Personal Finance

Children learn from what they see

Any parent who wants to teach their children the art of money management should start by managing their money properly. This is where many well-meaning parents fail.

It is common knowledge that children are like sponges. They don't do things as you tell them but as you do them. Children study the movements of adults and it is unfortunate that many have inappropriate habits in relation to handling money.

A group of 8- and 9-year-olds were asked what their biggest fear was. It was amazing that one child indicated that his fear was that he would have to support his parents in the future.

Of course, given his answer, he had to be asked what the reason was for that fear. The boy said he heard his parents arguing almost every night and his mother would tell his father, "If you continue to buy those expensive electronic gadgets, we'll end up living in a poor house. If that happens, who is going to support us?

What is really astonishing is that when other children were asked if they felt the same way, most responded with a similar story.

We understand that parents want the best for their children. That is why you must understand the importance of managing your finances correctly. Children who notice that their parents have high debts on their credit cards due to unnecessary purchases or vacations that they cannot afford, tend to behave in a similar way as adults.

No matter how many people think otherwise, children who see unpaid debt collection letters or listen to and take collection calls are getting a lesson that is highly detrimental to their financial future.

Many of these children will deal with their financial problems for the rest of their lives. This problem could be compared to that of children of parents who do not exercise or eat properly: in the future, many of them copy their parents' habits.

Ten heartfelt gifts

You won't see this kind of gift in shopping malls. We all know that original and really distinctive gifts are not easy to find.

Holidays are supposed to be for sharing with loved ones. So we should stop seeing those occasions as times when a lot of money should be spent. It's time to focus on giving gifts that really mean something.

Here are some suggestions for spending less money and putting a little creativity into your gifts:

• Family Recipes - Do you miss a meal your grandmother used to make for you? You can be sure that another member of your family is feeling exactly the same. Try gathering all the family recipes into a cookbook. Use your skills to create the book cover, and add photos and anecdotes to tell your family's story through this book.
• Video - Who hasn't dreamed of being an artist at some point in their life? Ask your family and friends for funny stories and favorite memories about the family member to whom you'll be gifting the video. Usually, these stories are shared on special occasions such as weddings, or when people have passed away. This is an excellent idea for parents and grandparents.
• Personalized gifts - All homemade gifts offer what big stores can't: all the love and effort that has gone into creating them. For example, you can make a puzzle out of a family photo. In turn, there are many stores where you can add personalized messages to mugs or portrait frames: a great gift for grandparents. Another gift idea might be a restored photo of your parents' engagement or a family photo.
• Family Reunion - This type of activity helps your family members relax and enjoy the holiday. It doesn't have to be a party on which you need spend a lot of money, it could be a dinner, a barbecue, or a day trip to the beach or park.
• Family newspaper - It's often difficult to keep your relatives informed of every event, and much more so if they live in different countries. A good gift would be to create a newspaper where you include all the things that have happened in your family.
• Gifts of the Month - You may be able to create your own gift of the month service for less money. For example, you can bake cakes, make candles or flowers, give away vegetables from your garden, write a poem, and wash cars.
• Prepaid Phone Cards - These make great gifts for college kids or older relatives who live on a fixed income. That way, their limited budget won't stop them calling their families.
• Work as a team – This refers to when a group of people come to an agreement to forget about gifts, and, instead, pool their money to enjoy something as a group. For example: going to a restaurant, spending a weekend on a beach or at a hotel. It is about enjoying the company of other people rather than focusing on material things.
• Share Your Joy - It's better to give than to receive, so think about giving something to charity. Tell your children to choose one of your gifts and donate it to charity, or have a family event to make a Christmas dinner for a family in need.
• Your Time - This might be the most valuable gift of all. This gift can take any form you want, but it is a valuable present when placed under the Christmas tree. How about babysitting your relatives' children for one night so they can enjoy a romantic dinner? You can also take care of pets, help out with difficult projects, spruce up the yard, do some gardening, or help build a playroom. Volunteer your time and expertise to help your loved ones with things they need, such as learning to use a computer or making a family recipe.

Five rules for good money management

Keeping a monthly budget is the key to managing money properly. It helps us to organize, save, invest, and maintain a manageable level of debt. Here are some rules to follow so that you manage your money, and not the other way around.

