They say that the best time to learn is when you’re young and you can teach your kids about personal finance today in a fun and educational manner. The best thing is that kids are always asking you for games to play to keep them entertained and there’s nothing better than learning while having fun. This article gives a rundown of the 3 best games kids can play to learn about personal finance.
1. Monopoly – a legendary and highly educational board games. As adults we probably played this game ourselves in our younger days and had heaps of fun. The money lessons from this game are still relevant today. Kids are forced to make decisions as to whether to buy or sell property and then as their financial situation changes, make further decisions. We, as adults, make financial decisions everyday and so it’s great that kids get exposed to that early.
2. Game of Life – a more modern game, yet still very educational. If you haven’t heard about the game, it explores the decisions we make and the paths we take in life. Eventually, the amount of money that we earn gets affected and you learn how to manage this. The closest thing to a real life game.
3. Cash Flow For Kids – invented by financial expert and motivational speaker, Robert Kiyosaki, it is probably the first game ever invented with the goal of making children more financially literate. It introduces kids to the concept of assets and liabilities as well as passive income. Probably the best game for kids out there today.
Whatever you decide to do, you must try to financially educate your kids from a young age. You may use other means with which to do this, but there’s probably nothing more exciting than personal finance games for your kids.
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According to Wikipedia.org: Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. It addresses the ways in which individuals or families obtain, budget, save, and spend monetary resources over time, taking into account various financial risks and future life events. Components of personal finance might include checking and savings accounts, credit cards and consumer loans, investments in the stock market, retirement plans, social security benefits, insurance policies, and income tax management.
With the financial crisis of the world today, you better be personally in charge of your income and spending. There a number of course that can help you to effectively plan your personal finance but first let me give you an idea of what it entails. This will guide you in the choice of courses to choose when you decide.
The basic ingredients of personal finance are:
Evaluation: Any personal finance course you decide to take has to have a detail course out line for finance Evaluation. This is one important aspect of personal finance Management. You need to know your personal financial situation to be able to effectively manage it. On your own however, you can access your situation by compiling simplified versions of financial balance sheets and income statements. This your financial balance sheet should lists the values of your personal assets like car, house, clothes, stocks, bank account and your personal liabilities like credit card debt, bank loan, mortgage. On the other hand a personal income statement lists where your resources come from and how much they are. This is what we call your personal income. It also contains what we call Personal expenses. That’s all you spend your income on.
Goal Setting: Setting financial goals will help you direct your financial planning and any course you take should help teach you the skills needed to effectively do this. Everyone has a daunting financial task ahead of them we can exclude the extremely rich but almost everyone does, trust me. Yours may be getting enough money to retire on, gathering enough money for kid’s education or getting out from underneath a huge pile of debt incurred over the years. Set financial goals you want to achieve and take your time to focus on accomplishing them.
Your goal can be to retire after 30 years of effective selfless service to your company with a personal net worth of $1,500,000″ and “buy a farmland, buy a house or set up a factory in 2 years paying a monthly mortgage servicing cost that is no more than 35% of your gross income”. It is usually best to have several goals, short and long term alike. Just keep them realistic.
Financial Planning: This is the next thing every financial planning course should involve after the goal setting. It is the main ingredient of financial planning courses. Financial planning, in the broadest sense, is the commendable effort of a person to manage all his personal or his family’s financial affairs. Naturally, that will start with planning family spending and extends through insurance, taxes, investing, and retirement, estate planning and so on. Financial planning gives the details of how you want to go about realising your goals. it involves assessing your current net financial net worth i.e what you make minus what you owe. That gives you what you have left to spend. With the list you had done before check out what your expenditure and don’t forget to include tax, insurance. Make how much you need to save to reach your goal one of the expenditure, then see what you can cut out to balance your income with your expenditure list.
Execution: This is the hardest part because it is easy to say all this things than doing them. Even though any good course should teach you what can help you reduce the temptation of not executing your financial plan you just have to do most of the job. Execution of one’s personal financial plan often requires discipline and perseverance. Many people take courses taught by professionals such as accountants, financial planners, investment advisers, and lawyers or ask for their assistance if they are close friends or family members.
Evaluation and control: Your financial plan must be evaluated and updated from time to time. For instance an added source of income should immediately reflect in your financial planning. Any financial course must teach you how to make this update and evaluation. You must always monitor your financial plans to check for possible adjustments or reassessments.
There are quit a number of personal financial courses online both free and paid for. You just have to pick keeping in mind the above points. Google can help too. Have fun planning.
“It takes as much imagination to create debt as to create income” quote attributed to Leonard Orr; if this is the case, then why is it that we create debts more easily than an income? well, most of us do, I know I do…I work so hard to create my income but on the contrary I easily get into debts.
In the last 5 years I have found myself getting into more and more debts, the more debts I get, the easier it gets for me to get to the next one and the next. My bank does not help either, the more debts I have, the higher the borrowing rates I am banded in, I guess it is because I am considered as a high risk to the bank.
Then there is overdraft charges, bounced direct debit charges, checks, late payments on my loans, utilities, mortgages all compounding into increasing my debt thus lowering my credit score and consequently increasing my APR…my debts feels like snow ball, free falling from a hill getting bigger by second, getting more and more out of control.
I took upon myself to look back at how I got into debts in the first instance; I knew if I have any chance of regaining control of my finance, I will have to know how I got in. It pays to understand how one gets into debt, and to do so, understanding income and expenditure is important.
Income is any earning that lands at your disposal, it may be money earned through paid employment, as business profit, or from investments. Expenditure (or sometimes known as expenses) is any transaction that takes away your earnings, for instance paying bills, mortgage, loans etc.
Income and expenditure chart, table or write up, (also known as cash flow) is a snap-shot of your earnings versus expenses. It is in essence looking at what you earnings (income), usually monthly against expenses (outgoing). An average person would not bother writing down his/her cash flow.
Using cash flow, it is easy to see how one gets into debt. When income is lower than expenses (also known as negative cash flow), the shortfall (deficit) has to be covered somehow from somewhere and for most of us it is covered by borrowing (loan, credit cards, store cards).
I began to learn that, if I am to avoid getting into debt, I will have to “live within my means”, i.e. at least break even between my income and my outgoing. To do this, I needed to master my will, guts and learn not to be ashamed of where I was, financially.
Most of the time, the pressure of conforming to other people’s expectations (keeping up with Joneses) is the one that gets us to live beyond our means, thus getting into debts. What we don’t understand is, debts have crippling effects and they are addictive in nature.
Robert Kiyosaki in his book cash flow quadrant (2000, p205) rightly said, “people who cannot control their cash flow work for those who can”; if we are to become free, we have to learn to control our cash flow and this begins by WRITING DOWN monthly cash flow account (personal income and expenses account)…it is surprising how those unplanned £5 expenses quickly adds up to £100′s plunging one down into ‘negative cash flow’.
The aim is to take control of the personal cash flow with the objective of creating income higher than expenses, positive cash flow (surplus) and use the surplus to get out of debt, invest to create more surplus and of course to ‘spend’ on pleasure. My personal motto is: “live within my means, then increase my means”, for pleasure, use surplus only…thus, no surplus, no pleasure.