Family & Consumer Sciences Extension

HOME

Kentucky High School Financial Planning Home Page

Back to E-Mail Updates page

HSFPP Update # 212—New Year’s “Financial” Resolution

Message from Flashman: I’m not a great fan of New Year’s resolutions since most people either forget about them by the end of the first month or they overreach, trying to do too much. If you do make resolutions, it’s best to break your goals into smaller components. As an example, you could resolve to lose five pounds by the end of January; another three by the end of February; five more pounds by the end of March; and so on throughout the year, if necessary. This way you will reach your goal of losing 40 pounds by the end of the year, the resolution that I’m working on. It’s not safe to lose too much weight at once, so you want to go slowly.

The same thing is true with financial goals. You’re not likely to become a millionaire by Age 65 unless you set monthly (short-term) goals and intermediate goals that are reachable. If 16 year olds begin investing young, they will not have a problem becoming millionaires—see Unit 3 in the HSFPP—but most will only begin investing later in life and most likely will never reach their goal of having $1 million in today’s money by retirement. (It’s important to realize that, by the time they reach 65, $1 million will not be worth as much as it is now and they will likely need more.) Hopefully, by the end of the semester, you will have teens seeing that it is possible for them to reach their financial goals by writing them down and looking them over monthly to keep on track and to make adjustments along the way.

This week’s lesson also includes three relevant Web sites for your use.

 

To New Subscribers:

We design our weekly updates so you can copy and paste each week’s article In the New$..., student activity, and questions into a word-processing file so you can hand them out to your teenagers. If you have trouble doing this from the e-mail, you can always go to our Web site. All updates are available at http://www.ca.uky.edu/fcs/hsfp/UPDATE.HTM. As long as proper credit is given, feel free to copy and paste material from any of these.

 

Academic Expectations:

Social Studies

Academic Expectation 2.18
Students understand economic principles and are able to make economic decisions that have consequences in daily living.

Practical Living

Academic Expectation 1.4
Students make sense of the various messages to which they listen.

Academic Expectation 2.33
Students demonstrate the skills to evaluate and use services and resources available in their community.

Vocational Studies

Academic Expectation 3.1
Students demonstrate positive growth in self-concept through appropriate tasks or projects

In the New$... How to Include Finances in Your New Year’s Resolution

by Claire Kimberly, a graduate student majoring in Family Studies at the University of Kentucky

Welcome to 2009!

A new year reminds us that we can have new opportunities and new beginnings. We actually can do this any time, but many people make plans at the end of the year to reach personal goals during the following year. Usually termed “New Year’s Resolutions,” these goals can include losing weight and stopping smoking. Another goal that is, not surprisingly, extremely common is to have more money. You could resolve to make more money, but that isn’t always possible, especially in a bad economy. Therefore, I am presenting several examples of potentially effective New Year’s resolutions that you might want to consider setting for yourself.

1. Start with a clean record. A girlfriend of mine applied for a loan to buy a used car for college. She was shocked to learn that someone had stolen her identity and opened credit cards in her name. Even more surprising was the fact that the thief was a male and he consistently had no trouble using the card. If she had checked her credit report a few years earlier, this problem could have been fixed more easily.
   
   Get your free annual credit report at annualcreditreport.com or call (877) 322-8228. If you find any problems in your report, make sure you contact the credit bureaus (http://www.fightidentitytheft.com/credit_bureaus.html) and your personal credit issuers in writing (Gerry Willis, CNNMoney.com). Or contact one of the three major credit reporting bureaus, Equifax, Experian, and TransUnion, now, another of the three in four months, and the last of the three in eight months. Staggering your requests among the three bureaus throughout the year can allow you to keep an even closer watch on your credit.

2. Re-balance your budget. If you were planning on losing weight, you wouldn’t take in more calories than you could burn, right? It should also be obvious that you also cannot save money if you spend more than you make. Take the time to figure out how much money came in and how much you spent in 2008. If you find that you are paying for everything in cash and have no record of what you spent in 2008, begin keeping a record for the next 30 days of what money comes in and goes out. If more money was going out than coming in, re-evaluate what you need versus what you want and cut back appropriately. Cutting out expensive premium coffee every day can help a lot. So can fixing your own meals.