Rule #1:

Draw up a balanced budget. Drawing up a budget is a simple process but we don't often do it due to a lack of time or interest. Balancing your expenses with your income can be a difficult and in some cases almost impossible task. You won't be able to do this unless you come up with a strategy.

The important thing is that you know how much to spend and how much to save. When budgeting and identifying your expenses, you should set priorities.

Experts recommend that you spend no more than 32 percent of your income on general household expenses, such as the rent or mortgage, insurance, and property taxes, among others.

In turn, it is recommended that you do not exceed 20 percent of your income in transportation expenses.

It's important to try to save 10 percent of your monthly income and put it toward building an emergency fund, opening a savings account, or investing it.

The remaining 38 percent can be used for other expenses such as: food, education, medical expenses, education or paying off debts.

Remember to keep your debts at a manageable level. In rule 4, we suggest that this percentage should not exceed 20 percent of your monthly income.

Rule #2:

In the previous rule, we suggest that you set aside an amount for savings or investment. Well, the second rule is to invest your money.

Allocating part of the funds saved to invest them is a good way to make your money work. It is very important to get help from a financial expert or someone who has expertise in this subject, so that you invest safely. For this money to pay off, you mustn't touch the investment for a long time (a period estimated as three to ten years). Be patient and cautious.

Allocating part of the funds saved to invest them is a good way to make your money work. It is very important to get help from a financial expert or someone who has expertise in this subject, so that you invest safely. For this money to pay off, you mustn't touch the investment for a long time (a period estimated as three to ten years). Be patient and cautious.

Rule #3:

Diversify. the number one rule of finance is not to put all your eggs in one basket. Experts prefer to recommend for young investors (who are usually more intrepid and less risk-averse) a distribution of 50 percent in stocks or mutual funds, 30 percent in bonds, and 20 percent in cash. On the other hand, when the investor is an adult, 50 percent in bonds, 30 percent in stocks or mutual funds, and 20 percent in money seems to be the perfect combination.

Remember that you can choose the right option for you with the help of an investment expert.

Rule #4:

Manage your debts properly. Don't get trapped by debt. It is recommended that your monthly debts do not exceed 20 percent of your monthly income.

If, when analyzing your level of debt, you find that you are at the limit or that you have exceeded it, seek help from a professional who can guide you on alternatives to debt problems.

You can try to arrange payment arrangements directly with your creditor, debt consolidation, refinancing, or payment plans through counseling agencies.

Following these rules to the letter can take time, but these tips will undoubtedly help you keep your finances balanced and out of the red.

At CONSUMER, we can guide you on how to properly use your money and avoid excessive debt. A certified counselor can help you prepare a budget that will allow you to meet your monthly obligations and start saving money for your future. For appointments you can contact 787-722-8835.

Women do not have enough money

Some women have lower salaries than men and are in financial situations that put them at a disadvantage. Many of these women suffer from a paralyzing psychological condition that prevents them from achieving the goal of having enough money.

Money can't buy happiness, but not having enough money makes you miserable, as many women and single mothers will know.

Although in recent decades women have made progress in entering the workforce and their rights being recognized, statistics show that they are still financially disadvantaged.

Women represent a high-growth sector of bankruptcy filings. Most of them are heads of their households. Some of the reasons why they decide to file for bankruptcy are:

• They have a low income
• They don't have enough savings to deal with difficult financial situations
• They have built up a lot of debt
• The Social Security benefits they receive are almost half that of men

Here are some questions you can ask yourself to see if you have money problems.

• Are you worried about your debts?
• Do you think it will be difficult for you to meet all your monthly commitments?
• Do you think that you lack financial knowledge and are unable to learn about money matters?
• Do you think that you're to blame for not having enough money?
• Do you disguise your lack of financial knowledge?
• Do you keep your secret from everybody else?

If you have answered yes to two or more questions, you could be experiencing problems with your money.

It is really important that you seek guidance as soon as possible. Consumer Credit Counseling of Puerto Rico has counselors who can guide you on how to use money properly, the importance of budgeting, and offer recommendations for saving, sources of income, and getting out of debt.

The most important step is to have a positive attitude and be willing to seek help and learn what you don't know so far.

How did this year go?

