HfW : Teaching Kids About Money

Source here

Experts suggest that students lose more than two months-worth of knowledge over the summer break. Many parents fill the downtime with outdoor activities and trips to keep kids busy and motivated, and of course, there’s always that mandatory reading list.

I think a great way to keep kids’ minds sharp, regardless of the holiday length, is to teach them about money. If you haven’t started having those conversations yet, you can take advantage of upcoming spring break to get things moving. It’s never too early to start. In fact, when it comes to teaching kids about money, the sooner the better.

Below are my recommendations on ways parents can get children involved in learning and understanding the value of money, so they are better prepared for their future:

Open a bank account. A bank account is the foundation of financial education. Helping your child open their first account creates an opportunity to begin teaching them about saving, fees, and interest. Rather than just opening an account at your current bank, ask them to help you do research on finding the right bank for them.

One suggestion is to choose a bank with a physical location that you can bring your child to. It might not seem important but it can make a big impact on the lessons you are trying to enforce. Taking a special trip to the bank to deposit their money creates a memorable and rewarding experience.

Develop a savings plan. Saving money can often be as difficult as earning it. Consider offering a matching program for every dollar deposited to help incentivize your children to start funding their account. Additionally, you might make saving a condition of their allowance and mutually agree on a percentage that will be saved each month.

Teach them about investing. Prospective retirees are now forced to plan for 20-30 years of retirement. Waiting for that first full-time job to start investing for retirement isn’t enough anymore.

For teens, discuss opening a custodial account or Roth IRA (if applicable). This is a great opportunity to talk to them about taxes, investments, and compounding returns. For an initial investment, consider a broadly diversified, low cost index fund.

For younger children, online games or websites can be useful in teaching kids the basic concepts of investing. Consider Warren Buffet’s recent business venture, Secret Millionaires Club. The online program teaches valuable lessons about money management through a fun, animated series that kids can relate to.

Discuss giving. We don’t just save, spend, and invest money. For varying reasons, sometimes we choose to give it away. Don’t hesitate to include your children in this process and teach them about the concepts of charitable giving. Consider having them research charities on charitynavigator.org, America’s largest independent charity evaluator, and provide you with their suggestions.

It’s never too early to begin. Kids are exposed to the concept of money at a young age. Helping them to understand it and develop good habits early on can be very beneficial to their financial future.

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HfW: Having kids is a financial strain

Source here. Recently, in fact yesterday there was an article on this. Read on.

THE price of an S-Class Mercedes-Benz and a semi-detached house. That’s what urban parents can expect to pay to raise a child from primary school to university, say financial planners.

The high cost would just cover sending a child through school and university.

Personal financial management coach Yap Ming Hui estimated the cost of upbringing to be as much as the combined price of a luxury car and landed property in the Klang Valley.

“Easily, RM1.5mil,” he said, adding that tertiary education in a local university cost between RM30,000 and RM150,000, depending on whether it was a private or a public university.

Noting a growing demand for private and international schools in urban areas, he said education, especially for a degree abroad, would make the biggest dent in a family’s finances.

He said in urban areas, it would cost parents of a child in primary or secondary school about RM1,000 monthly, excluding extras like smartphones, data package charges, activities like music lessons, transportation and tuition fees.

“Previously, one tuition teacher would cover all subjects but today, teachers specialise and parents pay more.

“So, if you are planning to have three or four kids, you better think twice,” he said, adding that with higher living costs, it would cost much more than RM100,000 to raise a child from birth to the age of 18 today.

Financial coach Carol Yip cautioned parents against treating their kids as “insurance” for their old age.

“The more children you have, the less savings you will have left for your old age,” she said, advising parents to learn more about their children before investing.

“Before you spend all your money on their education in an international school or overseas, understand the child’s characteristic and needs first.

“A smart child will shine even in a normal school.”

Marziana Mohamed Alias, 33, a mother-of-two, spends close to RM1,500 monthly on her children, both of whom have health and education insurance.