3. Reduce your debt. List all your debts in order of interest rate, from the highest rate to the lowest; or arrange them by the number of payments you have left, starting with those you can pay off most quickly. Once your first debt is fully paid, scratch that debt off your list and go on to the next. Follow this process until all your debts are paid. Paying off the debts with the highest rates first will reduce the number of years you will have payments and will save you thousands of dollars in interest (Steven B. Smith, youngmoney.com).
   
   Remember that the financial habits you develop in high school will likely be with you for the rest of your life. If you find yourself saying you don’t have money to further your education or to buy a home 10 or 15 years from now, it could be because your monthly debt payments are more than 15% of your income. Set a goal to be debt-free by the end of the school year and keep your debt low in future so you are able to save and invest your money.

4. Start an emergency fund. It is surprising how many college students use “payday” loans for their car expenses. These loans have an annual interest rate of 240% to 390% APR. Wouldn’t you like to make this much interest on your savings or investments? If you set aside an emergency fund, on the other hand, this disaster could be prevented.
   
   If you have an emergency fund, great! Add more to it if necessary. If you don’t yet have money set aside for an emergency, begin today, even if you can only set aside a few dollars a week. If you ever have an unexpected problem such as your car breaking down—and this happens to all of us at least a few times in our lives—you will be far more prepared because you have the money set aside (Steven B. Smith, youngmoney.com).

6. Eat out less often. In high school, I was surprised at how many of my friends regularly stopped at fast food restaurants after school. I’ve also been shocked at how many of my college friends buy meal plans for almost all of their meals, but still eat out a lot. If they added up all the money they spent at restaurants a year, it would probably come to a couple thousand dollars. One thing I learned was that eating a healthy snack during the day would help me avoid the temptation to eat out all the time. Not only have my savings prospered, I’ve also been healthier.

6. Reduce your impact on the environment. Think about doing simple things to protect the planet. This could include car pooling to school and using public transportation whenever possible; unplugging your charger as soon as your phone is done charging; turning off the lights after you leave a room; and/or taking a shorter shower. This not only helps the environment, it also helps with your budget.

Sources: (1) Gerri Willis, “New Year’s (Financial) Resolutions,” CNN.com, 01/03/2007. http://money.cnn.com/2007/01/03/pf/saving/toptips/index.htm?postversion=2007010312

(2) Steven B. Smith, “9 Nifty New Year’s Resolutions,” YoungMoney.com, 12/27/2005.  http://www.youngmoney.com/money_management/budgeting/041223-01

(3) G. E. Miller, “5 Personal Finance New Year’s Resolutions,” 20somethingfinance.com, 1/01/2008. http://20somethingfinance.com/blog/2008/01/01/5-personal-finance-new-years-resolutions/

 

Discussion Questions:

1. Have you already made a New Year’s resolution? Would the above resolutions hinder or assist you with your original resolution?
   
   
2. What could you do to help make sure you keep your resolutions?
   
   
3. What other goals could you set to help you save money?

 

Web Site Picks of the Week:

“Carbon Fund”  http://www.carbonfund.org/
This website shows how you can save your own money and the environment at the same time.

“Credit Report”  www.annualcreditreport.com
Go to this website to apply for your free annual credit report.

“Fight Identity Theft”  http://www.fightidentitytheft.com/credit_bureaus.html
This website provides information on understanding and reporting identity theft.

 

Kentucky High School Financial Planning Program

http://www.ca.uky.edu/HES/fcs/hsfp

The purpose of the HSFPP financial updates, video lessons, and Web site is to assist county Extension agents, credit union educators, high school teachers, and parents who home school their teenagers so that they may improve the economic well-being of our teenagers; and also to show educators how the HSFPP, updates, and video lessons meet Kentucky core concepts. The Web site, updates, and video lessons are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators. The list of core concepts and order form for free program materials including the student guide and instructors manual can be found on the Kentucky HSFPP home page.

If you are not already on our listserv:

The video lessons are available only to members of our listserv and will not be posted to the HSFPP Web site because of the timeliness of the information. If you would like to receive our video lessons, which are sent to our listserv biweekly, on alternate weeks from these updates, please sign up at the following page of our Web site: http://www.ca.uky.edu/HES/fcs/HSFP/response.htm.

The use of any trade names or products does in no way constitute a recommendation for this product.