There are nearly 128 million workers in the United States.  Only 10% manage their money well. 

To me, the importance of financial education is quite clear.  When I saw the statistics published by the National Institute of Personal Finance Employee Education – the importance of financial education is even clearer.

• 90% of our nation’s workers have difficulty managing their money and not surprisingly – aren’t saving for retirement. 
• More than half admit spending 21 hours every month while at work – dealing with personal money matters. 
• Two thirds say they have trouble paying their bills on time and worry about money.

The real challenge when it comes to financial education is trying to get and keep everyone’s attention.  It takes time and a commitment to learn about banking and credit and savings and investing.  Sometimes learning about money just doesn’t hold the entertainment factor that’s needed to hold someone’s attention – regardless how badly they might need the information.

That’s why I do whatever I can to make learning about money – fun and mental.  Games help.  They provide a non-threatening, playful, competitive atmosphere with a mutual focus. The learning comes from the playing and talking and problem solving everyone must think through and do.

Games require critical thinking.  They make the abstract concrete.  Simple games that require counting or board games like Monopoly that show you the money and bring out the capitalist spirit in each player – are what help make learning about money – fun and mental.  It’s your money so take it personally ™. 

Here’s to your health and wealth.

The color of money is green but being in the black should be your state of mind.

When it comes to the financial well-being of my fellow African-Americans, I have one message consistently: Black is beautiful, but being in the black is better and necessary. That’s why personal money management must begin with a revolution of thinking in living rooms and dining rooms and kitchen tables all across the country. As President Obama told the National Urban League: “We still have work to do.”

African-American unemployment is up; incomes were already and remain lower; there’s not much of a cushion. And though the country’s economy is growing once again, black communities must be of the rebuilding mindset that is not just for the immediate short term but rather for the long term future.

President Obama said – and I agree – that education is the economic condition of our time because 8 in 10 new jobs will require higher education by the end of this decade.  Education is a prerequisite for prosperity.  Financial education/financial literacy must be a component of our children’s learning.  Since it’s not being taught in all the nation’s schools – a commitment to teaching children about the importance of responsibly using money – depends on each of us who has access to and can influence children. 

Black families must act with a sense of urgency to become financially informed.  Hanging on to old bad habits about money and how to make it, save it, invest it and spend it – must be rethought.  As my grandmother used to tell me when I was holding on to misinformation or was unwilling to see the benefit of eliminating negative thoughts:  “Are you going to let bad things live rent free in your head?” Somehow that always made me see the light.

Yes, being Black is beautiful but being in the black – financially aware and smart – is better.  It’s your money so take it personally ™.

Here’s to your health and wealth.

It’s back to school across the nation and I want to give credit where credit is due.  Well intended parents are sending their kids off to college usually with a credit card.  I want to help you be sure they steer clear of some common credit card mistakes.

The average consumer has nine credit cards.  Don’t let your student get caught in the crosshairs of potential debt.  Collecting too many credit cards is absolutely not a good thing.  Even if the cards have zero balances, multiple open accounts mean the account holder is ripe for the potential temptation to max out on all the plastic.  So school them well before they get to school and are confronted with all those offers of free giveaways if they just sign up for yet another piece of plastic.

The credit card introductory rate isn’t forever.  But how many young consumers remember that?  If they do their homework, they’ll know that once that (usually) six month teaser, introductory rate is over it’s not unusual for the rate to jump to 18 or 20%.  That is an ugly and unexpected surprise for the uninformed.

A big lesson to be learned about credit cards is the importance of reading the fine print.  That’s where the (devil and) details of the offer are printed in tiny but all inclusive explanations.  Most credit cards have limitations about balance transfer fees, amounts and new purchases.  Your student should be well-schooled about the importance of knowing those tiny details.

Be sure to choose a credit card for the right reasons.  By this I mean, don’t let your student choose a card just because it has other attractions such as a rebate or rewards program or is offered by a well known icon or celebrity.  Remind your student that credit card granters aren’t their friend.  It is a business that wants to earn as much money as it can.  So make it your student’s business to shop for the card that has the best interest rate rather than the most interesting look.

