Monthly Archives: August 2016

Raising a fiscal family

Raising a fiscal family from //

Many people who are parents today grew up in families where it wasn’t polite to talk about money. Yet with national debt at an all-time high, the average American household carrying over $15,000 in credit card debt, and recent college grads facing the highest student loan debt ever, many parents lack confidence when it comes to teaching their kids about money – at the very time that financial education has become more important than ever.

So how can you raise kids who are financially savvy?


Most financial experts agree that children have a basic understanding of money as early as three. And financial habits are mainly formed by the age of seven, according to a study by University of Cambridge.

Most toddlers could care less about money, but a rewards system that consists of a favorite television show or a tasty treat can help these little ones learn the concepts of money early on. When your toddler displays particularly good behavior, give them a homemade coupon. You can attach the value of a small treat for one coupon and a greater reward for 3-5 coupons. Your child will start learning about saving, spending and delayed gratification before you know it.

As your toddler begins to grow, play ‘store’ to introduce the concepts of trading money for things (just play with items you’ve collected from around the house). If you play with coins this would be a great time to help your child recognize the different values of the different coins.


An allowance is one of the best ways to teach your child to manage their finances well. However you determine your kids should earn their allowance, giving it to them on a regular schedule will help them learn these management lessons rather than sporadic installments. When deciding how much your child should get for an allowance, there are a few things to think about: their age, your family income and what their allowance is meant to cover.

As soon as your kids start receiving an allowance, teach them to budget by providing them a breakdown of where their money goes. Percentages and categories will differ between households, but you might consider something along the lines of 40% allocated to spending, 40% to savings, 10% to charitable giving and 10% towards family taxes (more on this later).

For younger kids, provide their allowance in small denominations for easy allocation and save them into separate labeled clear jars or plastic bins so they can watch their money grow in each category.

As soon as you think they are ready – probably between ages six and nine – take your child to the bank and open up a savings account. This is also a great opportunity to discuss the concept of interest. When your child is a teen, take them to open a checking account so that they can learn to responsibly use their debit card before leaving home.



A savings chart is a great tool for kids of all ages. When your child has a savings goal, whether that be a new toy or a car, create a chart with a picture of the desired item at the top. Then, for younger kids, figure out how many weeks of allowance it will take to buy it and draw a box for each week. The child can then fill in the box with a marker or sticker when the money for that week is saved. They will feel so proud of themselves when that item is theirs and they bought it with their own money.

For older kids, this may be a separate savings account that they deposit allowance and/or earnings into to reach their goal. But their satisfaction in themselves and the pride they take it their new possession will still reflect that of a younger child!


Teach your kids the value of making thoughtful purchases by allowing them to buy the luxuries they want. For example, keep food in the house for your kids to be able to pack their own lunches, but if they want to buy food at school, then they pay for it themselves. It could save you money, help your kids to be thoughtful about what they spend their money on, and likely ensure they eat healthier foods than what the school provides.

Kids don’t usually understand the cost of things aside from the sticker price, so it’s up to you to teach your kids about less obvious (or even hidden costs). If your older kids want to make a big purchase like an iPhone or a car, teach them about the added expenses of monthly data plans, insurance, repairs, etc.

When it comes to spending, your kids are going to make mistakes, and that’s okay! They will likely experience buyer’s remorse at some point and may turn to you for help. If this happens, compassionately let them experience the consequences of their actions, particularly if you warned them before they made the purchase. The pain they experience now will help them make better choices when the stakes are higher.


Remember when you were working your first job and you were so excited to get your first paycheck? You’d worked hard for that money and probably already spent it in your head a dozen times. Then when that day came, you were shocked by how much smaller it was then you thought – because of taxes.

Issuing a “family tax” will creatively teach your kids about taxes from an early age. Steve Shaffer, CEO, recommends a tax of 25%, but your family ‘tax bracket’ may differ. Then use the taxes to do fun things as a family.

Increase your teen’s investing savvy (perhaps your own as well) by allowing them to choose one company (or a few) that they know of and think are ‘good investments’ and the pretend to invest a specific amount in them. Follow the activity on the market together and see how you do.

