Summer jobs teach teens to manage money

This was originally published on Monday, May 30, 2017, in the Pacific Daily News.  Click here to subscribe to the PDN.

Summer is just around the corner. You may have a teen eager to try out the work force. Summer jobs teach teens how to manage money and what is expected of them once they are ready to start a career.

There are many advantages to working a summer job. Help them understand that there is temptation to buy the latest gadget, game or clothes and that treating yourself every now and then is OK.

But give them the true gift of understanding the value of money.

  • Savings account. Find a good starter account, one that does not have many penalties, especially for maintaining a balance below a certain minimum. Many banks offer bank accounts for kids of all ages. Usually credit unions charge a lower fee and pay more interest.
  • Basic money management skills. Technology has made it easier to keep up with your budget. There are apps that kids can download right onto their smartphones.
  • Investing. Get kids interested in different ways to invest their hard-earned money. There are stock market games that kids can play, using real-time information on what is happening in the stock market. Kids invest game money and use it to compete with each other.  Once they see the potential of investing their money, and potentially making money, they may be interested in actually investing some of their summer earnings.
  • Retirement. Many kids still in high school haven’t even thought about retirement. This is a great time to teach the concept of compound interest and how it can work for you. Starting a retirement fund at 16 verses 35 can create a nice nest egg with the possibility of early retirement. Besides the lure of a larger retirement fund and early retirement, there are other benefits to a teen Roth account. If money is used to purchase a first home, the money can be withdrawn free of taxes and penalties. Also, the Roth account cannot be used as income when applying for financial aid for college.
  • College. If your child is considering college, it doesn’t hurt to have them pay for a portion of it. After all, if they understand how much hard work went into paying for college, they might understand how much time and energy you have put into covering the rest. Cost of tuition, books, fees, living quarters and just the basic college necessities keep rising every year.
  • Down payment. Once a child gets their driver’s license, they want a vehicle to go with it. As much as we would all love to wave our wand and see a car magically appear in the driveway, we know that paying for another vehicle could cause us to go over budget. By working summers, they can save up for a down payment, pay for fuel and even help with the insurance.

Besides the financial aspects, summer jobs help foster confidence, time management, opportunity to learn more about themselves, networking and experience — and may even open up a door to a career they never thought about.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com

Tips for the family vacation

This was originally published on Monday, May 1, 2017, in the Pacific Daily News.  Click here to subscribe to the PDN.

Question: My family and I have talked about going on a dream summer vacation off island a few years from now before my oldest graduates from high school. Do you have any tips to help me give my family the vacation of a lifetime?

Family vacations, whether on island or off island, are lots of fun and create many wonderful family memories. These family memories will be shared for a lifetime, but you don’t want the trip to put you and the family in a financial bind.

Going off island can be very costly. Just the plane tickets alone are expensive. Of course, with anything that expensive, you need to save. Making the family dream vacation come true is a great feeling, but you certainly want to plan and budget well in advance. Here are a few things to consider when putting your family vacation budget together.

  • Be flexible. Do you know exactly where you want to go? If not, keep your options open. Do some research with your family. You may want to consider traveling internationally, especially if the dollar is strong. Look for destinations that provide you the most for your money. The typical tourist destinations are usually pricier.

The best time to travel is May through early June. Although the kids are still in school, it can save you money. Talk to your child’s school and see if they can arrange a way to let your child out a little earlier. By traveling during the off-peak times, you can save a lot of money. Airfare, rental cars, and hotels have some of their best deals outside the peak summer travel months. Weekday travel is usually cheaper than traveling on a weekend. Also avoid traveling on three-day weekends.

  • Non-summer travel. Does your vacation have to be during the summer time? Think about spring, Thanksgiving or winter break. Most schools are willing to work with you to extend these breaks a few more days so that you can travel. Schoolwork is a great way to keep kids busy on an airplane.

Use your points or rewards. Many companies now give incentives to use their services. Many airlines, gas stations, car rentals, hotels and credit card companies can save you money by using their customer loyalty programs. Some programs may even partner up with other companies to offer package discounts.

  • Shop around. Travel agents can help you create the dream vacation and are convenient. But they do charge extra for their time. Get quotes from several different agencies before committing. You may also want to consider an online booking agency. Many of them can create package deals with airfare, hotel, rental car and amusement parks. Since they have direct contracts with these companies, they can be less expensive to book.