“These are necessities. It’s so expensive when children get sick, even if it’s just a fever.”

The working mother still breastfeeds but also gives her daughter milk formula.

“Imagine how much more I would have to spend if I relied entirely on formula,” she said, adding that daycare took the biggest chunk out of her expenditure.

*Estimates based on how much middle-income families spend on necessities and perks. Expenditure includes the cost of food, tuition, transportation, clothing, extra-curricular activities, pocket money, health, insurance and education.

Things were much cheaper five years ago when her son was born.

She then paid RM290 in nursery fees but now the same nursery wants RM400 for her two-year-old daughter.

“It’s too much. I’m paying RM300 to a baby sitter instead.”

Her son’s pre-school fees cost RM500, and it is not even one of the branded chains.

She said she also had to set aside RM400 to buy new clothes every six months.

K. Anbalagan, 52, said the financial strain was even greater if the child had special needs.

His six-year-old autistic son needs RM1,800 monthly for his milk, vitamins and classes.

“He still wears diapers and will soon need speech therapy as well,” he said.

Rumah KIDS assistant coordinator P. Salvee said the “barest monthly minimum” to raise a child was RM500.

The home which houses 40 abused, orphaned and neglected children aged between six and 18 in the Klang Valley, spends an average of RM800 on each child.

Most of the home’s residents are children of single mothers who are too poor to raise them, she said.

The mothers are allowed to visit and even take their kids back when they are financially stable.

“Parents who leave their kids here have the love but not the means to care for their children. It’s heartbreaking.

“Food, schoolbus fees and tuition are not cheap. And, tuition is a necessity nowadays,” she said, adding that the home even paid for the children’s tuition.

Salvee said the Government should provide financial assistance beyond one-off yearly handouts if it wanted to encourage parents to have more children.

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If you think you are one of them, I can be of help. I can guide you through what is best for your future financial planning.

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HfW : How Bloggers Make Money On INSTAGRAM

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"I have an idea if you're open to it," Danielle Bernstein, 22, a personal style blogger who runs We Wore What, wrote me recently.

I'd emailed Bernstein to ask if she'd be open to explaining the business of bloggers being paid by brands to feature their products on Instagram. Most people are probably aware this is going on as they flick through their feeds (#spon), but the money and business practices behind it are inconsistent—and often obscured.

She proposed she'd take me through how she makes money from Instagram, as long as she was the only blogger in the piece. "It's super important who I associate myself with in this industry," she says. "It's not that I don't like other people, but there are some other bloggers that it's random seeming to associate myself with."

Bernstein has 992,000 followers on her Instagram @weworewhat. When she gets to a million, which she predicts will happen in the next 10 to 15 days, she can charge "a good amount more" for sponsored content. "It's a big milestone," she says.

Right now, Bernstein's rate card, through Next Models, sets her range for the cost of a single piece of sponsored content (i.e. one Instagram shot) from $5,000 to $15,000. This rate can go up or down, depending the terms of the deal, such as if a brand wants a long-term commitment or multiple Instagram pictures. "Everything's negotiable," Bernstein says, laughing. "I'm Jewish."

According to experts who spend a significant portion of their days figuring out how brands and so-called creators can play together nicely on Instagram, we're at some kind of mid-point. There are still plenty of products sent out gratis to bloggers with fingers crossed that they'll throw a picture of themselves online using it. Bernstein does this, too, albeit selectively. Milly recently send her an electric blue bag that was too bright for her taste. Bernstein wrote back, "I love this bag, but do you have it in black?"

But there's also just as much contracted—often agent-negotiated—work where the blogger agrees to feature the brand in a certain number of Instagrams, often promising not to put any competitors in the same shot (or even hold off mentioning them for a week or so). Industry estimates say brands spend more than a $1 billion per year on sponsored Instagram posts. Particularly in fashion, "there's a rapidly developing economy on Instagram," says Thomas Rankin, co-founder and CEO of Dash Hudson, a program that lets you make your Instagram posts shoppable. Instagram founder Kevin Systrom even went to Paris Fashion Week, attending Jean Paul Gaultier's couture salon and meeting with Karl Lagerfeld and Louis Vuitton's Nicholas Ghesquière, to learn more about the style bloggers, models, editors, designers, and clothing brands who create such a large portion of content on the photo-sharing site.

