How Financially Literate Are You? 3 Things You Should Know About Your Money

Most of us received little guidance or instruction on how to handle money when we were growing up. That’s OK — we can learn now, a little bit at a time. Let’s start with the basics.

How do most of us learn how to use our money wisely and well? When we’re growing up, we’re given special instruction in important subjects — swimming, driving, sex — to arm us with info and keep us from harm.

Yet when it comes to managing our money — an activity that every one of us needs to do, every day — we receive surprisingly little preparation. We’re not taught much about it in school, because education systems leave it to us to learn from our families and friends. However, those people often don’t fill in the gaps because money can be such a loaded or taboo topic.

Natalie Torres-Haddad, who grew up in southern California, saw many people around her struggling with debt and financial instability. She was determined to be the exception, and she purchased her first rental property in her early 20s and earned an MPA in Finance & International Business. In the process, however, she became buried in debt. Only by teaching herself the basics of money — basics that she’d never learned — was she able to steady herself and her finances.

Today she leads workshops and sessions to prevent others from falling into the money pit. (She’s also the author of the self-published Financially Savvy in 20 Minutes ). She’s found that even among the college-educated people she meets, “the majority feel confused and overwhelmed about balancing their income and expenses,” she says. The stats show they’re not alone. A 2015 Ohio State University study reported nearly 70 percent of college graduates in the US say they don’t feel equipped to manage money and deal with their debt.

Not only must we get up to speed on the basics, we also need to start having honest conversations with each other about money, says Torres-Haddad. In the same way we’d tell family and friends that we’re cutting out refined sugar from our diets or practicing yoga to increase our flexibility, we should be open with them about the steps we’re taking to boost our financial health. That way, we can get advice and support. This transparency, she adds, can also make us less susceptible to peer pressure-related spending. How many of us have agreed to a pricey meal or weekend trip because we didn’t want to come clean about our money concerns?

Becoming financially literate does not require a huge time investment. Torres-Haddad believes we can start by dedicating 15 – 20 minutes a day to developing our skills and knowledge by learning new terms and resources. Just like attaining literacy in a foreign language, she says, “it’s an ongoing education.” Here are three things you need to know about your money.

1. Know How Much Money You’re Bringing in Every Month vs. How Much You’re Spending

Most of us can rattle off our salaries in our sleep, but could you do the same for your monthly after-tax income and where you’re spending your money every month? If you can’t, that’s normal. But now is the time to learn your actual take-home pay and your actual expenses (and not just ballpark figures or estimates).

For your income, look at your physical or online pay stubs, and start keeping a record of the after-tax amounts. If you’re a salaried employee, that number should be fairly steady; if you’re not, those numbers will vary.

For your monthly expenses, Torres-Haddad suggests writing down — whether it’s in a physical or online notebook — every single daily purchase (coffee, take-out, Uber, online shopping, etc) you make and every single ongoing payment you make through autopay or credit cards (Netflix, gym membership, car insurance, utilities, etc.).

If you’ve never done this before, you may find this uncomfortable — even painful — but it will force you to face up to your spending habits. It will also make these purchases visible. Often, our regular outlays (such as Netflix, Hulu, etc.) can go unnoticed or unquestioned, and our daily spends — especially if we pay by debit card so the funds are instantly drawn from our bank accounts — can go forgotten. Torres-Haddad calls the latter “runaway spending” — “when the little things that you thought cost only a few dollars actually cost much more” in the long run. Take a daily $5 green smoothie. By making them at home, you could save yourself a few hundred dollars in a month.

After you have a fundamental understanding of income and expenses, you can download an app to help you track these categories; see your bank account, credit-card and loan balances; and organize your purchases into buckets so you can identify areas where you might cut back. Two free apps to try are Mint or Charlie, says Torres-Haddad. But, she cautions, apps can be a little “out of sight, out of mind,” meaning if you need extra help to be aware of your spending, stick with the pen-and-pad (or fingers-and-keyboard) method a while longer.

2. Know Your FICO Score and Your Other Credit Scores

While you don’t need to have a good credit score to be financially literate, you must know what it is. ( Note: Most of the information in this section applies to people living in the US.) In the US, FICO was the first company to offer a three-digit credit-risk score for lenders to use when deciding whether or not to approve a loan or line of credit, a credit limit, and an interest rate. There are three other national credit reporting bureaus — Experian, Equifax and Transunion — which also keep track of all your loans (student, auto, personal, etc.) and your balances and histories for all your credit cards (whether issued by banks, stores or businesses).

However, the FICO score is the one most frequently used when you apply for credit cards, mortgages and most types of loans; rent an apartment; or sign up for utilities. FICO scores range from 300 to 850; 670 and up is seen as a good score and 800 and up is excellent. While the FICO score is calculated with a proprietary algorithm, the primary factors that go into it are your repayment history (do you pay your credit-card bills on time? how late are you?), how much debt you’re carrying on cards and loans, how long you’ve successfully held a credit card or loan for; and whether you’ve managed to hold a mix of different kinds of credit.

Most banks and credit cards offer free access to your FICO score on their mobile apps and websites ( here’s a list of the ones that do). If you don’t use one of these companies, you can also find out how to access your score on FICO’s helpful FAQ, including a chart showing where your score falls between “Poor” and “Exceptional.”

Besides checking your FICO score every year, do an annual check of the reports issued by Experian, Equifax and Transunion. This is so you can verify that they’re correct, make sure no one has opened up a line of credit in your name, and see where you might improve. You are entitled to a free copy of a credit report from each bureau once a year. Beware: Many sites will charge you a fee, so use the federally approved and secure Annual Credit Report site.