Much like the family taxes example, you can teach your older kids powerful lessons about debt and credit now, too. If there is something they really want, give them three options: 1) Buy it now, 2) Save to be able to buy later, or 3) Borrow the money from you with an interest rate attached. Teach them that if they are going to borrow money it will cost them – and the longer they wait to pay it back the more it costs. Set up the rules of borrowing in advance.


Rather than saying “we can’t afford it” or even, “it’s not in the budget,” try saying “we’re choosing to not spend our money on that right now.” Talk to your kids when you decide not to spend money on something and be open about why you chose not to spend.

Particularly with young kids, teach delayed gratification by associating today’s “no” with tomorrow’s ‘yes.” For example, if you say no to a dinner out or a movie in the theater, explain that you’re not spending money on those things because we’re going to put that money toward an upcoming vacation. And, when your child asks a challenging question, try responding with, “Why do you ask?” This will help you understand their line of thinking behind the question before responding.

How the Vanguard Effect Adds Up to $1 Trillion

You don’t have to get into the details here but this is a good thing for the ‘everyday person’ and a rare time when the public benefits…

How the Vanguard Effect Adds Up to $1 Trillion – Bloomberg View

industry, here’s a happy statistic: A private-sector wealth-transfer machine has saved average investors $1 trillion. That machine is Vanguard, and its model is worth highlighting — and maybe even emulating.

Let me explain the math.

Vanguard has saved investors $175 billion in fees since it was founded in 1974. This is based on the historical difference between the asset-weighted average expense ratio of an active mutual fund versus that of a Vanguard fund, as seen in the chart below. The difference is multiplied by the firm’s assets each year — in other words, the amount an investor would have paid if Vanguard didn’t exist.

The firm has also saved investors about $140 billion in trading costs or turnover. Every time a fund manager makes a trade, it costs a tiny amount. Generally speaking, every additional 1 percent in turnover comes with 0.01 percent in extra costs. Active mutual funds have an average turnover approximately 50 percentage points higher than a Vanguard fund.

Finally, there is the “Vanguard Effect”: The company’s influence leads other funds to lower their fees in order to better compete. For example, the average fee for active funds has dropped from .99 percent in 2000 to .77 percent today, which can also be seen in the above chart. This decline benefits the investors who make up the $10 trillion in active mutual-fund assets. In other words, Vanguard has saved non-Vanguard investors about $200 billion in active funds alone.

So to sum it all up: $175 billion in fee savings, $140 billion in trading cost savings, and $200 billion in savings from competition, which brings us to a grand total of $515 billion in lifetime savings. How, then, do we get to $1 trillion?

We have to assume that Vanguard’s lifetime isn’t over. In fact, the company is in its prime, having grown assets from $1 trillion in 2006 to $3.3 trillion today. This year, Vanguard has taken in $174 billion, which is about 70 percent of the net cash that has gone into all U.S. mutual funds and ETFs. Assuming a conservative growth rate of 10 percent annually, the firm should easily reach $6 trillion in less than 10 years, as seen in the chart below:

That future growth is where you get an additional $500 billion or so in investor savings, which brings us to the $1 trillion. And remember — that money doesn’t sit under a mattress. It compounds and is turned into even more money for people who will ultimately use it for things like retirement, a new house or a college education.

There’s another element to all this, and it stems from innovations made by John Bogle, Vanguard’s creator. First was the introduction of the index fund, which is arguably the financial-industry equivalent of the MP3 — a disruptive technology that has revolutionized the mutual-fund business. Second was Bogle’s decision to set up the company using a mutual ownership structure. The funds own Vanguard and the investors own the funds. In fact, the only interest Bogle has is as an investor in the funds. The result? Profits are given back to shareholders in the form of lower costs, which in turn builds trust, and so on.

All that seems worth celebrating — especially if it adds up to $1 trillion.

  1. The effect is arguably much wider-reaching than this — in the advisory business, in hedge funds, and particularly in the exchange-traded funds market, where the first ETF was actually priced to compete with Vanguard’s S&P 500 Index fund. But for the sake of brevity, we’ll keep it at $200 billion.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Frey Freyday- Change

(Frey Freyday is simply a bunch of inspirational, motivational and other quotes meant to make you think, reflect, smile, even laugh a bit. Hopefully helpful, useful stuff….)