Regardless the credit card that’s chosen as being the right one for your student – make sure they understand that even with the right credit card comes ongoing responsibilities:

• Credit card bills should be paid off at the end of every month.  Making a minimum payment only will get them in trouble for a very long time.  For example, if your student has a $1000 balance with a 17% APR and pays the minimum $25 monthly amount, it will take them 57 months to pay off that debt and cost $452 in interest charges. 
• Always pay on time, every month.  Be sure your student knows to check their account statement for the due date and pay at least 3-5 business days ahead of time

It’s vital that your student assume responsibility for their own money management.  Yes, it is time for them to understand it’s their financial thumbprint from now on.  It gives new understanding for them when they’re told:  It’s your money so take it personally ™ .

The high cost of health insurance gets even higher when identity thieves get their hands on your medical records.   

According to the 2010 Identity Fraud Survey Report by northern California based Javelin Strategy & Research – ID theft continued to rise last year and had more victims than in any period since the survey began in 2003. 

The good news in the midst of a bad situation is that the average out-of-pocket dollar amounts victims pay reached an all time low due to better understanding among consumers about ID theft prevention, detection and resolution. 

But when it comes to your medical records, identity thieves call them “the mother lode” for committing their crimes.  After all, medical records contain everything that’s needed to establish someone else’s identity:  Social Security numbers, addresses, often even payment account information.  In fact, the most recent National Study on Medical Identity Theft by the Ponemon Institute estimates that nearly a million and a half Americans were victimized by this kind of theft within the past two years. 

Medical identity theft typically involves stolen insurance card information or costs related to medical care and equipment given to someone using the ID theft victim’s name.  More than 1-point-4 million adults have experienced some type of fraud involving theft of their medical identification information.  The dollar cost on average per victim to resolve a case of medical identity theft is nearly $21,000.  

Unlike credit card fraud where the bank eats the losses, with medical ID theft, victims often have to pay for care they never received, and some lose their health insurance because of it or are forced to pay higher premiums to restore it.  Victims are often forced to sort out the fraud from fact with doctors, hospitals, insurance companies and credit agencies. 

It’s your money so take it personally ™.  Next week, how to protect yourself against medical identity theft. 

Here’s to your health and wealth.

TAGS: Medical identity theft

Students are certainly tech savvy these days.  They tweet and text and surf with great confidence, secure in their know-how about the joys of connectivity.  But how secure is their knowledge about being safely connected when it comes to online money management? 

For example, what would your student do if they received an email from their bank asking them to update their account information?  Would they confidently click on the attached link and update their records?  Wrong decision!  They would be giving identify thieves direct access to their money.  But if they’d played a new, interactive financial literacy board game called Wi$eMoney – they would know that banks don’t ask customers for account information via e-mail. 

Wi$eMoney teaches students about banking, credit, investing, budgeting and identify theft.  It was created by The Learning Key, a company that creates games to transform learning into action (www.thelearningkey.com) .  It has been tested with students and teachers in nearly two dozen states and complies with school board approved curricula. 

The information that’s shared while playing Wi$eMoney is priceless. And, it’s desperately needed because U.S. students are graduating without basic financial education.  They’re graduating without the ability to manage their money.  In fact, in a recent survey of educators across the country who belong to the Business Professionals of America teachers said:

• only a third of students who graduate from high school are financially literate
• 93% need education on how to manage a budget 

But the other disturbing fact that was identified in the survey is that more than half of the teachers (51%) said they are only somewhat qualified to even teach students in financial matters. 

That’s why parents and teachers must find ways to make learning about money fundamental and help students understand the importance of the mindset:  It’s your money so take it personally ™.

How better to do that than with a game that makes become financially smart fun and mental?

Here’s to your health and wealth. 

TAGS: Generation Y, Women and Money

 Is your child money smart when they graduate from high school? 

Being financially literate is not the grade most teachers give the nation’s high school students.  More than half say today’s kids have not been adequately educated about money matters by the time they receive their high school diploma. 

According to a recent survey of teachers nationwide who are members of Business Professionals of America, 51% said students are either somewhat or very illiterate when it comes to money matters regarding managing a budget, saving and investing money, credit cards and paying bills.  Only 2% of these educators felt that graduating seniors were very well-versed in financial matters. 

The survey was done for an interactive financial literacy board game called Wi$eMoney – a product of the Learning Key – a company that designs learning tools (http://www.thelearningkey.com/index.php).  I provided content for this board game and focused on challenging juniors and seniors to test their money skills and knowledge.  Wi$eMoney helps them understand early on why It’s your money so take it personally ™ should be their mindset. Wi$eMoney’s goal is to stimulate student awareness of their financial responsibilities and make the process fun! 

