April is Financial Literacy Month, so here is a top 10 list of tips for making sure your children grow up to be money-wise:
Tip #1: Teach them the difference between a “want” and a “need”
Tip #2: Help them develop the discipline of saving money on a regular, systematic schedule
Tip #3: Help them learn the value of work and earning money, either through paid labor (think baby sitting) or entrepreneurship (think lemonade stand)
Tip #4: Teach them the basics of credit–both secured (mortgages, car loans) and revolving (credit cards)
Tip #5: Teach them to appreciate–and leverage–the power of compound interest
Tip #6: Teach them how to put together a spending plan
Tip #7: Give them an allowance so they have low-risk opportunities to make money mistakes
Tip #8: Talk about the consumerism culture and help them be able to filter consumer advertising and marketing messages
Tip #9: Teach your children that money is NOT the key to happiness
Tip #10: Instill in your children the need to give back to society in a charitable way
Follow these 10 tips and you’re on your way to raising children who will be well-equipped to manage their finances responsibly by the time they leave the nest. Good luck!
There’s a great article in last month’s New York Magazine about women and Wall Street. It’s titled, What If Women Ran Wall Street?, and given Wall Street’s performance over the last two years, I think the obvious answer is: certainly no worse, and probably better!
The article is fascinating and insightful–give it a read.
One of the things I love about Valentine’s Day is all the pre-holiday talk about how and why people “do” Valentine’s Day. The amount of time and effort we spend on the Day of Love shows just how important relationships are to women and men.
I came across a rather amusing article over the weekend that attempts to horn in on the connection between the way we accumulate and spend money and our interest in the opposite sex.
I’m not sure the author was very successful in making his point—he’s pretty hard on men, that’s for sure—but there was one section I found particularly interesting, and it had to do with how romantic impulses can affect spending decisions. According to a 2007 study in the Journal of Personality and Social Psychology, we humans often use spending decisions as a way to signal the opposite sex that we are attractive.
Not a surprising insight, really. But here’s where it gets interesting. According to the study, “romantically primed” men “…are much more much more willing to splurge on things like flashy watches and expensive cars…. Women, meanwhile, didn’t adjust their consumption at all when romantically primed. Instead, romantically primed women indicated that they were more willing to spend time volunteering (such as at a children’s hospital or a homeless shelter).”
So what does this mean? Are men shallow and materialistic, while women are deep and altruistic? Maybe. But remember, the study was trying to measure signaling—which means the subjects were (consciously or subconsciously) trying to demonstrate attractiveness to the opposite sex.
So maybe men are into flashy spending because women are duly impressed by it. Or maybe men just think they are–when really, they just want us to go volunteer with them. I’m not really sure—this study certainly doesn’t give us a definitive answer.
But if we take Madonna’s word for it, there just might be some truth to this study after all:
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Since we started this blog a month ago, we’ve gotten a number of questions about who we are and where we came from, so I thought I would give you a little background on Sophie and SimpliFi.
Background
SimpliFi was started by four guys who went to Wake Forest business school together in the early 2000’s (2 of whom, Bill Grizack and Bryan Link, are still here!). The idea was pretty simple: bring expert-level financial advice (the kind that only wealthy people could traditionally get) to the masses by using the Internet. The hard part was figuring out how to do it and make it something that regular people would use.
That’s how we came up with the idea for Sophie. We thought having a “face” on the service would help personalize it, make it feel a bit more human. And we chose a female advisor because studies show that men and women trust female financial advisors more than their male counterparts.
Early Days
So we started the company in early 2004 and began building the service. We launched the first version in early 2005, and we were off and running, with Sophie leading the way. For the first four years, we offered the service exclusively to credit unions under the name BrightLeaf Financial, so unless you were a member of one of our partner credit unions, you probably never heard of SimpliFi until recently. Since our first launch, we have completed two major upgrades, with a third coming in the near future!
Current
We have been based in Winston-Salem, NC, since we started the company, and are still here. We started in downtown, then moved out to the ‘burbs, but are moving back downtown on March 1 to a a new office on 4th Street, right in the heart of downtown (1 block up from a/perture cinema, Winston’s cool new indie move theater). Here’s a picture of our new digs:
In addition to being anchored to Winston-Salem, we have strong ties to Wake Forest, where the founders met at b-school. 60% of our staff went to Wake Forest undergrad or business school (including our intern, who is a junior there now), and roughly half of our investors are Wake Forest alumni (including one professor). Our first office was actually at the Wake Forest Business Incubator, and Wake Forest owned a small piece of SimpliFi until very recently. We love the Demon Deacons at SimpliFi! As further proof, I plugged a/perture cinema not just because it’s cool–but also because the founders are Wake MBA alums.
What About Sophie?
Over the years, we’ve gotten so many questions about Sophie. When we first designed Sophie, we had high hopes for her, but we never knew she would become as popular as she is now. She is truly the face of SimpliFi. She’s on Twitter. Facebook. This blog. She’s everywhere. And we plan for her to become even more popular in 2010. Keep your eyes out–you might be seeing Sophie in places you wouldn’t expect…
I’ll leave you with a few images from Sophie’s early design days–so you can see how she evolved. Happy Thursday!
