that yields a higher interest rate than most savings accounts, and requires that your initial deposit is invested for a fixed period of time. If you’d like to compare CD rates, bankrate.com offers up to date information on rates and reviews. Please note that most banks will charge an early withdrawal fee if the CD is redeemed before its maturity date.

Purchase a book on investing and open an investment account. We often feel that we have to have a lot of money to begin purchasing stock. I recommend starting small. Sharebuilder is a great option for someone starting out because there’s no minimum deposit or investment amount. In addition to allowing you to invest ‘your way,’ the site has a plethora of resources that can assist you in making sound investment choices. A book that has received good reviews and may be helpful to teens is The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of . This book along with an initial deposit in an investment account may be a good igniter to help your teen begin investing in their future.

Purchase the Pretend and Play Checkbook. This gift was featured in the post, Financial Gift Ideas for Young Children. While your teen may perceive this as a joke, the gift can serve a great purpose. If your teen is preparing for college, in all likelihood, they will have a checking account at some point. This ‘checkbook’ can be used to practice managing their money for college preparation. For instance, as a part of the gift, I recommend adding a beginning balance. The money should be ‘earmarked’ for college expenses (e.g., college tours, applications, etc.) As they begin to incur expenses, help them manage this ‘account’ by adding deposits on a periodic basis. Their ability to manage their Pretend and Play Checkbook will assist them in managing the real thing.

Purchase the game of Monopoly. I’m sure that we’ve all played Monopoly at least once in our lifetime. Why is this important? The game of Monopoly teaches players how to strategize and the art of negotiation. It also teaches the most important factor in purchasing real estate – location, location, location. Although this game is older than many of us, it is still relevant.

I hope these gift ideas are helpful. As we prepare to give, let’s also look for opportunities to educate those we love. While they may not welcome your new approach to giving, they will thank you later. We’ve all experienced being a teenager and assuming that we knew what was best. As we matured, we realized that our parents did know a ‘thing or two.’ Your teen will arrive at the same revelation at some point; it’s only a matter of time.

Financial Gift Ideas for Young Children

Posted on December 8, 2011 by Khooppres 3 comments

Parents are their children’s first teachers. I know I don’t have to tell you that they watch EVERYTHING we do, say, and even the things we don’t do or say. Because our children are always watching, we often have to find ways to incorporate teachable moments in the least suspecting places. Christmas time is one of those occasions when parents can incorporate educational opportunities through the act of gift giving.

A key principle for Rags to Riches is to leave an inheritance for future generations, but in addition to establishing a legacy, we must teach children how to be good stewards of what they have. The earlier we begin teaching our children sound financial principles, the better off they’ll be. The reality is whether we intentionally teach them or not, many children adopt the financial habits of their parents. If you are struggling to ‘make ends meet’, I know this is not the future you want for your children. That being said, I ask you to be open to trying something new.

As you finalize your Christmas shopping this year, consider incorporating at least one financial gift for each child you plan to buy for. Included below are some pretty cool gift ideas that are affordable, educational and fun:

Piggy Banks – Every child should have a piggy bank. There are numerous options available, from the most traditional to the talking ATM machine. I’ve highlighted two types for your consideration:

Money Savvy Pig – While this bank doesn’t talk to you or include flashing lights, it helps children develop the habit of allocating their money to key categories – saving, spending, donations and investing. If children are taught this key principle from the beginning, it becomes second nature and they will always approach money in this manner. This is a gift that qualifies as a life-long blessing!
Summit Zillions Deluxe ATM – This bank incorporates all of the bells and whistles that we have in a real ATM machine. Although the Money Savvy Pig is my first choice in banks, this is definitely a contender. Because of the interactive components of this bank, children will seek opportunities to earn money just to deposit it into their bank!

Pretend and Play Checkbook – Children are always looking for opportunities to be ‘grown up’ like their parents. Think about it; how often do you see young children playing house? The Pretend and Play Checkbook includes checks, deposit slips, check register, pen and calculator. While reading the reviews on this item, I was extremely impressed by one couple’s approach. In addition to giving the checkbook to their child, they included a beginning balance. Each time the child asked for money, they had to evaluate if there was enough money in their ‘checking account’ and determine if their ‘want’ was worth reducing their balance. Now that’s a real life experience!

Cash N’ Carry Wallet – My son is always asking if he can carry a wallet like his dad. This year his wish will be granted. We have been looking for ways to teach him basic money principles and I think this gift is a perfect way to educate him in a fun and interactive manner! The set includes play bills in various denominations and plastic coins that are close to the real thing. It also includes a Visa and Cash Card as well, which just might be the perfect way to introduce the concept of credit management.

Toy Cash Register – There are numerous choices in toy cash registers and children love them! While completing my research for this post, I was most impressed with Learning Resources Teaching Cash Register. This toy touts all of the bells and whistles! Children will be engaged for hours with creative play while learning basic math concepts and money recognition. In addition to including make believe cash, this toy has a scanner for coupons and credit cards and a scale that really works! I’m sure that this toy will put a smile on a child’s face even if it’s not the first choice on their Christmas list.

While the gifts highlighted in this post are clearly for younger children, I hope you’ll seek opportunities to give financial gifts to the older children in your life as well. It’s never too late to start, and many times, sustainable change is accomplished through taking ‘baby steps’. Please join me in adopting a new principle this year and blessing our children with a learning experience they won’t soon forget!

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