This year is about to end and it is a good time to carry out an analysis of how your finances are doing. Were you able to complete your projects? Did you save what you wanted? Did you have enough income? Were there a lot of things left to accomplish? Are you in more debt? What do you plan to do with your money next year?

These questions will help you evaluate how this year went and set your goals for the year ahead. You need to have a good plan to do this.

Once your plan is ready, you have to see if it reflected everything that happened throughout the year. If you set out to save a certain amount of money, you need to see if you achieved that goal. If he could not, then you have to analyze why that happened. There are often details or unforeseen expenses that prevent us from meeting those goals. For example, a reduction in income, the birth of a child, an illness, emergency operation or an accident that cannot be covered by insurance.

That's why you should make a monthly budget to establish how you will spend your money. When doing this, you need to identify your income, expenses and debts. It's crucial that you prioritize your spending based on your needs. Set spending limits. If you have money left over, use it to increase your savings or reduce debt.

Heed the warning signs that an economic problem is coming. If you spot any of the following signs, you could be heading towards a crisis: a late mortgage payment, using your card to make purchases that you usually pay for in cash, defaulting on some debts to cover others, or receiving collection letters from creditors.

Don't suffer in silence: take action and seek help. Don't be afraid of your creditors: contact them as soon as you find out that you have a problem. You may be able to negotiate an arrangement with your creditor in such a way that your credit is not affected and you can meet your commitment.

Remember: financial success lies in your hands. "Don't let your history control your destiny and your past determine your future."

Tips for starting the new year and getting out of holiday debt

Once the holiday season is over, many consumers find themselves haunted by the ghosts of the holidays, such as calls from creditors and credit card statements. The satisfaction of shopping and celebrating the holidays can turn into panic and fear for those who don't control their spending at this time of the year.

Here are some tips that can help you draw up a budget:

• Make a New Year's Resolution – You will balance your checkbook every time you get paid in order to ensure that you do not spend more than you receive.
• Review your debts regularly - You can use a file or safe for your collections and statements. Keep separate bank statements, income tax documents, credit card statements, medical receipts, mortgage statements, and others. Keep an eye on the due dates of your debts.
• Make a monthly budget - Your budget is the blueprint for how you'll spend your money. To make this budget, you need to calculate your monthly income, and your recurring expenses (mortgage, rent, food, transportation, savings, entertainment, etc.). Then identify other expenses such as: clothing, maintenance, gifts, the purchase of household items, credit card purchases, and vacations.
• Prioritize your spending - You should prioritize based on your needs versus your wants. Set spending limits and determine the estimated cost of each expense. If you have money left over after all your commitments are covered, you can use the money to reduce debt or to save. Use the extra income to increase your savings. Look for ways to reduce your day-to-day expenses.
• Development of a diversified savings plan - Saving shouldn't be limited to just your retirement plan. It's important to save for the purchase of a home or vehicle, or to cover medical expenses. Make regular deposits to a savings account to cover those expenses. Be sure to benefit from your employer's savings plans.
• Recognize early warnings that you are approaching a problem - If you spot any of the following signs, you could be headed for an economic crisis: falling behind on your mortgage payment in January, using credit to buy things you usually pay for in cash, not paying some debts in order to cover others, receiving collection letters or calls from your creditors. Currently, more than 25% of income is committed to paying credit card debt.
• Don't suffer in silence: take action and seek help. Contact your creditors or seek financial counseling - don't be afraid of your creditors As soon as you know you have a problem, contact your creditors, explain your situation and what you are doing to meet your obligations. Depending on your creditors' policy and situation, your credit, and your payment history, you may be able to negotiate some settlement with your next payment. Remember, your creditors prefer to have you as a client than to lose you because you file a bankruptcy or foreclose on your home.

It is very important to check the services that the different agencies provide, before seeking help. Check to see if the agency offers financial counseling without forcing you to sign any documents to qualify for a debt repayment plan. Ask the agency about their service fees, costs and the country where its headquarters are located. Find out if the agency is a member of the NFCC, which means it will offer you quality services.

How much money do you want to make this year?

Many people believe that the amount of money they can make during a given year is one of the factors over which they have little or no control. However, we all have the opportunity to determine our income.

