Financial Literacy for Kids a Big Worry for Parents, BofA Says

According to Bank of America, financial management is the most important lesson a parent can teach their child. Although there are obviously many other important lessons parents teach their children, I do agree that financial literacy can help children lead a more stable life, and should be instilled at a young age.

The Merrill Lynch Affluent Insights Quarterly, which surveyed 1,000 Americans in June with investable assets of at least $250,000, found that 51 percent cited “financial know- how” as the most important life lesson to share with their children. That compares with 54 percent who named maintaining ties to family, 26 percent who said choosing the right spouse and 11 percent who mentioned staying physically fit.

“Cash and debt management, along with their children’s financial literacy, have become increasingly important to our clients as they juggle often competing financial demands while hoping to teach the next generation how to effectively manage their own money,” Dean Athanasia, head of banking and the direct investment division for Bank of America Global Wealth and Investment Management, said in a statement.

As uncertainty over jobs and long-term economic recovery increases, affluent investors are worried about rising college and retirement costs, the survey said. About 40 percent of respondents said they are concerned about the rising cost of college education and 46 percent are worried about their ability to preserve an inheritance for their children.

Continue reading at Bloomberg.com…

10 Ways to Increase your Savings

With a record number of taxpayers living paycheck to paycheck, these days many people are finding it difficult to save money. We all work hard for the income we earn and it is nice to be able to put a little away for the rainy day – so, I have put together the following list of saving tips.

1. Set a Savings Goal

If you are serious about saving money, then I highly recommend the following: set a goal, a timeline, and a plan of attack. Depending on your unique financial situation your goal might be to save up enough money for a new car, or it might be to just put extra funds in your savings for that rainy day. Whatever your goal is, it is always helpful to identify it, and work towards achieving that goal.

2. Focus on Paying Off Debts

Many of us have credit cards, and are simply paying the minimum monthly payment. Do you believe sending monthly payments to a creditor can significantly inhibit your ability to save? Believe me, it does. Therefore, you should focus on paying off your credit cards as soon as possible. It is always a good rule of thumb to begin paying down cards with the highest interest rates, which will help you save as much of your money as possible. As you work towards paying these cards off, it is important to not use them any more then you absolutely have to. A good habit to get into is to pay the monthly balance in its entirety each month.

3. Put Together a List of Monthly Expenses

In order to assess areas that you can save, you should put together a list of all of your monthly expenses. Then, determine which expenses are required (rent, car payment, health insurance, etc.) versus those that are unnecessary (such as coffee, landscaping, gym memberships, etc.) By making these two separate lists you can focus on finding ways to save.

4. Trim "Unnecessary" Expenses

After your list is complete, you should identify all the ways you can trim your unnecessary expenses. This could include eating out less, brewing your own coffee, mowing your own lawn, downgrading your cable or satellite service, or finding a gym with a less expensive membership fee. It might be difficult to go without some of these luxuries at first, but once you begin seeing the result of your savings you will be encouraged to trim more and more!

5. Reduce Household Monthly Expenses

Even though you cannot simply get rid of some monthly household expenses, you may be surprised to see how much money you can save with a little effort. When your lease is up ask your landlord to reduce the rent, or move to a cheaper place. If you own your home you might be able to refinance with a lower interest rate. Additionally, you should check your insurance policies to make sure you are not “over insured,” and paying an inflated premium. You could even start an office carpool to lower your gasoline bill. Be creative; you are sure to find a few ways to reduce your monthly expenses across the board.

6. Stick to your Budget

Millions of families across the country make a monthly budget for expenses, but sticking to that budget is often easier said then done. You should make your budget a priority, and get your whole family involved in the process. Maybe invest time in having a weekly or monthly family budge meeting.

7. Become a Discount Traveler

Summer is often the season when families take a vacation. However, your vacation does not have to break the bank. You could save money by looking for cheaper hotel rooms online, or take a frugal camping trip this year.

8. Review Tax Withholdings

While looking for ways to cut your expenses, it is also a good idea to look over the taxes being withheld from your paycheck to make sure you are not over or underpaying. If you overpay the government each month then you are basically giving the IRS an interest free loan. Instead, you could get more money in your paycheck, and put that money into a savings account.

9. Interest Earning Savings Account

As part of your plan to save money, you should consider looking around to find a savings account with the best interest rate possible. If you have enough spare cash you might be able to put the money into a high interest savings account. However, these accounts often have restrictions such as a large minimum balance.

10. Put Money from Each Paycheck into Savings

If you are committed to saving, then you need to make it a priority and see that money from each of your paychecks goes into your savings account. You could decide to put a specific percent of your income into savings, or a dollar amount, whatever you select the most important thing is to stick to your plan. Many banks even offer automatic transfers from your checking to savings account, which is a great way to make sure you add more funds to your savings each month.

A Financial Report Card, Right in Your Tax Return

In today’s tough economic climate most Americans are confused about their finances, and it can be difficult to determine where you stand financially. However, as New York Times author Jan Rosen explains, your tax return can offer several clues to help assess your finances. Check out a snippet of her piece below.

MOST of us would like an answer to this question: Am I on the royal highway toward realizing my long-term financial goals — building up savings for the children’s education and for retirement, for example — or am I bumping along a back road that ends far short of my goals?

Your tax return can provide clues for answering that question. So, before filing away a copy of your 2009 return, spend some time reviewing it. Even if you want professional advice, you should still review the return first. “The client who gets the best advice is often the one who raises the best questions,” said Sidney Kess, a New York tax lawyer and certified public accountant. He and two other accountants who specialize in personal finance offered pointers for going through the return, the topics to consider and the questions to ask.

INVESTMENTS. Look at Lines 8 and 9 of the 1040 for interest and dividends, and, if you have more than $1,500 of either, look at the attached Schedule B. Line 13 will show net capital gains or losses with the details of your trades reflected on Schedule D.

If Schedule D showed only gains, take it as a warning sign, said Lyle K. Benson Jr., who heads his own firm, L. K. Benson & Company in Baltimore, adding, “Harvesting losses is an important part of good planning.” Often investors do not want to sell losers, feeling a stock will surely bounce back. But a capital loss could offset a capital gain, making the gain tax-free, and the money that was recognized in selling losers could be reinvested, perhaps more productively, he pointed out. Net losses of up to $3,000 can offset ordinary income with any excess carried forward to future years.

Many tax professionals expect tax rates to rise, and if they do, harvesting losses can become even more valuable. President Obama has proposed raising the rate on long-term gains — those held more than a year — to 20 percent for most taxpayers, and under present law the top rate for ordinary income next year is to rise to the 2001 top of 39.6 percent.

Continue reading at NY Times.com…