If it’s your first time checking or you’re about to make a big purchase (such as a car or a home), Torres-Haddad suggests getting all three reports at once. After that, she recommends spacing them out throughout the year. That way, you can quickly catch any errors, fraud, identity theft or any other actions that could hurt your credit history. Mark your calendar so you know when you can request your next free credit report.

3. Know How Much Credit Card Debt You’re Carrying

Knowing how much credit-card debt you’re carrying — and how quickly it’s increasing due to interest — is critical to your financial literacy. Make a list (on paper or on a computer) of each of your credit cards, their current balances, and their current interest rate. Then, put them in order from highest interest rate to lowest.

In general, says Torres-Haddad, this should be how you should prioritize paying them off, paying as much as you can towards the card with the highest interest rate while paying the minimum on the other cards. Called the “ debt-snowball method,” this was popularized by money expert Dave Ramsey.

If you have any cards that offered a 0% APR as a promotion when you signed up, mark down the date on which the promotional rate expires because that’s when you can expect your debt to accumulate at a high interest rate (20% or more). Try to budget your monthly payments so that this card will have little to no balance when that expiration date arrives.

Believe it or not, having a credit card can be a great thing for a person’s FICO and credit scores — if you use it responsibly. Of course, carrying no debt on your cards is best. Otherwise, Torres-Haddad recommends using no more than 30 percent of your available credit limit. So if you have two credit cards with limits of $6K apiece, totalling $12K in available credit, make sure the total balances you’re carrying do not exceed $4K.

If you’ve managed to pay off a credit card, congratulations. But while you may be tempted to close it, Torres-Haddad advises against it. Why? Closing the account will shrink your total amount of available credit and cause your credit score to dip. Instead, delete the card number from any online shopping accounts, cancel any auto-pays billed to it, and freeze the card in ice. It may sound silly but it means that if you want to use it, you’ll be forced to wait for it to defrost — and forced to take a little time to think about your purchase.

When choosing a new credit card, look for ones that offer incentives — such as travel points or cash back — which could help you and your finances. Torres-Haddad recommends going to nerdwallet.com and bankrate.com to compare credit card offers.

Obviously, these three points represent just a small part of financial literacy. That’s why Torres-Haddad urges people to be patient and to learn gradually. Two books she recommends are Napoleon Hill’s Think and Grow Rich!  and Robert T. Kiyosaki’s Rich Dad, Poor Dad. For those who like to get information through listening, she suggests the “Popcorn Finance” and “Her Dinero Matters” podcasts.

When you can, supplement your research with an in-person workshop, adds Torres-Haddad. “Even going to one financial literacy workshop can have a life-changing effect,” she says. A good time to find free workshops is April, which is Financial Literacy Month in the US. One of the best investments you can make in your life is to educate yourself about money, says Torres-Haddad. “It can really give you a lot of peace of mind.”

By: Erin McReynolds

Source: How Financially Literate Are You? 3 Things You Should Know About Your Money

.

Related Contents:

What is Personal Finance

Creating a Personal Financial Plan

Financial Planning And Goal Setting

The Importance of Financial Education

How we compete : what companies around the world are doing to make it in today’s global economy

10 Best Personal-Finance Tools to Better Manage Your Money

High schools are beginning to require personal finance courses

Financial Planning Curriculum Framework

Can The Best Financial Tips Fit On An Index Card

Managed care: the US experience

America’s 25 Most Fascinating Entrepreneurs

Personal Computers; Managing Your Money

Credit Karma raises $30M for personal finance tools

Top PFM (personal financial management) companies

How To Teach Kids Financial Literacy In An Ever Changing World

How to Teach Kids Financial Literacy in an Ever-Changing World

This is one of several upcoming articles focused on financial-literacy tips and activities for parents inspired by the new Entrepreneur Kids book series. The first title in the series, Entrepreneur Kids: All About Money, is available for purchase now via Amazon | Barnes & Noble | IndieBound | Bookshop | Entrepreneur Press.

When my wife and I were raising our children, it was an easier time. We could have the kids go out and sell lemonade on the corner. They delighted in hearing the jingle of the coins in their pockets and then spending the cash on candy (or whatever) at the store. Times have changed. It’s important not to fumble the financial teaching of our kids today.

Parents: You have to do this financial-readiness teaching for your ; no one else will. Fortunately, there is some time-tested guidance and tools to help you adapt to our changing world.

Related: Something Big is Coming: Entrepreneur Kids

Oh, how the financial times have changed

There is so much debt nowadays. Your child is not going to make it financially unless you teach them. You want them to know how to be an entrepreneur? Teach and time management first, and give them ample opportunities to practice with money.

Many and older Gen Z adults are back living with their parents because the cost of living on their own isn’t as attainable as it once was. It’s vital for parents to help prepare their kids for living in an increasingly complex world.

Start young with financial teaching

It’s hard in the best of times, but when parents don’t have a lot of money, it can be that much harder to teach a child fiscal responsibility. We are busy, and when you add in pandemic-related stresses, teaching a young child about money may not seem that essential, but the lessons learned from our current macro-economic circumstances are all the more reason to make instilling them in our kids a priority.

Even a child between three and five can learn that money has to be earned. They can learn about spending, saving and giving. When you take them to the store, even sharing some financial information such as, “Mommy and daddy are so lucky to have good jobs so that we can buy this food” is meaningful.

Simple conversations go a long way toward informing kids that it takes money to do things. Begin at about age three, and continue until their late teens. If you start young, they’ll better understand the connection between finding a job and having money for needs and fun by the time they’re in high school.

If you head to the movies or some other recreational outing, reiterate the same concepts: “Aren’t we so lucky that we have good jobs so that we can afford to go ?” “We are so happy that we can work hard so our family has money to go to movies.” These conversations begin to have a cumulative effect.