CHANGE-\ˈchānj\ –  to make (someone or something) different

“A year from now you will wish you had started today.” — Karen Lamb

“All change is not growth, as all movement is not forward.” — Ellen Glasgow

“Be the change you want to see in the world.” — Mahatma Gandhi

“If you do what you’ve always done, you’ll get what you’ve always gotten.” — Tony Robbins

“One day your life will flash before your eyes. Make sure it’s worth watching.” –- Anonymous

“The best way to predict the future is to create it.” — Peter F. Drucker

“The person who says something is impossible should not interrupt the person who is doing it.” –- Chinese proverb

“The question is not who is going to let me, it’s who is going to stop me.” — Ayn Rand

“When you are through changing, you are through.” — Bruce Barton

“Your life does not get better by chance, it gets better by change.” –- Jim Rohn

Change: to become different, to make something different, change is constant

First, there is change everyday. Some people like it, even thrive on it. Other people resist change, even if the change brings better conditions.

As a leader at school, work, or in a community, one will find out how many people will resist change. Something new can create fear, uncertainty and there are certain personalities that will fight the change even if improvements come from the change. It’s sometimes funny, sometimes scary how much people resist new ideas. First they laugh at it, they ridicule it, resist and fight it, and finally they embrace it.

Change happens. Whether we want it to or not, it will come so you might as well be able to adapt, improvise and improve yourself.  Studies show that people who are more flexible, adaptable and able to adjust to change will do better in life, be healthier psychologically, and overall experience more happiness.

It is interesting, often those people who are more afraid of the future resist moving into the future. Those people that change – or even create the change – move or lead into the future. These people typically embrace the future and change.

For one’s own personal growth, change is a must. We must go outside our own comfort zones. We must do different things, take different actions, and think different thoughts if we want different results. You can’t do the same thing and get better or different results. We all know it but sometimes ignore it.

Time goes by. Change happens all the time. Those that change are healthier, happier, and more flexible. Those that create change are leaders and creators. Change involves mistakes, failures and tough times that ultimately lead to success. Change is natural.

Frey Freyday was actually born out of something I created called “Words To Live By” (WTLB). Going forward, I will now not only share the quotes, as you may be used to receiving, but also a related (WTLB). In 1999, when we had our first daughter, I was contemplating how I would raise my new beautiful child, and I was thinking about how I can best educate her and my other children about values, morals, and other key thoughts about life. School offers education. Religion offers some values and morals. Parents offer most of it, sometimes intentionally, sometimes accidentally.

So I created a (WTLB) book, like a dictionary, which lists things like honesty, love, persistence, etc. with a definition that I created, with my wife’s input. I then turned it into a workbook with one word per page and space below for notes. For years we would discuss with my two daughters and they would draw pictures and make notes in the blank space. I may share some of those images with you. As they got older, they were less inclined to draw and more open to quotes and references from adults, hence where Frey Freyday came from….




How to Get People to Change


Authors Chip Heath and Dan Heath discuss their new book on change management.


Courtesy Random House

Chip and Dan Heath uncover the truth about why people make poor decisions.

Forget PowerPoint. If you want to influence employee or customer behavior, charts and data typically won’t cut it, say Chip and Dan Heath, authors of the 2007 bestseller Made to Stick and the new Switch: How to Change Things When Change Is Hard. In Switch, the Heath brothers explore ways to manage big changes in life and in business. “Change is hard, because we’re schizophrenic,” says Chip, a professor of organizational behavior at Stanford’s Graduate School of Business. (Dan is a senior fellow at Duke University’s Fuqua School of Business.) “Part of us may want to change, but part of us has this emotional connection to the way that we’ve always done things.” In researching their new book, the Heaths consulted experts on subjects as diverse as how to diet and how to change society. “Time and again, we found the same principles coming up, whether it was individual change or organizational change or societal change,” says Chip. Those principles, he says, involve appealing to both our rational and emotional sides. Inc. senior editor Bobbie Gossage recently spoke with Chip Heath about the book’s findings.