Whether you use a traditional travel agent or online booking, be sure that you know what you are buying. Spend a little extra money for a refundable option. You may run into some difficulties during travel or even before you start. The last thing you want is to pay for that dream vacation that you never took.

  • Book in advance. Whether it is airfare, hotels or rental cars, booking in advance usually saves you money. Some travel websites recommend anywhere from 45 to 90 days in advance. Check fares early and often. You can sign up for airfare alerts through certain programs online. Once again, be flexible. Usually the most direct route is the most expensive. If you have time, consider alternate routes or flying one route to your vacation and flying back on another. You may have more stops and layovers, but as the saying goes, “It’s not about the destination, but the journey.”

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com

Give your kids basic financial tools

This was originally published on Monday, February 20, 2017, in the Pacific Daily News.  Click here to subscribe to the PDN.

Finances are difficult for some adults. Many have learned the hard way that messing up their finances can create a dire situation. Giving kids the financial tools they need prior to heading out on their own is an important role of a parent.

You can help them discover the difference between earning, spending and saving. Children will also learn the value of money. Introducing them to finances at an early age gives them a head start to a healthy financial future.

No matter what age, here are a few important lessons to teach your children about personal finances:

  • Money does not grow on trees. There’s not an endless supply. There are limits to how much money you have. Many kids see adults swipe a card and see money comes out of and ATM. Instill in them that whether it is a credit card or debit card, it is tied to real money, even though they do not see it. By setting up a savings account, they see for themselves first-hand how the concept works.
  • Money is earned. Whether it is a plastic card or money in hand, many kids don’t understand the effort it takes to make money. Of course they see mom and dad heading off to work. But do they know how hard you work? By giving kids the opportunity to earn their own money, they can get a better appreciation for you and learn the value of money. This teaches a work ethic and makes them more invested in the choices they make.
  • If you want it, save for it. Video games and other electronics that most kids fancy these days can cost a lot. Giving into every request for a toy doesn’t teach kids how real life works. Teach them the idea of saving their money for things they want. If it is worth having, it is worth saving money. This is a very valuable lesson about how we get the things we want in life.
  • Making choices. Spending for something now means not being able to afford something later. Help them think about their goals and aid them in making the right choices. Most adults face severe consequences when they make the wrong financial choices. You can help them learn this lesson early in life, at a time when making the wrong spending decisions does not affect them as much.
  • Credit and investing. Irresponsible credit usage is a cycle that is hard to break. Many use credit to pay off other credit and around and around it goes. As kids get older, you can teach them about renting a house versus owning a house. Teach them about investing in the stock market. Talk about compound interest and how it applies to credit and investing.
  • Rainy day savings. Start them from a young age with the idea that putting money away for an emergency is a necessity. If they learn this habit as a child, they will most likely continue it as an adult. Having an emergency fund will reduce the likelihood of taking on more debt.
  • A good lesson every child should learn is giving. Giving a little money to a worthy cause can go a long way. It builds self-esteem and self-worth. Understanding that they are part of something bigger and looking outward will help them become productive citizens.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com

Teach your teens about finances

This was originally published on Monday, February 20, 2017, in the Pacific Daily News.  Click here to subscribe to the PDN.

Giving your children a good foundation and teaching them about financial matters is critical for their personal development. Knowing how to budget, spend and save will establish good money habits for life.

If children develop good financial skills, they will be ready for the financial challenges that adulthood brings. Teaching children the value of money, especially through real life scenarios, will help them understand where money comes from, how it is earned and how to save it. As kids become older, real life situations and examples are the best way to learn.

Ages 13 to 18

This age group has started thinking about college and what they want to be when they grow up. At his age they can start thinking about long term financial goals. It is a good time to learn about the stock market, budgeting, and being responsible for their spending.