Support is out there

Some parents might be relieved that their children didn’t grow up grappling with the hard realities of money, but as I watch so many millennials struggling financially, I’m grateful I opened my mouth with my kids. Did it feel weird and uncomfortable? Certainlty, but we don’t have the luxury of silence anymore.

Luckily, there are many more resources now than there used to be. Check out the National Financial Educators Council for some great age-appropriate advice. And there are many books written for very young kids to start learning about money matters. One of the best I’ve seen is the Kyng & Kyren Generational Wealth Building Activity Book. Grab one that works for you and your family, and get started.

The cause-and-effect stage

When a kid is about seven-to-10 years old, they’re ready to begin earnestly understanding the operations of money. Think of it as their, “If I don’t do my chores, I won’t get an allowance” stage. In the past, we meted out cash as a reward. In an increasingly cashless society, that may prove more challening.

There are credit cards available with kids in mind that parents can stricly monitor, which might be the most practical route. It’s also an effective way to teach them purchasing power, particularly when they realize there’s not enough money left on the card to cover what’s in their cart.

Years ago, one of my kids decided to buy a pair of Air Jordans. They were three times the price of regular sneakers, but the child had earned the money, and it was his to spend as he wished. Later, he said, “These shoes wore out just as fast as my other shoes.”

I asked, “What did you learn?” At first, he said, “I learned that I can have more shoes if I don’t have Air Jordans.” Later, he revised his opinion, saying, “I’m buying another pair of Air Jordans because I have the money,” adding that he wanted to make more so that he could buy Air Jordans for everyone. Now that’s an entrepreneur.

Related: 5 Ways to Build Your Kid’s Financial Literacy

With this guidance as a bedrock in their earliest years, your kids will hopefully mature into money-wise teenagers and, eventually, young adults. Parents, it is your great privilege to help your children succeed and move forward financially and in business. Take the challenge, and hopefully you can all bank on the results.

Peter Daisyme

 

By: Peter Daisyme / Entrepreneur Leadership Network VIP

Source: How to Teach Kids Financial Literacy in an Ever-Changing World

.

.

More Contents:

8 Financial Lessons From Top Personal Finance Experts
[…] JaMorcus Trayham grew up in a Houston neighborhood where the school dropout rate was 30 percent and financial literacy was far from the focus in their curriculum […] they realized how behind the curve they were, so they started Literacy Kings as a way to encourage financial literacy in communities similar to the one they grew up in […]
3
Growing Local Economies | Rotary International
[…] The Rotary Club of Guatemala de la Ermita helped 400 local women complete financial literacy courses so they could pool their money and fund their own microlending program […]
N/A
Teach Children To Save
[…] Teachers Why participate? Most students are not learning these important financial literacy lessons at home […]
0
A Shocking Look Into CHEAP REAL ESTATE (How To Find A Real Estate Investing DEAL) – COUNTER.NEWS
censored.today – Today
[…] Minority Mindset was founded to revolutionize the way Money Minds think about money and to make financial literacy fun […]
N/A
Catholic Relief Services Regional Director Visits Ayorkor Botchwey |
this.kiji.is – Today
[…] them with technical knowledge as well as life skills in areas such as entrepreneurship and financial literacy […]
0
Technology and Design Manager, Libraries Without Borders US | Public Interest Tech Job Board by
jobs.codeforamerica.org – Today
[…] places of lifelong learning—from basic reading, writing, and computer skills to health, legal, and financial literacy […]
N/A
Zim women entrepreneurs urged to utilise AfCFTA
cite.org.zw – Today
[…] evident gains, women entrepreneurs and women-led business face greater challenges, such as limited financial literacy, access to finance and business networks, and even constraints due to social norms […]
1
Webinar Registration – Zoom
lakeheadu.zoom.us – Today
[…] Ahead conference and let us help! This event will focus on empowering the youths of today in financial literacy and career preparation […] The other workshop is provided by our partners at Royal Bank of Canada (RBC) and focuses on financial literacy […]
7
Samantha Savoia Fiore on LinkedIn: #health #fitness #nutrition
[…] #healthylifestyle #yoga 4 3 Comments Like Comment Thiefaine Magre Agreed! healthy living and financial literacy should be core principles starting in grade school […]
0
Key Competences by Arjana Blazic on Genially
view.genial.ly – Today
[…] of science as a process and way of thinking and includes a reference to the increasing need of financial literacy […]
N/A
HOT JOBS & COOL JOBS: FINANCE DIRECTOR FINANCE OMAHA NE USA
[…]  financial literacy, health & safety, family functioning, and community connections […]
N/A
MBA ASAP Corporate Finance Fundamentals
[…] Why take this finance course? Understand the Numbers side of Business Financial Literacy Matters […] Asked to take a basic financial-literacy exam—a test that any CEO or junior finance person should easily ace—a representative sample of U […] Lack of financial literacy matters and impacts an organizations ability to optimally perform […]
N/A
Charlie Hu, Blockchain Expert, Founder of Candaq Fintech Group – DApps: Leading Polkadot & Tezos Networks – IntelligentHQ
[…] force is the effort that has been put into the academics, promoting University education and financial literacy across the country […]
1
NSSF Career Expo
nssfug.org – Today
[…] Finalists will also acquire practical, financial literacy, entrepreneurial and employment skills to help them optimise career opportunities after university, […]
N/A
Healthy Food for Denver’s Kids – City and County of Denver
[…] Prior to working for DHS, she worked for Junior Achievement, which focuses on promoting financial literacy in schools […]
N/A
Harrison Barnes on the NBA Trade Deadline and His Career 2021 Season
[…] be able to give kids the opportunity to have money in a savings account, to be able to learn about financial literacy and have the opportunity to really have tools and knowledge that they’re going to need for the rest […] There’s not a point where you say, “OK, I know everything about financial literacy, I know everything about investing and saving and spending that I don’t really need to lear […]
1
JSE offers high school learners investment skills
[…] colleges to ensure that the programme reaches every corner of the country, in order drive financial literacy and expose the youth of South Africa to the exciting world of finance and investment […]
N/A
This state has the least affordable housing market in the U.S. based on income — and it’s NOT California
[…] net, a financial literacy website, explored what percentage of households in each state nationwide, plus the District o […]
1
Meeting Registration – Zoom
stockton.zoom.us – Today
Meeting Register Page Meeting Registration  Microsoft (Outlook) Topic Money Moves Workshop with Bashira Khan Description JOIN BASHIRA KHAN AS SHE SHARES HER MONEY STORY. LET’S ALL TURN TOWARD HEALTHY FINANCIAL LITERACY HABITS. Time Mar 23, 2021 07:00 PM in Eastern Time (US and Canada) Loading * Required information Register
2
Local fintech partners with Infobip to create SAs first WhatsApp payment gateway  –
ventureburn.com – Today
[…] thrilled that through various working associations we are able to assist organisations to address financial literacy and inclusion […]
4
How To Start Investing For Wealth Success Today
[…] Investing is on the opposite end to the financial literacy scale […] You need to learn how to start investing for wealth success today Information on investing and financial literacy is available everywhere […]
0
Ukheshe Technologies and Infobip collaborate to create SA’s first WhatsApp payment gateway
[…] are thrilled that through various working associations we are able to assist organisations address financial literacy and inclusion […]
0
Insurance firm to empower business women | The Nation
thenationonlineng.net – Today
[…] ADVERTISEMENT The financial literacy session was anchored by AXA Mansard’s Investment Officer, Nneoma Mere […]
2
Buy Now, Cry Later? A Look Into a New Phenomenon in Digital Payments and E-Commerce –
suara.seacen.org – Today
[…] It should be apparent from the preceding paragraphs that financial literacy is key, and financial education promoting literacy, whether provided by the BNPL firms themselve […]
0
4 ways to take your credit union to the next level
[…] Providing financial literacy and education through life changes has long been one of the key attributes that set credit union […] Credit unions always go the extra mile to educate their members; many run financial literacy workshops to help their members […]
N/A
How to invest your pandemic pounds in an ISA
[…] Kia Commodore, founder of financial literacy platform Pennies to Pounds, agrees: “Young people are sparking a movement towards sustainabl […]
N/A
How next generation financial services platforms are driving global financial inclusion | Newz Post
newz.ug – Today
[…] are disrupting the financial services ecosystem, effectively banking the unbanked…and elevating financial literacy where it is most needed […]
N/A
Wisdom Group launches an advanced Fantasy Gaming App: ‘Wishgames11- Ab Har Wish Hogi Poori’ | Business
[…] Trusted Brand’ by White Page International in 2020, ‘Amity Corporate Excellence Award For Promoting Financial Literacy‘ by Amity University in 2020, and ‘Best Brand Award’ by World Marketing Congress at Uttar Prades […]
0
Whether you’re making $50,000 or $50 million, the basics of financial planning and life insurance are the same
advisor.news – Today
[…] ” If you lack healthy money habits and financial literacy before you receive an inheritance, lottery win, or other financial windfall, you’re more likely t […]
0
STEM camp
[…] never been taught… Yup nailed it! ​ I wish that I would have known what I know now about money and financial literacy, at an earlier age… That was me…so I guess we have something in common […]
2
Leaving no one behind in the rush toward digitalization
[…] training and incubation program that focuses on increasing the capacity of MSMEs including financial literacy, social media management, business process planning, business law, taxes and many more […]
2
Alliance for Financial Inclusion
MMA-AFI Virtual Member Training on Strategic Approach to Digital Financial Literacy Maldives Monetary Authority (MMA) and AFI areMaldives Monetary Authority (MMA) and AFI ar […] Authority (MMA) and AFI are organizing virtual member training on Strategic Approach to Digital Financial Literacy (DFL) on 17-18 March 2021 […]
N/A
Financial inclusion: how Nigerian small-scale farmers are locked out, and some answers
globalupfront.com – Today
[…] This reflected people’s ability to effectively participate in a formal financial system through financial literacy, consumer protection and prudent financial decisions and plans […] Our study found that only a few small-scale farmers met the threshold of financial literacy and consumer protection […] In addition, a financial literacy framework was established in 2013 […]
1
DIFS – State of Michigan Officials Applaud American Rescue Plan for Making Health Insurance More Affordable for Michigan Families
[…] In addition, the Department provides consumer protection, outreach, and financial literacy and education services to Michigan residents […]
0
Nigeria: Financial Inclusion – How Nigerian Small-Scale Farmers Are Locked Out, and Some Answers
allafrica.com – Today
[…] This reflected people’s ability to effectively participate in a formal financial system through financial literacy, consumer protection and prudent financial decisions and plans […] Our study found that only a few small-scale farmers met the threshold of financial literacy and consumer protection […] In addition, a financial literacy framework was established in 2013 […]
2
Brisbane school provides pathway for budding entrepreneurs
[…] an entrepreneurship class and providing students with the opportunity to learn about business, financial literacy, growth mindset and collaboration through fun and thought-provoking activities […]
N/A
Meaningful Banking from Metrobank
metrobank.com.ph – Today
[…] While this can be attributed to several factors, many financially capable individuals lack the financial literacy to generate passive income and work towards financial success […]
0
:: CCI :: Center for Cultural Innovation ::
[…] This is not financial literacy–this is financial resilience […]
806
HOT JOBS & COOL JOBS: FINANCIAL ANALYST SANTA BARBARA CA USA
[…]  that brings financial literacy and digital commerce to millions of unbanked and underserved  […]
N/A
Impact of pervasive broadband on digital financial services
ournaijanews.com – Today
[…] various dimensions of financial inclusion, including access, usage, affordability, appropriateness, financial literacy, consumer protection and gender […]
0
Black Success Magazine Podcast- How to Build Your Children’s Financial Literacy by Black Success Magazine Podcast • A podcast on
anchor.fm – Today
On this episode of Black Success Magazine Podcast: Season 5, Episode 19 “How to Build Your Children’s Financial Literacy” Checkout articles and videos online at: http://www.blacksuccessmagazine.com Facebook, Twitter, Instagram, LinkedIn, YouTube To receive a digital copy of Black Success Magazine reach …
1
Timers Co., Ltd. Timers Co., Ltd., which operates Famm, was selected as the best company in the 2021 edition of “Best Companies to Work For” in the women’s category.
re-how.net – Today
[…] photos and videos, photo sessions with child-rearing cost counseling sessions to improve the financial literacy of child-rearing families, career schools for moms who can attend with children, and on-sit […]
0
Cryptocurrency Internship in South Korea
internsinasia.com – Today
[…] Moreover, the financial literacy among the public is rapidly increasing which hints at the potential adoption of cryptocurrency i […]
2
[CASE STUDY] The Cost of Financial Literacy
[…] Despite boasting the world’s largest economy, America ranks 14th in Standard & Poor’s Global Financial Literacy Survey […] many lessons, but perhaps one of the most significant takeaways is the need for greater access to financial literacy training opportunities. An increased emphasis on financial literacy is required as Americans attempt to rebuild their finances and employers search for ways t […]
0
FinLocker Partners With EPM To Provide The “Empower” Financial Well-being App To Homebuyers – FinLocker
finlocker.com – Today
[…] aims to empower consumers with the financial tools and educational resources to improve consumers’ financial literacy and financially prepare them to qualify for a mortgage […]
0
SOM – Former Insurance Agent Sentenced in Elder Abuse Embezzlement Case
[…] In addition, the Department provides consumer protection, outreach, and financial literacy and education services to Michigan residents […]