Many of the nation’s teachers – in fact, one in five of those asked –  who felt that students are very financially illiterate – don’t think their schools are doing enough to prepare students for the real world of money – how to make it, spend it, save it and invest it. 

Elizabeth Treher is founder, president and CEO of The Learning Key.  She says:  “Teachers, in general, are concerned that students are not aware of the financial responsibilities they will encounter when they become independent of their parents.”  Treher adds:  “Many educators feel that basic financial education should be introduced to students as soon as they enter high school and become involved until they graduate”. 

Financial education like reading should be fundamental as well as fun and mental.  What better way to engage students in learning to become money savvy than to make a game of it?   

Here’s to your health and wealth. 

If you’re interested in learning more about the Wi$eMoney board game and/or sponsoring financial education in your local school district, go to http://www.thelearningkey.com/PDF/Sponsorship_Promo_06092010.pdf.

TAGS: Generation Y, Women and Money

Who should be the successor of a family owned business when the founders are no longer available, willing or capable of continuing to run it?  That’s definitely a mind over money matters choice. 

My friend and colleague Dawn Fotopulos, a much sought after small business advocate and coach is the Founder of Best Small Biz Help.com, The Solopreneur’s Lifeline(http://bestsmallbizhelp.com/meet-dawn-fotopulos/).  She says usually one or two people are in charge of the business and have been the ultimate decision makers and they must be willing to delegate authority before they’re ready to sell or turn the business over to be run by someone else.  Why?  Fotopulos says because such a transition requires a three year on-ramp/off-ramp time frame to do it successfully and suggests the following: 

• Think about succession at least three years before you want to transition
• Delegate authority and not just tasks to your key proven people
• Seriously consider non-family members as viable leaders of the business 

If you’re the founder of a family business, are facing this decision and considering appointing two people to run the company and use an accountant as a referee – Fotopulos says you might want to reconsider.  She is a firm believer that you can never have a 50/50 split in ownership. 

“It’s a recipe for disaster,” she says.  “Designating more than one owner in a succession plan doesn’t work.  Someone must ultimately be in charge.  That person needs to understand the mission of the business.  Although a business should be able to run independent of the founder,” she goes on to explain, “it only can when the owner delegates authority regarding decision making and not just delegate tasks.”

A succession plan takes time.  So does identifying the right person.  Mentoring a successor requires good, time consuming, on-the-job training, nurturing and giving adequate lead time for a smooth transition.  Most family business founders haven’t done that or identified their successor because they’re structured the business around themselves.  Even if the owner/leader has identified the person to succeed them, often they can’t let go or they don’t think far enough ahead to implement change and find that it’s a crisis that forces putting a succession plan into play.

Lost time is lost money.  Forward thinking about the transition of power is a bottom line issue.  Mind over money really matters when it comes to this decision.  It should be made from the mind of a good business owner rather than the heart of a hopeful parent/founder.

Fotopulos says the successor boss must be responsible for the business viability year in and year out.  The entrepreneurial generation (founders) made the sacrifices but need to be sure that when the second generation (adult children) takes over, their willingness or motivation often isn’t the same.  Thus the s suggestion to consider a longtime, loyal employee – a person who is considered your critical second in command – to become your successor.

When choosing the person to succeed you in your successfully run and profitable family business, as you consider who best can do that, remember:  It’s your money so take it personally (TM).  It applies here more than ever before.

Here’s to your health and wealth.

TAGS: Communication Skills, entrepeneurs, financial planning, Women and Money

It’s a fact:  family owned businesses are a huge part of our country’s economy. 

It’s a fact:  family owned businesses usually come with built-in problems. 

It’s a fact:  experts say family owned businesses (generally) fail not because of economic issues but because family life and workplace life can create turmoil. 

Family owned businesses account for 60% of the nation’s employment, 78% of all new jobs and 50% of the country’s gross domestic product.  But a lot can go wrong in a family owned business so it’s important that we all understand these businesses’ unique struggles and support them because only about a third survives into the second generation. 

Family business success depends on forward-thinking and planning. The problem with family owned business succession plans is that the well-intended founder – the parent who made all the sacrifices – remembers the lean years while in most cases, the adult child, would-be successor doesn’t.  Instead, the child only recalls seeing over and over that Mom or Dad (or both) took risks, worked the hours, made the sacrifices and got the business to break even and have free cash flow. That’s why many 20-30 year family businesses – viable when the parents hand it over (usually to the son) – are run into the ground in two years. 