We don't just have to earn enough to survive, but also enough to achieve our goals and make dreams that surely have come true. With this goal in mind, when determining the income we want to earn, we should set ourselves a figure that requires more effort on our part; a figure that demands that we reach our true potential.

But how do we identify this figure? Think about the revenue you generate in your most productive year and increase it by 50%. For example, if it is $20.000, set your target for the next twelve months at $30.000.

The next step is to determine what quantity or volume of sales you will have to make, of your respective product or service, to earn that amount. For example, if your income equals a 10% commission on the total volume of sales you make, this means that you will have to sell a total of $300.000 in order to earn $30.000. So, this total sales volume becomes one of your goals for the next twelve months.

Take this goal and break it down into smaller steps. Determine what your monthly earnings goal should be. Remember that the best way to reach a goal, no matter how big it may seem, is to break it down into smaller goals, into objectives and activities that you can carry out every day.

If you take the annual income you want to earn and the sales volume you will need to generate in order to achieve it, and divide it by the number of months and weeks you work during the year, you can determine what your monthly and weekly financial goals should be.

Then, you'll need to set specific goals for even shorter timeframes. This is equivalent to determining your revenue and sales volume.

Don't mix business with pleasure

From the moment you make these calculations, and when you are at work, don't do any activity that does not generate money.

Identify, in your work or business, those activities that affect your productivity and which, if executed properly, can increase your income.

What are the activities related to this 20% that affect your productivity, if they are not performed? They are the activities that contribute to your personal development or that, in one way or another, help you make your dreams come true or reach your goals.

Many professionals, particularly those who have flexible schedules and need to constantly leave the office, tend to mix their professional duties with other activities that have nothing to do with their work and which, obviously, do not pay fifteen dollars an hour (grocery shopping, washing the car, making personal phone calls, or any other form of wasting time).

You cannot act in this way and still expect to earn $30.000 annually, as this would not obey the law of cause and effect.

When you're at work, ask yourself if the activity you're doing, or about to do, is part of the 20% that will produce 80% of your success.

Just knowing how much an hour of your time is worth, based on the financial goals you want to achieve, enables you evaluate it more accurately and make much better decisions about how to invest it.

As a professional, the only thing you really have to offer is your time, so use it wisely.

Start the year by saving

Starting a new year gives us the opportunity to start off on the right foot. If last year was not great or if you had financial problems, here are some tips to make this year different:

• It is essential to live within your own means.
• Create a savings fund for emergencies and personal expenses, in order to cover unforeseen events such as accidents and illnesses.
• Have a protection plan, such as medical life insurance, and third-party insurance. This is considered crucial for optimal savings.
• The most important thing is to make a budget and make it work.
• Invest the extra money when you receive paychecks or windfall gains.
• Leave your checkbook and credit cards at home to avoid unnecessary and impulse buying.
• Pay bills on time to avoid penalties and financial surcharges.
• Make budgeting comfortable. You won't succeed if you set a budget that's too strict and can't stick to it.
• See saving as a fixed expense.
• Start recording and saving copies of receipts, invoices, and documents.
• Review your budget regularly to see how it is progressing.
• If you are thinking about short-term savings, buy a piggy bank and deposit in it every day. Just when you least expect it, you'll have enough coins to cover the entire cost of your next vacation.

These tips can help make this year different from last year. Some people think that the solution to economic problems is to have more money, but if we don't monitor our expenses and follow these tips, the result could be the same as in previous years.

Try to make a budget and stick to it to the letter. Seek professional help from agencies like CONSUMER, where a certified counselor can guide you and give you alternatives and tips to improve your budget. The time to save is now.

Energy saving recommendations

There are different ways in which you can save money and electricity without affecting your quality of life. Here are some tips, suggested by experts, that are easy to put into practice and others that will require a more effort to save energy and money.

Washing and drying clothes

• Wash clothes in warm or cold water and rinse them with cold water. Use hot water only when needed.
• Wash one full load at a time, but without overloading the washing machine. A small load in the washing machine consumes the same amount of electricity as a full load.
• When using a dryer, wait until you have enough clothes for a full load.
• Also, separate drying loads into light and warm garments.
• Light garments dry in less time, so the dryer can be set for less time with these loads.
• Dry garments in consecutive loads as the dryer will retain heat from the previous load.
• Clean the lint filter thoroughly after each load. A clogged filter limits airflow and reduces dryer performance. Also, check the vents periodically to ensure that there are no obstructions.
• Do not dry garments more than required. Excessive drying produces wrinkles, limits the life of the fabric, generates static electricity and consumes more electricity.
• If you use the dryer, hang up the clothes immediately at the end of the cycle to avoid ironing them.