Here’s What Banks Can Learn From Innovative Providers Reaping ROI From Personal Finance Management Tools

1

Personal finance management (PFM) tools can allow banks to create highly personalized customer experiences and, in turn, drive revenue and retention.

The diversity of today’s PFM market illustrates the value that a wide range of providers see in developing such offerings, but its promise — PFM was lauded as the future of banking for over a decade — has long failed to materialize for most incumbent banks as well as consumers. PFM user share plateaued at between 10% and 12% as of 2017, the most recently available data, per Celent.

This plateau is the result of several design flaws that made earlier iterations of PFM tools unengaging. These include only showing users their financial data without providing actionable insights, personalized financial advice, or tools to manage their finances more easily; poor user experience (UX) due to many banks’ PFM functionalities being confined to separate tabs to better track engagement metrics; and limited data sharing before open banking regulations (in some jurisdictions), making personalization difficult to achieve due to incomplete financial data for each user.

Today’s most sophisticated PFM features, however, can give users maximal control of their finances while requiring little effort on users’ end through advances in AI, smart analytics, automation, and regulations like open banking. A new breed of PFM providers is drawing on these developments to roll out features that are more insightful, accurate, and predictive than before, making them a powerful tool for getting consumers to engage with their finances in a meaningful way. Customers are responding to this upgraded version of PFM, and banks need to pay attention or they’ll risk eroding customer engagement and loyalty. As customers engage with their finances more meaningfully, banks can translate this increased engagement into more revenue.

In the Personal Finance Management Disruptors report, Business Insider Intelligence gives an overview of the major categories of players shaping the PFM market today. We continue by outlining some best practices for banks looking to upgrade their PFM offerings, based on exclusive interviews conducted with seven leading PFM providers.

We then present the PFM Digital Maturity Model to show banks and other providers the standards they should be aiming for as they build new PFM features to satisfy customers. We continue by making the case for why banks should reinvest in PFM, and why they can’t afford not to. Then, we examine eight sophisticated PFM features we believe are bringing significant value to customers and banks today, enriched through our interviews with the companies providing them.

The companies mentioned in this report include: Cleo AI, Greenlight, Meniga, Minna Technologies, N26, Personal Capital, Personetics, and Strands. Here are some of the key takeaways from the report: PFM tools allow financial services providers to create highly personalized customer experiences and drive revenue and retention ……

Read more : Business Insider

financecurrent3

Whether you’re a bitcoin trader or new to the market, you can buy, sell, and trade cryptocurrency with AUD, USD, and other major currencies. We service clients globally, including Australia, the United States, Singapore, Canada, New Zealand, and Europe

5 Signs It’s Time to Change Your Financial Advisor

1

How do you manage your finances? Do you have a financial advisor, or do you do it yourself? If you’ve taken the DIY (do-it-yourself) road, you’re very much in line with fellow Europeans

A CNBC and Acorns survey reveals that only 17 percent of Europeans use a financial advisor for their finances. One must note that these findings are from the March 2019 edition of the survey. The October edition of the same poll puts these figures close to 1 percent. While we understand that it’s a huge difference, the rather valuable insight is that very few Europeans use a professional financial expert to manage their finances and instead rely on their knowledge, expertise to handle their money.

However, is that a brilliant strategy? The answer would be both no and maybe. Let’s take up the first part of our answer.

A survey from GoBankingRates.com finds that a majority of Americans can’t even answer basic financial questions, a finding consistent with other similar studies. So it makes a little sense for people to manage their own finances.