  • Compound interest. Simple math can teach how compound interest can be used to make money grow. Show them the effects of different interest rates on the same amount of money. Show them how compound interest can work against them when using credit cards.
  • Long-term goals. It’s always good to think about the future. Kids at this age have many wants and are tempted to spend as soon as they get money. Help them see that delaying what they can buy today can make a huge difference in what they want later. Using what they have in their savings account, let them calculate how long it will take to save and pay for it.
  • If not sooner, when your child reaches the ninth grade, sit down with your child and discuss the cost of college. Being honest about how much you can afford will help them set realistic goals when they start looking at colleges. Help them see there are other ways of funding college. Start looking into scholarships and grants.
  • Credit danger. Children often don’t see money exchanged for purchases in this world of invisible money. Invisible money is used when people use credit cards, internet banking and online shopping. It sets a false sense that money is limitless. As soon as your child turns 18, he or she will be inundated with credit offers. If they don’t understand the dangers of credit, some may fall into the credit cycle many get trapped in.
  • Help them start their first budget — how much they make versus how much they spend and save. Include money needed for gas, lunch and entertainment. Create a checking account for them. This will help take money managing a step further. If they fall short, don’t bail them out. They need to understand the consequences of their decisions and actions.
  • One thing many teenagers have is free time. Maybe they can get a job over the summer. Summer jobs are a great way to learn responsibility. It can teach them about what employers expect and how much one works to earn money.

Maybe they can start a side business to earn extra money from babysitting, cutting lawns, or pet grooming and walking. Another way of making money is clearing out their room and holding a yard sale. By this age, they’ve collected items from prior years that no longer entertain them. Why not turn those items into cash?

  • Stock market. Give them a pretend amount of money and have them “invest” in a company that interests them. Evaluate the stock’s performance over a period. Discuss what current events may be driving the prices and causing the values to fluctuate.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com

 

Financial tips for kids ages 6-12

This was originally published on Monday, February 13, 2017, in the Pacific Daily News.  Click here to subscribe to the PDN.

How many of us look back at childhood and wish we were introduced to money and finances at an early age?

Unfortunately, many schools no longer teach the importance of saving, spending and investing money. Learning about credit and balancing a checkbook is a life skill as important to being a successful adult as reading, writing and arithmetic. Children want to learn about money and, depending on their age, there are lessons for every age group.

Ages 6 – 12

At these ages, children can start doing chores around the house to earn money. It is also a good age to start teaching them that money has a limit. Help them make choices that display the concept that once they spend the money they have, that is it, they must earn more to spend more.

  • Allowance vs earning: This subject is always a difficult one for parents. Do I give my kids an allowance? But why just give it to them? Hardly anyone just sits around and earns money, so why should children be any different?  The media has flooded television with programs with kids who are well off and have nothing better to do than party. But we all know that real life is far from that fantasy. Pay your kids for chores around the house such as washing dishes, vacuuming, washing the car or taking out the trash. This will instill in them that money is not just given to them but they must earn it.
  • Want vs. need: Many adults have trouble with this lesson. Help your children understand the difference. Something wanted is something you desire and is not necessarily needed to survive. Need is something you have to have to survive. Teach them that their money is best spent when you purchase your needs first.
  • Power of decision making: Children at these ages can start asking for some expensive items. If they want a video game and a new pair of basketball shoes but they only have enough for one or the other, they must decide which one to buy. Kids can make decisions and weigh the consequences of those decisions.
  • Involve them in family finances: When going to a store, explain why you choose a less-expensive brand or why one is a better deal. Ask which they think is a better deal. Talk about deals like bulk items.  Also teach them how stores can trick you into thinking you are saving, especially with deals such as “buy two and get a third for half price.”  If you are going to the store for one, why spend more to get a deal on a third?  While shopping, ask financial questions such as “Do we want this or do we need this?” “Can we get this from somewhere else at a better price?” Should we hold off till next week to purchase this?”
  • Bank account. This is a good age range to open a savings account for them. Watching the balance grow is a great way to teach them how the bank pays interest to their customers to hold their money. Now that they are earning money, they can make regular deposits. Encourage them to put money from special occasions, such as birthdays or the holidays, into their account.
  • Giving. Giving and taking care of others is just as important as saving. They can pick a charity, an organization, or even a person whom they wish to help. Maybe they can use it at a bake sale or a fundraiser. Either way, helping others is a great way to give back and it will make them feel good about themselves.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com

Teach your children about finances

This was originally published on Monday, February 6, 2017, in the Pacific Daily News.  Click here to subscribe to the PDN.

Question: I have made some financial mistakes that took years to overcome. I am now about a year out of debt and turned my credit score completely around for the better. My parents never talked about money and I think if I had learned about it sooner I may have been able to make more sound decisions.  My question is, when should I start teaching my children about money?

Answer: As a parent, it is important and our duty to teach our children important financial lessons. Your financial history gives you the tools to become a great teacher to your children.