Recently, Bernstein's done Instagram-only work for Lancôme and Virgin Hotels. Lancôme had her feature its new foundation, Miracle Cushion, in a picture of her morning routine and as part of her on-the-go makeup bag. For Virgin Hotels, she posed at the opening of the one in Chicago with Virgin's owner Richard Branson. "Last year was definitely my most profitable," she says. "I hate talking about money, but let's just say it's more than I could have ever imagined as a 22 year old. I fully support myself, and it's in the mid-six figures. I save, I invest, I'm trying to be smart about it all and learn as I go."

Bernstein is at the top end of this new Instagram economy, but it's one with a big income gap. On average, if you have hundreds of thousands of followers you can make anywhere from $500 to $5,000 a post, but if you have upwards of 6 million followers, your fee can be $20,000 to $100,000 a shot. "Which is kind of crazy," Rankin says.

Part of what makes the idea crazy that bloggers would be paid five figures for a picture of them doing something like sitting on their couch is that it just looks so casual—which is, of course, the point. Indeed, when Bernstein worked on a campaign for Project Runway, part of her well-paid contracted work was posting pictures of herself sitting on her couch. "I'd say I was watching the show," she says.

In fact, when Rankin approves blogger's Instagrams before they're posted on behalf of a brand, the only negative feedback he gives if he thinks something looks too posed. "It's not an editorial photo," he says. "We're not trying to be in a magazine. We're trying to create a moment."

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HfW: 19 Secrets Your Millionaire Neighbor Won’t Tell You

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The secret to financial freedom.

From time to time we bring you posts from our partners that may not be new but contain advice that bears repeating. Look for these classics on the weekends.

That’s right. Although having a million bucks isn’t as impressive as it once was, it’s still nothing to sneeze at.

In fact, CNBC reports that in 2013 there were 13.2 million millionaires in the United States alone.

That’s a lot of people, people. And the odds are one or two of them are living near you.

Heck, one of them might even be your neighbor. In fact, the odds are very good that it is your neighbor.

But, Len, you don’t know my neighbor. That guy doesn’t look anything like a millionaire.

Well, guess what? Your suburban millionaire neighbor called (oh yeah, we go way back) and the two of us had a nice little chat.

Here’s a few things he shared with me but apparently doesn’t want to tell you. (No offense, I’m sure.)

1. He always spends less than he earns. In fact his mantra is, over the long run, you’re better off if you strive to be anonymously rich rather than deceptively poor.

2. He knows that patience is a virtue. The odds are you won’t become a millionaire overnight. If you’re like him, your wealth will be accumulated gradually by diligently saving your money over multiple decades.

3. When you go to his modest three-bed two-bath house, you’re going to be drinking Folgers instead of Starbucks. And if you need a lift, well, you’re going to get a ride in his ten-year-old economy sedan. And if you think that makes him cheap, ask him if he cares. (He doesn’t.)

4. He pays off his credit cards in full every month. He’s smart enough to understand that if he can’t afford to pay cash for something, then he can’t afford it.

5. He realized early on that money does not buy happiness. If you’re looking for nirvana, you need to focus on attaining financial freedom.

6. He never forgets that financial freedom is a state of mind that comes from being debt free. Best of all, it can be attained regardless of your income level.

7. He knows that getting a second job not only increases the size of your bank account quicker but it also keeps you busy — and being busy makes it difficult to spend what you already have.

8. He understands that money is like a toddler; it is incapable of managing itself. After all, you can’t expect your money to grow and mature as it should without some form of credible money management.


9. He’s a big believer in paying yourself first. Paying yourself first is an essential tenet of personal finance and a great way to build your savings and instill financial discipline.