However, there is a flip side as well. Financial experts believe that the availability of relevant information online, videos, articles, infographics, could be a reason why more Americans are confident in handling their money.

Are you in a similar dilemma: hire an expert or DIY? We’re going to find out what a financial advisor does, when is the right time to change your financial advisor, and how to choose one?

Why should you hire a financial advisor?

If you were to get a dental implant, you’d probably go to a dentist instead of your spouse do it for you, right? Sadly, when it comes to managing finances, many spouses (15 percent) leave financial management to their partners.

Research finds that have a financial advisor can have a profound impact on your financial health. More than 66 percent of Americans with a financial advisor feel financially secure against 30 percent without a financial advisor at their side. Having a financial advisor gives them a sense of moving in the right direction.

While some may be skeptical of advisor fees, research finds that the right financial advisor can very well compensate an investor for the asset management fees through impressive returns.

Copyright: Portia Antonia Alexis

Here are a few of things that a financial advisor can do for his clients:

Help you define your financial goals. What are your short-term goals? How do you see yourself financially after 25 years? How much money would you need during retirement?

These are some of the most common financial questions you may have. A financial advisor can help you define specific short-term and long-term goals and create a strategy to achieve them.

For instance, if you’re saving for the down payment of your first house, where should you keep that money? Or how much money do you need in the first place? Is your checking account the right place to keep it? Your financial advisor understands your housing requirements and can give a ballpark idea of how much money you may require. Similarly, he can suggest the right saving instruments, such as a high-yield savings account, to deposit your money.

728x90

Similarly, your financial advisor can help you identify your retirement goals. Instead of having no estimate, he can put together a figure, backed by an investment strategy, to offer a sense of financial certainty.

Find investments that work for you. Not every investment suits your retirement portfolio. If you’re well in your 50s, investing in equity might be a risky choice. Similarly, if you’re in your late 20s or early 30s, putting all of your money in bonds or CDs may not be the smartest way to grow your wealth.

A financial advisor understands your goals and picks investments that will help you achieve them. Furthermore, he can advise investments that suit your risk profile, thereby limiting your overall risk exposure.

Let’s take the above example. For someone in his 50s, it is best to apply a conservative investing approach that focuses on consistent long-term returns instead of growth. At the same, a portion of your portfolio should be invested in growth-oriented financial instruments to fund your income for the next several years.

Help you gain more financial control over your life. Research finds that people having a financial advisor finds themselves in control of their life. Nine out of 10 Americans reveal that having financial order in their house makes them both confident and happy.

Financial problems can cause stress, and it’s not just major money issues, such as bankruptcy or an overwhelming amount of debt. Sometimes, it’s more about having financial control in your life, knowing how much money you’re bringing in, where you are spending it, and are you moving toward your financial goals.

A financial advisor helps you understand money better, creating strategies that work in your favor. You can be relieved of your stress with the right financial expert by your side.

Hold experience in addressing, resolving financial challenges. Financial advisors hold years of experience in managing finances, and as much as you would like to consider your circumstances unique, they’re often not. The chances are quite solid that your advisor has already helped someone facing the same challenges.

Let’s take the example of debt. If you have a huge debt, which only seems to grow despite your regular payments, your advisor can create a strategy to repay your debt, negotiate better payment terms, and guide you through the entire process. If you have a mix of debt, with both high interest and low-interest loans, paying down the most expensive debt while making minimum payments on others might help you save money on interest payments.

The key is to be transparent and as open as possible about the issues. By working together with your financial advisor, you may just regain your long-gone financial freedom.

As good as it may sound, not every financial advisor has your good interest in his mind. It’s critical to evaluate the performance of your investments regularly, ensuring that your advisor is keeping the promises he or she made initially.

Let’s have a look at some signs that indicate that you need a new financial advisor.

1. You’re not on track to meet your financial goals.

Most of the financial advisors will start a relationship by understanding your financial requirements, goals, and challenges.

They’ll list your short-term and long-term goals, and advise strategies to achieve them.

All good so far, but you suddenly notice that your investments aren’t helping you achieve your financial goals. In fact, if anything, you’re nowhere close to your financial goals or even on the right track.

It’s understandable if the investments occasionally miss their mark, but if that’s not the case, you need to change your advisor immediately.

As a responsible investor, you must track your financial goals and returns periodically.

2. Your advisor recommends investments that aren’t suitable for your portfolio.

Every time you speak with your financial advisor, he pitches a new investment product and instead insists on purchasing it. Sounds familiar? That’s a red flag, and if it’s happening with you, consider having a new advisor.

Every investment product or financial instrument has a risk profile, and the product must suit your risk tolerance level. It’s your financial advisor’s job to recommend products fitting that criteria.

Instead of blindly investing in a financial instrument, do some individual research, and if you have doubts, ask your financial advisor. One must understand that financial advisors often receive commissions for recommending a product, so you should always do personal research.

3. Your life is due for a significant change.

Are you on the verge of retirement? Is there a major life event that would affect your financial life? You need to make sure that your financial advisor is qualified for your new economic requirements.

Most investors tend to stay loyal to their long-term financial advisors, and for all the right reasons; however, if you’re retiring or there’s another financial change in your life, your financial advisor should be able to realign his financial strategy to suit your needs.

The best way is to ask your financial advisor for recommendations or suggestions and crosscheck it with a third-party expert. You can get professional advice on a per-session basis, so you don’t need a new advisor simply to validate the new strategy.

4. You’re not receiving monthly or quarterly reports.

Most of the financial advisors provide monthly, quarterly, and annual reports to their clients. That’s how you track how your money is doing. These reports should be detailed, helping you identify realized profits or losses, understand how your portfolio is doing, and provide a list of relevant accounts, such as portfolio number, demat account, 401k account or Roth IRA account number.