Ironing

• Do not leave the iron on when not in use.
• Stockpile as much clothing as possible to iron.
• Iron clothes that require less heat first.
• Turn off the iron a few minutes before you finish ironing and use the heat you have left.

Using an electric lawn mower

• Do not leave the mower on when it is not being used.
• Keep the blades sharp.
• Grease them regularly to keep them efficient.
• Buy a lawnmower with the appropriate capacity suited to your needs.

Air conditioner

• Work out the right size for your needs.
• Use it in hot weather, but do not turn it on too early in the day.
• Turn off the unit if the room is going to be unoccupied for an extended period of time.
• Keep exterior doors and windows closed to prevent air leaks.
• Avoid using items that generate heat inside the room, such as: televisions, irons, and hair dryers, etc.
• Clean the filter at least once a month.

Electric stove

• Plan your meals ahead of time to make the most of the heat from the stove.
• Use utensils with lids and flat bottoms, that are the size of the stove top you use, to prevent heat loss.
• Turn on the stove top when you have the ingredients ready to cook.
• Turn off the stove top minutes before the food is fully cooked, as the heat from the burner can finish cooking the food.
• Use pressure cookers to prepare your meals.
• Never boil water in an uncovered utensil.

Fridge or freezer

• Adjust the cooling level of the fridge and freezer.
• Avoid opening the door frequently so that the cold does not escape.
• Ensure that the rubber seal around the door closes tightly.
• Do not put hot food in the fridge.
• When buying a fridge or freezer, choose one according to your family's needs.
• When you go on vacation, empty the fridge, clean it, unplug it and leave the door open.
• Set cooling to the optimal level. Refrigerators and freezers can be an area where significant electrical power is wasted.
• Make sure they are as full as possible and that the airtight seals are in good condition. This will decrease the loss of energy when you open the door.
• For best performance, keep the refrigerator temperature between 37°F and 40°F.
• Keep food away from the inner walls so that cold air can circulate faster.
• Keep the refrigerator condenser coils clean. Clean them every six months.
• Avoid placing refrigerators or freezers in unconditioned places such as garages.
• Think carefully before you decide to place your old refrigerator in the garage or basement to use as extra storage. Many secondary refrigerators are not ENERGY STAR certified and generally use 75% more energy than newer ENERGY STAR models.

Water Heater

• Turn down the thermostat on the water heater. A temperature of 120°F is adequate.
• Take quick showers instead of long baths. This will drastically reduce the amount of hot water needed.
• Install low-flow showerheads and faucet aerators. You probably won't notice the difference in water flow, but these devices can reduce water consumption by up to 50%.
• Install a timer for the water heater. Setting a timer to heat water for four to five hours per day or less will result in significant monthly savings.

Cooking

• Cooking small portions in the microwave or toaster oven generates less heat than the stove or oven and can reduce cooking electricity consumption by up to 80%.
• Use the correct size pots on the electric stove. A 6-inch pot on an 8-inch burner wastes more than 40% of the stove's heat.
• PHANTOM POWER or standby power consumption refers to the consumption of electronic equipment and appliances while they are turned off or in standby mode. To avoid phantom power, disconnet appliances, or use a multiple outlet and turn off the multiple outlet switch to cut off all electricity to the appliances. This can save up to $100 a year.

Lighting

• Use small lamps for work areas such as desks in order to avoid lighting the entire room when working.
• Turn off the lights when you don't need to use them and use motion sensors if this is practical.
• Use ENERGY STAR-certified compact fluorescent light bulbs (CFLs). They use three-quarters less electricity, generate 75% less heat, and last up to 10 times longer than standard incandescent lighting.
• Outdoor lighting can be on for longer than indoor lighting. Install CFLs and new ENERGY STAR-certified outdoor lights.

Some of these suggestions for saving electricity may require a higher monetary investment. However, in the long run, they will save you money.