10. Although it’s possible to get rich if you spend your life making a living doing something you don’t enjoy, he wonders why you do. Life is too short.

11. He knows that failing to plan is the same as planning to fail. He also knows that the few millionaires that reached that milestone without a plan got there only because of dumb luck. It’s not enough to simply declare that you want to be financially free.

12. When it came time to set his savings goals, he wasn’t afraid to think big. Financial success demands that you have a vision that is significantly larger than you can currently deliver upon.

13. Over time, he found out that hard work can often help make up for a lot of financial mistakes — and you will make financial mistakes.

14. He realizes that stuff happens, that’s why you’re a fool if you don’t insure yourself against risk. Remember that the potential for bankruptcy is always just around the corner and can be triggered from multiple sources: the death of the family’s key bread winner, divorce, or disability that leads to a loss of work.

15. He understands that time is an ally of the young. He was fortunate enough to begin saving in his twenties so he could take maximum advantage of the power of compounding growth on his nest egg.

16. He knows that you can’t spend what you don’t see. You should use automatic paycheck deductions to build up your retirement and other savings accounts. As your salary increases you can painlessly increase the size of those deductions.

17. Even though he has a job that he loves, he doesn’t have to work anymore because everything he owns is paid for — and has been for years.

18. He’s not impressed that you drive an over-priced luxury car and live in a McMansion that’s two sizes too big for your family of four.

19. After six months of asking, he finally quit waiting for you to return his pruning shears. He broke down and bought himself a new pair last month. There’s no hard feelings though; he can afford it.

So that’s it. Now you know what your millionaire neighbor won’t tell you.

Oh, and, um, would you be so kind to keep this just between you and me? I’d hate to ruffle anyone’s feathers or cause of any kind of neighborly spat.

Please?

Thanks. You’re a peach.

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HfW : EPF to cover country’s financing gaps?

This was made public in The Sun Daily (here)

PETALING JAYA: Bank of America Merrill Lynch Global Research said there have been concerns whether the Employee Provident Fund (EPF) will be called upon to cover financing gaps due to a wider fiscal deficit, lower Petroliam Nasional Bhd (Petronas) dividends and a cash-strapped 1Malaysia Development Bhd (1MDB).

"Concerns are nevertheless mounting that with a wider fiscal deficit, potentially lower Petronas dividends and a cash-strapped 1MDB, the EPF will be called upon to forsake returns, cease its foreign diversification and cover the financing gaps of government-linked entities," its Asean economist Chua Hak Bin said in a report yesterday.

"That would be a huge setback for the EPF's commendable track record," he added.

Chua highlighted the EPF's omnipresence with funds of RM637 billion (US$174 billion) and accounting for 50% of MGS and 13% of the stock markets.

Rule changes are moreover in favour of increasing contributions and reducing withdrawals.

EPF inflows are a sufficiently large magnitude to provide some support to both the domestic bond and equity market, as foreign portfolio inflows dwindle.

EPF net contribution flow was about RM23 billion in 2014. Total foreign portfolio investment registered a net outflow of RM9.6 billion in 2014, although most of the portfolio outflows were concentrated in Q4 (RM20.6 billion). This was when oil prices collapsed, raising concerns over the impact on the fiscal and current account balances.

Foreign holdings of Malaysian Government Securities (MGS) have however been relatively resilient. While foreign holdings fell RM8.7 billion over July to Dec last year, they have risen some RM6.1 bilion in Jan-Mar this year.

However Chua said, there have also been concerns whether the EPF's heavy presence will depress yields on MGS and boost stock market valuations.

"Despite underperforming, the Kuala Lumpur Composite Index's (KLCI) still trades at about 17 times price-to-earnings ratio, higher than valuations on Singapore, Hong Kong, Thailand or Korea stocks," he said, adding the EPF's captive holding has also reduced the KLCI velocity.

Chua said poor liquidity in turn has hurt trading and investment interest, adding that Malaysia will issue RM5.5 billion of its 5.5-year bonds.

With total investment funds of RM637 billion at the end 2014, EPF is ranked seventh in the world when measured against the size of Malaysia's economy, in which EPF is ranked below Japan, Korea, China and Singapore, but above India and Taiwan.

Meanwhile, as a share of gross domestic product (GDP), Malaysia's EPF is the third largest after Norway and Singapore.

The research house expects EPF's fund inflows will remain large, reflecting both favourable demographics with a rising labor force and wages.

It noted that net EPF contributions increased 28.5% to RM23.3 billion in 2014, about RM1.9 billion per month, while active membership grew 2% last year, over 10% since 2010.

"We expect EPF fund inflows to remain high over the next decade given the growing working-age population and favorable demographics."

EPF's assets grew by 7.9% in 2014, in which it has increased the proportion of risky assets to sustain returns.

Compared to a decade ago, EPF has increased its portfolio share of equities to 42%, while reducing the share of MGS to 26% and money market instruments.

EPF also has increased its foreign allocation significantly to 23%, raising overall returns and reducing over-concentration risk on domestic assets.

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HfW : Here's What I Learned Working For Self-Made Millionaires

Source here

I spent years working in small business accounting, so I've had a chance to know a number of self-made millionaires.

As a result, I also got an insider's view of their financial positions and behavior — both business and personal. It's kind of like being a doctor and giving physicals — you see people for who they really are, minus their magnificent external wardrobes.

So, what are typical self-made millionaires like, how did they come into their fortunes and what do they do with it once they have it? The answers represent a wealth of direction to those of us who hope to join them:

They're fiercely independent. 

I think this quality drives them more than anything, including the quest for money. Money doesn't rule over them, but they're quiet mavericks, working to build their businesses and avoid any complications that might weaken their independence.

They're survivors. 

The millionaires I knew weren't MBAs. They may have college degrees, but most graduated from the school of hard knocks. They usually come from modest beginnings and bring those philosophies to their businesses. Having been through hard times they know their financial survival requires:

• Full control of their business
• A full bank account
• A frugal lifestyle, and
• A debt free position

They're self-employed. 

Because they're so independent, they're not organizational types. In fact, I doubt many of them could even survive in the corporate world, let alone in government or academia.

They're principled. 

Generally speaking, I found legitimate millionaires more pleasant to be around than the imitation wannabes. There's a surprising humility about them; a practicality that's disarming. You can't play mind games with them; they can sniff out b.s. from a mile away.

You won't see them driving around in one of these.

They're NOT high rollers. 

A debt free business is the holy grail. An independent business is an unencumbered one, and these people are keenly aware of that. They know that taking on business debt puts them in an unwanted partnership with banks. So any debt incurred early in life was paid off as soon as possible. They don't buy stock on margin, don't borrow against retirement plans, and mortgages for investment property — if taken at all — are taken for ten years or less and paid off early.

They save money. 

A fat bankroll is their ace in the hole and it's increased constantly by a conservative lifestyle that expands ever more slowly than their wealth and income. When they need to expand their businesses, they do it in cash.

They usually have basic product lines. 

In popular culture millionaires are often portrayed as being inherited money, dot.com entrepreneurs, shady money shufflers, stock market wizards, entertainers, athletes, and the occasional Jed Clampett who strikes oil in his backyard. The few I came across who actually fit that description seemed better at dissipating money than building it.

I knew one guy who took a flier on a stock with $25,000 that exploded into about $2.5 million within a few years. He expanded his lifestyle, quit his job, and made a career out of finding the next longshot. Ten years later, he was still looking for it. He was also down to his last million and falling fast. There's a reasonable chance he'll retire on social security alone.

What businesses were the real wealth builders in? To name a few: hardware, corrugated boxes, building products, food supply, and medical products.

They're discreet. 

Real self-made millionaires don't stand out in a crowd —they may even be your neighbor. Overalls or business casual are a more typical wardrobe than business suits. Armani suits and gold watches are for people trying to prove a point; a multi-million dollar portfolio means they don't need to prove anything to anybody.

They don't talk about big money. 

Most don't discuss what they've got; often they actually don't have much in the way of stuff anyway, preferring to have their money tied up in their business or in income preserving/producing assets.

They're patient.

"Patient capital" best describes the investment philosophy of most millionaires. Entrepreneurial millionaires are careful to expand their investments slowly and generally to do so without incurring debt. There's a pronounced preference for income-producing investments such as dividend paying stocks, bonds, certificates of deposit, treasury securities, and unleveraged investment real estate with positive cash flows.

They generally avoid raw speculation, although they may devote a very small amount of money to mutual funds or to the occasional penny stock. They’ll leave the potential of a quick score in order to avoid a wealth-destroying bear market.

For us non-millionaires, the risk is that we'll become tempted to pattern ourselves off the stereotype rather than on reality. We may fake it until we make it by "investing" our money in material goods and a lifestyle rather than in capital assets like businesses and income-producing investments. But that only feeds our ego and drains our finances.

From what I've seen, becoming a millionaire is a boring process: You work hard, you plan to work forever, and you relentlessly save money. You don't speculate, you don't "make a killing," and you don't live life in the fast lane. As for the self-made millionaires who do have some luxury in their lives — it usually followed many years of deferred gratification.

I suspect that most self-made millionaires don't have a problem with the masses believing the typical stereotype. They're happy to watch us speculate and spend our money on things that are likely to leave us broke because, when we do, there are fewer of us competing with them.

Is there a message in that for us?

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HfW : Everything Business Owners Need to Know About Beacons

Q: What are beacons, and how can they boost my sales?

Beacons are small, wireless broadcasting devices that transmit a data signal that can be received by a smartphone—in this case, the one belonging to your customer. Once the beacon and smartphone connect, a retailer or service provider can instantly deliver a welcome message or discount. 

There will be 4.5 million beacons in use in the U.S. by the end of 2018, according to a report from BI Intelligence, with 3.5 million of those used by brick-and-mortar retailers. 

For help understanding what that means for small businesses, we talked to Rob Murphy, vice president of marketing for Swirl Networks, a proximity-based mobile marketing startup in Boston that helps retailers and brands engage customers while they shop. 

How exactly do beacons work?

Using the Bluetooth low energy signal, they trigger an app to deliver targeted offers that are meant to encourage customers to buy more during their visit to your retail store, restaurant or business. Beacon marketing can also be used to reward frequent visitors and deliver helpful content to consumers while they shop or wait for service.

Where else can beacons be used?

Wherever there is value to be created by delivering relevant digital content to a person who is standing in a particular location. This applies to museums, stadiums, conferences, trade shows and inside banks and offices with walk-in traffic.

What kind of results do they produce?

Major retailers—Macy’s and McDonald’s among them—say they are seeing 60 percent engagement rates and 30 percent purchase rates for beacon-triggered messages and offers sent to in-store shoppers. In one study, 73 percent of shoppers who received beacon-triggered mobile content said it increased their likelihood of making a purchase during their store visit. And more than 60 percent of surveyed shoppers said that beacon marketing campaigns would cause them to visit a store more often and spend more money at a store. So yes, marketing by beacon really can drive up your sales revenue.

How much does this tech cost?

The beacon transmitters themselves are relatively inexpensive, retailing for $20 to $40. The real expense for businesses is the cost of licensing the software and the media expense associated with paying third-party app providers to create and deliver the messages to their mobile users. Costs for this new form of mobile advertising will be comparable to other marketing investments such as email platforms and digital advertising. 

Small-business owners should keep an eye on developments in this evolving space, which is still in its infancy. It’s only a matter of time before the technology and the costs involved drop to the level of being affordable for small businesses with only a handful of stores or locations. It’s also only a matter of time before customers become conditioned to expect an offer to appear on their phone as soon as they walk in the door.

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