What mistakes do leaders make when they are trying to change their organizations?

One of the main mistakes is when leaders come up with a new vision but never translate that broad analytical vision into something people on the frontlines can actually execute. I was talking to an entrepreneur who wanted his employees to have a “mindset of customer service.” But if you’re an employee, when you hear that, all you hear is buzzword, buzzword, buzzword, jargon, jargon, jargon.

What if you are dealing with some really stubborn people who don’t like change?

You can try to find the feeling that’s going to make them empathize with customers. For instance, Microsoft had some very stubborn programmers who thought they were writing brilliant software. But six out of 10 customers Microsoft surveyed couldn’t figure out how to use the new feature. When they told the programmers this, their response was, “Where did you find six dumb people?” Microsoft brought the programmers into a usability-testing lab and put them behind a two-way mirror. When the programmers watched a real customer struggle with the software they designed, the programmers immediately started thinking about ways of changing it.

Don’t try to argue with a stubborn employee. That appeals to the dark side of the analytical parts of ourselves.

What do you mean by the dark side?

Our analytical capacity is wonderful, but we face too many choices. If you give customers in a grocery store an assortment of 24 jams to sample, they’re actually less likely to buy any of the jams than if there are only six jams. Very often we paralyze our analytical side by offering it too much to analyze. The same thing happens if you give your employees too many things to think about — like having a “mindset of customer service.” As an employee, there are 45 things I could do that might improve customer service, and I don’t have time to do all of those things, so I end up doing none of them.

What about using carrots and sticks?

If you’re offering bonuses or hiring and firing a lot of people so that you can find the few special people who can execute your vision — those are expensive, time-consuming strategies. Very often, by making small changes in the environment, we lead people in the right direction without that expense.

So you should change the environment, not the employee?

One of the most basic mistakes that psychologists have documented is that we tend to blame people and their personalities for problems and ignore situations. One of my students, a director at Nike, thought of herself as a very open manager. She had an open-door policy, but when she asked for feedback, she learned that her staff thought she was a bad communicator.

After talking with her team, she realized the problem was the way her desk was set up. When an employee came in and sat across from her, her computer was right in the middle. She got distracted when e-mails showed up. After she rearranged her office so she would have to turn her chair away from the computer when an employee came in, she immediately got positive feedback. By fixing that environment, she fixed the problem.

You mention in the book that peer pressure is also a powerful motivator.

Social influence is strong. If a third of your employees aren’t filling out their expense reports on time, what they may not know is that two-thirds of your employees are. Sometimes just understanding that a crowd of people is moving in a direction makes people uncomfortable enough to change. One of my favorite studies in the book is about a group of researchers who went into hotels that have those “Please reuse your towels” signs. They changed one of the signs to say, “Most people in this hotel reuse their towels at least once during their stay.” Immediately, towel reuse rates went up 25 percent, and laundry bills went down.

Does a bad economic climate affect people’s ability to change?

We commonly think that fear is a good motivator, but fear works for only a short time. And this recession has gone on for a couple of years in some parts of the country. So when we try to motivate people, we need to find feelings of hope and optimism.

How do you do that?

There’s a technique we talk about in the book: looking for the bright spots. When you face a change situation, you’re often demoralized and depressed. Instead of focusing on what isn’t working, you need to shift people over to thinking, What have we done in the past that has been successful for us?

I was talking to a small-business owner whose firm is a general contractor. He had been killing himself by doing proposals for big government contracts, which the company would often lose. I asked him, “What are the last three times that you got a contract you were excited about?” Turns out they were all projects from referrals, and they tended to be not the bigger projects but projects for small and medium-size cities where relationships mattered more.

At this firm, they were masters of taking people who might not necessarily agree on what the fire station should look like and helping them resolve those conflicts. The firm shifted to focusing on smaller projects where it was in charge of a more complete project and people’s skills were better utilized.

It’s easy to get demoralized when you lose and you lose and you lose. But when you think about the last time you won and how you can do those kinds of things more often, that gives people a sense of hope and optimism that will motivate their behavior.


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