Additionally, you have complete rights to seek access to your online investment portfolio. Your financial advisor should have no problem whatsoever in sharing it.

However, if you don’t get at least quarterly and annual reports, it’s time to ask questions, and if your advisor isn’t answering, there’s your cue.

5. Your advisor changes your portfolio without informing upfront.

Did your financial advisor add a new product or investment without consulting you? It’s a common practice among financial advisors to rebalance your portfolio for maximum growth or minimizing any impact from market volatility, provided you gave them consent upfront. However, if you didn’t do it and your advisor anyways changed your portfolio, it’s time to find a new advisor.

If you’ve identified one or several of these red flags, its likely time to change financial advisors. Here are a few suggestions for hiring the right advisor this time around.

Find out if your financial advisor is a fiduciary. Fiduciaries are investment advisors who are registered either with a state regulator or the SEC. It’s their duty to act in your best interest, and in case of any possible conflicts of interest, they must notify you in advance.

You must understand that not every investment advisor is a fiduciary, and stockbrokers, broker-dealers, and insurance agents aren’t bound with the same duty to work in your best interest.

You can ask your financial advisor for his registration number and crosscheck it on the NAPFA (National Association of Personal Financial Advisors) website.

In addition to the fiduciary standard, find out if your financial advisor has any specific certifications, such as CFP (Certified Financial Professionals), ChFC (Chartered Financial Consultant), or AIF (Accredited Investment Fiduciary). It’ll help you understand their qualifications and whether they’re suitable for your financial requirements.

Ask how your financial advisor gets paid. How a financial advisor gets paid can have a massive impact on your portfolio composition. Financial advisors operate through with different fee structures, where some are fee-only advisors, whereas others may receive a commission to recommend a particular product. There are other fee models, such as asset management fees or success fees (hedge funds).

While there are no rules defining the ideal compensation models, it’s critical that your financial advisor discloses it.

Verify credentials and customer feedback. Checking the credentials of your financial advisor is only the first step. It’s critical to find out if there’re any possible complaints registered against your advisor. You can do that by merely going to the SEC website, CFP® Board, or checking your advisor’s records with the FINRA (Financial Industry Regulatory Authority). If you find a complaint, ask your advisor about it, although multiple complaints are a red flag.

In addition to checking official records, ask your financial advisor for references. Any good advisor would be happy to share them. Speak with the previous or existing clients of the advisor and get thorough feedback. You can search more about your financial advisor online.

The right financial advisor can make your life better, peaceful, and financially rewarding. It’s crucial to do thorough research before hiring a financial expert. Even when you have someone looking after your finances, make it a habit to track your portfolio. A little bit of caution and routine checkup will go a long way in securing your financial future.

Portia Antonia Alexis

By:

Source: https://www.entrepreneur.com

This video discusses some common types of financial advisors, the key differences between them, and why you may choose to work with one. We post educational videos that bring investing and finance topics back down to earth weekly. Have a question or topic suggestion? Let us know.
Connect with TD Ameritrade:
Open an account with TD Ameritrade: http://bit.ly/SignUpTDAmeritrade

The Funds With The Smartest Investors, And The Funds With The Dumbest

1

Are mutual fund investors impulsive? Do they jump into a fund after a winning streak and then sell out, in despair, after a bad stretch?

I tested this hypothesis by going to Morningstar MORN , the securities analysis outfit in Chicago. The Morningstar Direct database, the version of its service sold to investment pros, has performance details that shed light on timing decisions by fund buyers.

The answer to the question: Yes, fund clients are impulsive. Bad timing causes them to earn considerably less than they would have earned by buying and holding. On funds of domestic stocks, they’re throwing away something like $54 billion a year.

The key to this analysis is a number that Morningstar calls “investor return.” It measures the average results taken home, as opposed to the performance of the fund.

The usual performance number reported for a fund assumes a hypothetical buyer putting a single sum of money in at the beginning and leaving it untouched until the end of some measurement period, like a decade. Example: The Schwab 1000 Index fund delivered a 233% cumulative performance over the ten years to May 31. That amounts to a compound annual 12.8%.

The investor return on this index fund is a bit less, at 12.6%. This figure takes into account the monthly flows of money into and out of the fund. More precisely: If fund shareholders had been earning a constant 12.6% on every dollar they kept in play, they would have wound up with the fund’s ending assets. In short, the 12.6% measures average investor experience.

Where does the 0.2% shortfall come from? It means that buyers of this fund had a slight tendency to add money, or to take it off the table, at the wrong times. We’re human. After a bullish run we’re in love with stocks and buy more—maybe near a top. A correction in stocks makes bonds more appealing and we hold back, just when stocks are a bargain.

The mistakes among Schwab’s clientele pale in comparison to those of fund buyers generally. Morningstar has 827 domestic-stock funds with both ten years of history and sufficient detail on asset balances to permit a calculation of investor return. At 527 of those funds, not quite two-thirds of them, timing decisions lowered the annualized gains experienced.

bitmax2

Among all 827 funds the average impact, with both positive and negative impacts included, was a loss of 0.64% a year. Keep that up for 30 years and you shortchange a $1 million retirement portfolio by $175,000.

It is important to understand what Morningstar is measuring. A shortfall does not occur when a customer is invested for only a portion of the ten-year period, since both the reported performance figure and the investor return are compound annual percentages. (Morningstar’s investor number is an internal rate of return. For an explanation of how that arithmetic works, see this article on how to compare your results to a yardstick.)

A shortfall will show up, though, if people jump into a style or sector after an upswing, only to be disappointed and then move into another kind of fund that seems to be the new ticket to wealth. Such performance chasing depresses investor returns at both funds.

Some funds have customers who are either lucky or smart. Their timing is good. They do better than the performance figures indicate.