Yesterday, I was listening to NPR on my satellite radio and I heard a segment on “Talk of the Nation” called “Wives Increasingly Earning More Than Husbands.” The show’s topic was inspired by a recently published Pew Research Center study called Women, Men and the New Economics of Marriage, which found that since 1970, the percentage of wives who make more money that their husbands has risen from 4% to almost 25%, and the authors expect the trend to continue.
The show’s guests included clinical psychologist Joshua Coleman and popular advice columnist Amy Dickinson, and the discussion centered around how changes in spousal earning capacity affect relationship dynamics. The comments of both Amy Dickinson and Dr. Coleman–and those who called in–confirmed what we already knew: money equals power in a relationship, so when spouses contribute roughly equally income-wise, there is usually a pretty equitable distribution of power between hubby and wife.
The problems start when one spouse makes significantly more than the other. And the fact that more and more wives are wielding the bigger wallet has introduced a new level of confusion into the rapidly-changing institution of marriage, which Dr. Coleman said has “changed more in the past 30 years than in the prior 3,000.”
Both guests talked at length about how the rapid flip-flopping of primary breadwinner roles from men to women has caused problems for both genders, as gender roles are more in flux than ever before. I strongly encourage you to listen to the segment, regardless of the current income distribution in your household (or even if you’re not married–better to know what may lie in store for you!).
The bottom line is this: money and finances are a HUGE part of a marriage, so it is incumbent on you and your spouse to come to a shared understanding on major financial issues like earning, spending, and saving money. In the segment, Dr. Coleman said that problems and conflict arise when the husband and wife have rigid, different ideas about who should provide financially for the family (and I know what you’re thinking, but it isn’t just the husbands who have issues here!).
So talk to your husband (or wife) about this issue. Listen to the segment together and see what kind of conversation bubbles up. You’ll be glad you did!
Maybe it’s time to put a financial value on homemaking and family-making. Sort-of a replacement cost for baby-sitters, day care, maid service, laundry, shopping, organizing the kids’ sports and extra curricular activities, etc.
I woke up this morning in Winston-Salem, NC, to about 6 inches of snow on the ground. It started late yesterday afternoon and it’s still snowing. If you live up north, this probably doesn’t sound like much, but for our region, this is practically a blizzard.
If you grew up in the South or currently live anywhere south of the Mason-Dixon line, you probably know what this post’s title ‘equation’ means. Ever since the weathermen/women started predicting snow on Wednesday, the grocery stores have been slammed with people stocking up for the snow. Apparently, whenever there is the threat of snow in the South, the unwritten rule for many is you go the store and buy as much bread and milk as you can–just in case.
Now, I was born and raised in the South, but I don’t get this. When it snows here, it hardly ever lasts more than a day or two, and then it almost always melts a day or two later. And while our snow removal services aren’t great, they do exist. So the idea that you need to be prepared for being snowed in for an extended period of time doesn’t make any rational sense.
Nevertheless, people still cleared out the bread and milk yesterday.
Psychologists and behavioral economists have demonstrated that emotions drive most of our decisions, and in many cases that’s not bad. But when it comes to how you handle your money, emotional decision-making is usually a bad idea. (Like overspending on food staples that will spoil before you can eat them).
There are all kinds of ways to minimize the impact that emotions can have on your finances. If you have trouble saving, set up automatic withdrawals so you can’t touch the money. If you’re prone to overspending, take cash instead of credit cards to the mall. If you have lots of anxiety about your financial future, create a written financial plan so you can have a better sense for where you are and where you want to go.
None of these strategies will completely eliminate emotions from your financial decisions, but they will minimize some of their negative effects. If nothing else, the next time you find yourself rationalizing a financial decision (if you hear yourself saying “but I deserve this” or “that can wait”), remember the bread-and-milk trap and fight the urge to let your emotions lead you into making a money move you regret.
Now, I’m heading out to go sledding. Happy Saturday!
I was in Miami for the past few days, so it was fitting that while I was there, I heard the news about the birthday party Sean “Puffy/Puff Daddy/P Diddy” Combs threw for his 16-year-old son. It turns out that in addition to a ridiculously over-the-top party (think an episode of MTV’s Sweet Sixteen on steroids), Diddy bought his son a $360,000 Maybach luxury sedan. Even though he doesn’t have a driver’s license yet.
I’m not sure there’s a teachable moment here–this is so out-of-bounds with just about anyone’s sense of proportion and good taste–but I’ll try. If you love your children (and I have two, whom I love dearly), you are probably regularly tempted to spoil them. And there’s nothing wrong with doing so–within reason. But you have to be careful. Extensive research has shown that giving children too much too soon is a surefire way to sap their initiative and create dependency.
If you want to help you children grow into adults, it’s critical that you help them become financially self-sufficient. And that means teaching them how to differentiate between needs and wants. Indulging them too often is a slippery slope and can undermine your efforts. Obviously, giving your 16-year-old a six-figure sports car is an extreme example, but it doesn’t have to be that extravagant to do damage.
Something tells me Justin “Diddy Jr” Combs has never met a want that wasn’t a need, so we can probably bank on Justin being dependent on his daddy’s dollars for many years to come. And if you’re not careful, you might end up in the same boat with your children. Here’s a link to Diddy’s “All About the Benjamins,” just for fun!
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