Now that you have learned about managing your finances, it is logical that you want to ensure your children don’t make the same mistakes. Many parents don’t talk to their children about finances.

Parents are the No. 1 influence on their children’s financial behaviors. You have the opportunity to raise your children to be savvy in spending, investing, saving and giving.

According to researchers at the University of Cambridge, kids’ money habits are formed by the age of 7. That means there are several years before the age of 7 to start introducing them to money and finance ideas. Teaching your children about money is a necessity. The method depends on their ages.

Kids at ages 3 to 5 will start to get curious about money. Although they may not truly understand the value of money, they can start to learn the name of the coins and which dollar bill is greater.

  • Wait for it. This generation is surrounded by instant gratification. No longer do they have to search through encyclopedias for answers or wait for a letter in the mail. However, the ability to delay instant gratification is a skill that will keep them from depending on credit or going into debt as an adult.

Teach them that if they want something, they should save for it. If there is a small toy that they want, help them save money in a jar and when they have enough, take their money to the store and have them make the purchase.

  • Three jars. Clear jars are a great way to teach kids about money because they can physically see their money grow or shrink. Label the three jars “savings,” “spending,” and “sharing.”

Every time your child receives money, have them divide the money equally among the jars. The savings jar should hardly be touched and can be used to buy a more expensive toy or just to grow. The spending jar can be taken to the store to buy smaller items that they want. The sharing jar can be used to help a friend or go to a cause in which they are interested.

  • Play time. Kids have great imaginations. Set up a store or a restaurant in the living room. They will learn the basic idea of spending and commerce by using play money and exchanging it for goods. There are many board games from which play money can be used,
  • Coupons. Go through the newspaper or magazines and have them clip coupons with safety scissors. At the store, hand your child a few of the coupons and have them search for the item at the store. This will make them feel like they are helping the family save money.
  • Set the example. Kids are sponges and they learn from your habits and behaviors. If they see you using credit cards or constantly arguing about money with your spouse, they will mimic these ideas and actions. Remember they are watching you and you should set a healthy example for them.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com

Help graduates be financially responsible

This was originally published on Monday, July 11 ,2016 in the Pacific Daily News.  Click here to subscribe to the PDN.

Every day we make decisions that have good or bad consequences for our future. It is important to teach your new high school graduate about finances before starting off in the real world. Doing so helps them make smarter choices in the future. Becoming financially responsible is a big step into the real world and will become one of the largest challenges they will face.

  • Student loans. The cost of university is becoming more and more expensive. Due to the increase in price, many more college students are taking on student loans. Many students think that because the payment is deferred until they graduate it gives them leeway to use it for other purposes than just for school needs. Take only what you will need for tuition, books, supplies and housing. With a tough job market, it can take some time to find a job which will allow you to start paying off your loans. You will be happy to have taken the bare minimum.
  • Taxes. If you are going right into the job market or working while in school, it is imperative that you start paying taxes. Just because you don’t make much does not exempt you from paying your taxes. Nonpayment can hurt you in the long run. It could cause your wages to be garnished or it could prevent you from being hired for a job.
  • Emergency fund. Start saving for an emergency. You will be thankful that you have an emergency fund if your car breaks down or you lose your job. The best time to start is when you have fewer responsibilities. Once you get a mortgage, children and insurance, it will be harder to put money aside.
  • Think about your credit. Your credit history will pretty much follow you around for the rest of your life. Ensure you make your payments on time.  Even though right now you are not in need of a mortgage, some day you will be and you will be thankful that you have a good score. Most utility agencies, jobs and landlords now run credit checks on their customers to see how credit worthy they are.
  • Health. Continue to take care of yourself. Get annual checkups for your dental, health and vision. One of the largest expenses most people pay is for medical attention. Eat healthy, get lots of exercise, and stay away from drugs and alcohol. Be sure you are insured, it will help tremendously when it comes to paying for doctor’s visits, medication and treatments.
  • Invest. Retirement may seem a long way off. Eventually you will want to retire. How old do you want to be when you retire? Your decision should decide how aggressively you invest. If you want to retire at 50 years old and travel the world, put more money aside. Open an IRA, invest in stocks, bonds or even real-estate. Social Security is no longer enough to retire on.

There is a lot to think of as a young adult. If you plan and stick to your plan, your financial future is a bright one. Take care of yourself and your finances. Your future self will thank you.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him atmoneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com