As my long time friend and colleague Dawn Fotopulos, a small business advocate explains:  “The bottom line is – it’s so hard to get a business profitable but takes just an ‘eye blink’ to destroy it and decades of hard work.” 

Fotopulos’ business is to improve the viability of small business in the United States. (http://www.smallbusinesshow2.com/dawn-fotopulos.html) She’s committed.  She knows what she’s talking about and definitely knows what she’s doing when it comes to educating small business owners for success. 

“The disconnect,” says Dawn, “is that the parents who made all of the sacrifices understand there are going to be lean years and tend to be conservative about how they spend their money.  They loathe spending money but want to give their kids everything they didn’t have.  They spoil the kids and the kids are of the mindset that the business gave them a nice life and is always going to be there.” 

There’s such truth in Dawn’s assessment.  When it comes to family owned businesses, the second generation isn’t of the frame of mind to save for a rainy day.  “When they take over the business”, Dawn says, “the mindset is often first that they must have the biggest and the best of everything – equipment, furniture, expensive environment – that the business may or may not need!”  She says too often she sees them start to run the cash position into the ground. “So if they lose a client or end up in a tough economic environment,” Dawn told me, “they can’t stand economic shocks.” 

It’s your money so take it personally ™ absolutely applies here.  In the case of a family owned business that’s failing, Dawn says part of the dilemma is pride.  Many in this generation wake up and say, “I deserve to have the best” and put themselves first instead of the business. “The family business must be viewed and treated like the third entity it is,” Dawn explains.  “The one that provides for them and their family and those they employ.” 

Next week:  Who should be the successor in a family owned business when the founders are no longer available, willing or capable of continuing to run it?   That’s definitely a mind over money matters choice. 

Here’s to your health and wealth.

TAGS: family businesses, family money, succession plans, Women and Money, work life balance

 A recent survey by Money Magazine found that 36% of people surveyed had at least one family member they considered “a mooch” – a person who was always asking for money but rarely repaid the loans. 

So what are you to do if you find yourself being asked to lend a money helping hand and are regularly “The Bank of Me for You” for someone you love?  It’s tough.  The terrain is tricky.  The emotions can get high quickly – especially if you say “no”. 

This post is part of a continuing conversation that began with my Thursday blog last week “Meeting Other People’s Money Needs:  Guilt or Obligation (http://thethinpinkline.com/category/women-and-money/ ) and the comments it generated. 

Comments »

1. Laura needs to realize she’s enabling her sister. Every time she hands over a dime, she is reinforcing to her sister that she (Laura) will always be there to help. Her sister is not experiencing any pain, and therefore has no reason to change her ways. Laura needs to cut her off. Tell her sister she’s having “financial problems” or whatever, and she won’t be able to provide anymore money “for a while”. And then *stick to it!* Yes she’ll feel guilty, and the sister will use the children to increase that guilt (“Well, I guess little Timmy won’t get that operation after all…”). But until her sister feels the pain necessary to make changes, she’ll continue to patronize the Bank of Laura. Comment by Debra — June 18, 2010 @ 9:50 am
2. Forgot to add: I don’t think budgeting for family will help. My educated guess is that the sister will start thinking of the budgeted amount as an allowance and spend more of her own money accordingly (“…because Laura’s paying the electric bill for me.”) Unexpected expenses will result in her asking Laura for “just a little more this month” … every month. Comment by Debra — June 18, 2010 @ 9:55 am
3. Hi Debra, I agree with you regarding Laura. She is enabling her sister. But as I wrote in my post, she feels a sense of obligation. Since I always work to meet a person wherever they are along their road to financial well-being, I wanted to provide Laura with real and doable ways to feel more in control and less put upon by her sister and family financially. Laura knows she is enabling her sister and has for years but that this is the first time she is consciously reaching out to figure out a way to stem the financial flow. As for the suggestion I made to her regarding budgeting the amount of money she’s willing to set aside for her family: since Laura is not yet ready to cut her sister off financially – at least she can say…”…I’ve already provided everything I can afford to give you this month.” The budget suggestion is more for Laura’s benefit than her sister’s. It will give her some control that can hopefully lead her to some concrete decisions regarding getting her sister from always wanting money from The Bank of Laura. Thanks for the comments, Debra. I know Laura will be reading this and hopefully be motivated to move quickly toward actually doing what you’ve suggested. Valerie Comment by Valerie Coleman Morris — June 18, 2010 @ 5:40 pm
4. Hi, I just wanted to write and praise your response to Laura. My husband and I do not have the highest combined income of our immediate family, but we are the ones who have mitigated our expenses and the ones who save. This means that we are usually the ones asked to help out “until a bonus” or until next pay day. We are paid back about 50% of the time. To be honest, we don’t mind that much. We like to be able to help out if someone needs it. If it got to be too frequent, or if the person seemed to demand instead of ask (as Laura’s sister appears to be doing) we might not be as comfortable with it.  Usually, when I read advice about this type of situation, people basically suggest cutting off others. This is impractical if one wants to keep relationships within family, not to mention doesn’t take into account that often people don’t mind small amounts of help, but just don’t like what the relationship has become. I liked your response, and just wanted to let you know that. We may have to keep the tips in mind if our own situation devolves into something like that! Thanks for the article!!  Comment by Bee — June 19, 2010 @ 11:39 pm