These ten funds all beat the market, as measured by the Schwab index fund, and had customers who improved on those good results by being invested at the right times:

Noteworthy on this list are two funds from the Kayne Anderson Rudnick subsidiary of Virtus Investment Partners VRTS . KAR leans toward concentrated, quirky portfolios of stocks like Teladoc Health and Morningstar. (Forbes profile here.)

Winning funds with well-timed investor moves are the exception. More common: funds where investor flailing depresses gains. These ten underperformed the market and had customers who magnified the damage with their stumbling:

I asked the operators of the second group of funds for comments and got one, from Needham:

“Our mission is to create wealth for long-term investors. Those who trade mutual funds or try to time the market may see returns that are less than those who stay invested and have been rewarded with excellent long-term returns.”

Moral of this story on investor returns: Follow Needham’s advice. Invest with enough conviction that you can stay put.

And if your attention is fleeting? Maybe you should discontinue the search for market beaters and just own an index fund.

Here’s one more statistic from that Morningstar data set. The average investor experience in the 827 funds was a compound annual 10.5%. That’s 2.3 points less than the return on the Schwab 1000 fund. This shortfall comes from both bad timing by customers and a parallel flailing by the funds. In their struggle to beat the market the fund managers ran up trading costs as well as their own management expenses.

Yes, 2.3% is a gigantic loss. Keep it up for 30 years and you cut your $1 million retirement in half.

Follow me on Twitter.

I aim to help you save on taxes and money management costs. I graduated from Harvard in 1973, have been a journalist for 45 years, and was editor of Forbes magazine from 1999 to 2010. Tax law is a frequent subject in my articles. I have been an Enrolled Agent since 1979. Email me at williambaldwinfinance — at — gmail — dot — com.

Source: https://www.forbes.com

GM-980x120-BIT-ENG-Banner

728x90

Many investors have bad habits that keep them from becoming as wealthy as they could be. A lot of times, people aren’t even aware of their own bad habits. If you want to be the best investor you can be then watch out for these investing mistakes. http://bit.ly/2IWg0jE

Money Is Changing. Here Are the 3 Most Important Ways It’ll Affect the Future of Your Wallet

1

For my upcoming book “Financially Forward,” I’ve read every cryptocurrency-related text I can get my hands on, watched dozens of videos and interviewed countless leading entrepreneurs — all with an eye toward taking a balanced, informed approach to the possibilities ahead.

It’s easy to over-exaggerate the potential of blockchain. But, the technology behind crypto-currencies such as Bitcoin has the potential to drive significant social shifts.

Here’s a closer look at what this may mean for our wallets.

1. No More Middlemen

Today, when it comes to managing our money (or processing just about any transaction), middlemen abound. There are banks, credit card processors, payment platforms, stock exchanges — the list goes on. Everywhere you look, entities are standing between both sides of every transaction we carry out. And in many cases, one or more of them is taking a cut or charging a fee.

Take a credit card transaction, for example. Your credit card issuer (e.g., Chase) and payment processing network (e.g., Visa) manages the transaction. The store where you make a purchase uses a point of sale system (e.g., Square) and pays a transaction fee. That’s a lot of cooks in the kitchen for a straightforward exchange of funds to buy something simple like a coffee.

With blockchain, those middlemen could disappear. One of blockchain’s main features is that it’s decentralized — meaning that you can transact directly with the producer of the item you want to buy, no bank or credit card needed. Transaction fees are no longer a part of the equation. Think about how much money that could put back in your wallet! And more importantly, how much this simplifies the transactions we make — giving us more clarity into where our dollars go.

2. Smart Contracts

Today, executing a contract is a rigorous process that involves lawyers and headaches. Think about buying a house. You have brokers, real estate and bank lawyers, the deed company — the closing process involves a ton of people, and mountains of paperwork (and of course, legal fees).

But blockchain can eliminate just about all of it. You don’t need all of those records and documents; the blockchain stores all the information. Buying something like a house becomes seamless. Contracts can be automated and direct. By reducing the time it takes to buy and sell, property can suddenly become a more liquid and accessible asset for consumers, pushing transaction costs down, and allowing consumers to more easily tap into their home equity.

Blockchain, in other words, takes power out of the hands of institutions and puts it into the hands of the consumer.

3. A More Secure, More Streamlined Wallet

It’s no surprise that so many people fall victim to credit card fraud. We all know that if someone walks into a store and tries to buy something with your credit card, the cashier barely glances at the name on the card, let alone the signature. The company might assume something is fishy and send you a fraud alert — or perhaps you check your statement a week later and notice that something is wrong. All told, it takes days for a transaction to be tracked and verified as fraudulent, another day or two for your new card (to replace the one you had to cancel) to arrive.

But all of that could be streamlined with blockchain. Because transaction records are permanent and immutable, there isn’t a question about who is involved in a transaction.

With blockchain, our phones could store not just our credit cards and passwords, but our medical records and our prescriptions, and even the “keys” to our car and home. Your identity will be fundamentally managed in one spot.

Once these disruptions start to change the way we as individuals interact with money, the next phase will be disruption across industries and society.

But while blockchain holds the potential to put more and more power into the hands of individuals, that doesn’t mean it’s going to be easy. These new technologies are endlessly complex — but the possibility for innovation is endless, too.

By Alexa von Tobel

Source: https://www.inc.com

728x90-1-1-1

It’s not about how much money you earn. It’s what you do with the money that matters. In this video, I’m going to show you a business strategy on how to manage your money. I’m not gonna tell you what to invest in. That’s not my role. Here are the best ideas of what the best professionals do to manage their money. Learn more from Tom LIVE at the next Summit event: https://tfi.media/2UC21rg

%d bloggers like this: