Tag Archives: Roberta Pescow

Kids Can Budget Too!

How to Help Kids Learn Budget Skills to Last a Lifetime – 
Without a spending plan, finances can easily spiral out of control. This is why learning good budgeting skills as early as possible is so important. Helping kids set up a budget doesn’t have to be cumbersome; the experience can actually be fun.

Beginner Budgets
Kindergarten and early elementary school kids can grasp basic budgeting ideas. Start by introducing the concept of wants and needs: A new toy is something a child may want, but he or she may really need winter boots. Explain that money is what we exchange to get stuff, and we often have to save and wait for things we want in favor of getting what we need.

A small allowance gives kids something concrete to work with. Of course you provide their basic needs, but with even a small income, they can begin to finance some wants. Introduce savings by giving them four jars with labels like “spending,” “saving,” “investing” and “giving”:

  • Use the spending jar for cash that can be spent on small, everyday wants such as sweets or stickers.
  • The saving jar can collect money to be used for larger items like a new Lego set or doll. Let kids create and decorate wish-list posters to help reinforce their savings goals.
  • The jar for investing should accumulate cash for things kids might want in the more distant future.
  • The one for giving establishes a fund your child can use to help others.

Kids watch everything you do, so one of the best ways to teach them is to model responsible budgeting and involve them with planning and shopping. This is also the perfect age to introduce banking concepts. Bring kids with you to a financial institution like Harris County Federal Credit Union to help them learn how they operate. For instance, you can show your children that the money you get from a cash machine is limited to what you put into an account earlier.

Middle School Budgets
Kids in their “tween” years can try out some more complex budget concepts. Give your child a set amount of money to work with and let her take charge of planning a family trip to a water park, restaurant or petting zoo. She can research prices and decide what rides, entrees or activities are affordable.

Enrich budgeting skills by encouraging your child to keep spending records and to maintain a list of long and short-term goals. You may want to provide an incentive by matching savings for a special long-term goal.

When your child accumulates more than a few coins, she’ll need a safe place to keep it. Consider opening a joint account that will both reward her good academic performance as well as regular deposits. These accounts earn interest and give kids access to Googolplex, an interactive online tool that teaches financial literacy through stories and games. Tech savvy youngsters can also improve their money skills by downloading entertaining apps such as Allowance and Virtual Piggy.

Teen Budgeting
Teen budgets begin to approach those of adults. Encourage your teenager to get a part-time job and let him be responsible for some of his own expenses, such as his mobile phone bill or gas for the car. A young adult share checking account can also provide rewards for getting good grades in school and offer built-in training features to teach teens how to avoid overdrafts.

As your teen’s budget becomes more complex, look for free apps that can help keep her finances organized. By this time, all the experience and good role modeling you’ve provided will have your teen well on the way to becoming a financially responsible adult.

Roberta Pescow, NerdWallet

Tips to Help You Buy Your First Home

Purchasing your first home can feel like an impossible dream, with many hurdles between you and that front door. But some solid planning goes a long way toward achieving your goal. Here’s how to join the ranks of American homeowners.

Optimize your credit score
It can take months to improve your credit score, which is one of the most important factors in getting approved for a mortgage. So examine your credit history long before house hunting to spot and clear up any mistakes. Start taking steps now to improve your rating. You can get a free report once a year from each of the three major rating bureaus, but there’s a small fee to get your score.

Save a down payment
One of the biggest obstacles to buying a home is coming up with a down payment, which may need to be at least 20% to avoid costly charges for private mortgage insurance, or PMI. But some types of home loans don’t require any money down for borrowers who meet certain qualifications.

To amass as much cash as possible, start years before you plan to buy. Set a budget and make lifestyle changes to cut back on unnecessary spending, such as dining out and taking pricey vacations.

Establish an objective and a savings rate as well as a date to reach your goal, and stick to it. Consider setting up an automatic savings plan that places a set amount from either your checking account or paycheck deposits in a savings account. If you have retirement funds, you may be able to borrow from them as well, and family gifts or loans can also help.

Find your best financing option
Once you have a down payment you’ll be ready to choose a mortgage interest rate structure and type. Fixed-rate loans often combine interest and principal (as well as property taxes and insurance) into one payment with a set interest rate that won’t change. While an adjustable-rate mortgage, or ARM, carries a rate that can change periodically based on a market index, most lenders offer hybrids that offer an initial fixed-rate term, like five years, then convert to a variable rate. Usually, these carry lower rates at first.

Some common mortgage types:
Conventional loans – These mortgages may have fixed or adjustable interest and have typical repayment terms of 10 to 30 years.

FHA – Designed for buyers with low to moderate incomes, loans backed by the Federal Housing Administration permit down payments as low as 3.5% and may have easier qualifying standards as well as lower rates and transaction, or closing, costs than conventional financing.

VA – Loans backed by the U.S. Department of Veterans Affairs for military personnel, veterans, their spouses and others who qualify; often require no down payment at all and can be easier to obtain than other forms of financing.

USDA – Restricted to properties in smaller communities and rural areas, mortgages backed by the U.S. Department of Agriculture may not require a down payment for buyers who meet certain qualifications.

Here at Harris County Federal Credit Union we can help buyers choose the best type of financing. Once you decide on the type of loan you want, get preapproved — it’ll help you drive a better deal with the seller.

Shop smart
When choosing a home:

  • Use a checklist of features to compare properties
  • Remember you can change the house but not the neighborhood
  • Factor in taxes, utility costs, any common charges and maintenance
  • Consider prospective resale values
  • Get a home inspection before agreeing on a price

With planning, discipline and attention to your credit, owning a home can be an achievable dream.

Roberta Pescow, NerdWallet