I think the comments show that this is a topic about which people take sides and feel quite passionate.  I make no judgments when it comes to the choice to give or not give money to family or friends because just saying ‘no’ can be tricky and difficult to just put into practice. 

In making suggestions on how to manage the family mooch or the worthy relative in need of a loan – I have but one basic rule and one caveat.  The rule:  the person who is “The Bank” should first be clear and deliberate about meeting their own financial needs and plans before extending a random or regular helping hand.  The caveat:  It’s your money so take it personally ™ and remember do not loan money you can’t afford to lose. 

Here’s to your health and wealth.

 A text message to me from a 40-year old female physician declared:  “See text below.  (The text she referred to read:  “Need $100 to cover me until the end of the month.  If you can’t do that, at least send enough for your nephew to get his hair cut for graduation this weekend.  Thanks.” )  Yet another demand from my sister that I give her money!  I can’t keep dealing with this.  It’s not right but I don’t know how to extricate myself.  Help!  Laura.” 

I followed up and spoke to Laura by phone.  She vented for about 10 minutes.  She told me that she regularly gave her sister money to buy food for herself and her two children; that she paid her mother’s car note and insurance premium; that she “had to come up with an immediate $600 last month” to cover the nursing home costs for her grandmother that were in arrears because her grandfather hadn’t kept up with payments which should have come from disability checks but used the money instead “for other things”.  Laura then returned to details about her sister and said while her sister makes $50,000 a year she is $40,000 in debt!  “What really upsets me,” Laura said angrily, “is that I feel guilty not giving her money when she asks for it!” 

Laura is a successful woman, a well-respected doctor, single and without children.  She asked that I help her get a mind over money matters mentality because her family just expected her to always cover expenses/needs/wants that they couldn’t.  “I’ve done well,” she told me again.  “I make a lot of money and I save it so that I can take care of myself.  My family reminds me of that each time there’s a money need in their lives that they want me to fill.  They’re not malicious about it – just unrelenting.  I can’t deal with this anymore!” 

The reality is Laura cannot afford to rescue everyone she loves.  The first suggestion I made is that she get clear about whether she was feeling guilt or obligation.  It was clearly the latter.  Because Laura is successful and her sister (by her own declaration) isn’t – Laura feels obligated to hand over money whenever her sister or other family member puts their hand out. 

Based on her sense of obligation which at least for now she feels she must fulfill, I made some basic, straightforward suggestions.  First and foremost, Laura should determine how much money a month she is going to budget/set aside for her family.  Determining the amount of this line item will help her feel more in control of the randomness with which she’s asked to provide money.  Have a serious conversation with her sister and insist on being given an accounting of anticipated monthly expenses and perhaps consider arranging direct payments for certain recurring bills for her sister (within the budget amount set aside for family) as well as for her grandmother’s nursing home care. 

The reality for Laura and others like her is that unless she establishes protocols and most importantly limits for family money requests – she will continue to be in the guilt game and paying the price.   I, of course, told her:  “Laura, It’s your money so take it personally ™.“   Laura says she understands the first step towards achieving this – begins with her.  Instead of getting angry about expected handouts she needs to get a plan and pay herself the compliment of being willing to help when she chooses without being made to feel guilty.  And her actions will underscore the importance of every member of the family who asks for her financial assistance – being expected to get educated about money skills and management as part of her requirements.   

Here’s to your health and wealth.

TAGS: financial planning, Women and Money