To put our youth’s debt problem into perspective, consider that two-thirds of college students borrow money to pay for college and that the average debt load is $23,186 (not including credit card debt) by the time they graduate (WSJ Article). Rising tuition costs, coupled with rather stagnant wage earning abilities for college students has the ability to dramatically alter the lives of college graduates. With mounting pressure of their debt loads, many college graduates are forced to put off many major life decisions such as investing in their first home, or even marriage and children. How might this all change if students understood how the concepts of interest rates, time, and compounding interest all work together? Might people start saving earlier and more altogether? I’d like to think so.

According to Weblog Get Rich Slowly, you can use the acronym, WEALTH to keep your savings goals and budgets on track by asking yourself a few simple questions before purchasing:

Want or Need? A simple question that can quickly help set priorities.
Ego? Am I purchasing this to keep up with the Joneses?
Add-ons? If I purchase this, what other items will I need to use it? Batteries, etc?
Lifestyle? Do I have time to use and enjoy this, or am I buying it to satisfy an urge?
Time? Is this a one time purchase, or might there be multiple purchases for upkeep?
Happiness? Will this really make me happier, or is it something that will quickly fade?

After asking yourself these six questions, you may just find it a bit easier to keep that money in your wallet instead of buying something you may later regret.

With the financial planning tools available today, i.e. iThryv Professor and others, saving money can be a simpler, more visual process. In iThryv Professor, users can create any number of Savings Goals, spanning different time lengths, amounts, and for various items. It gives students the power to understand how much money must be earned and saved to attend college, as well as to be able to afford other items like cars and homes. With iThryv Professor, 1st grade students can create a Savings Goal for college and begin saving toward that goal immediately. Why wait until they reach high school to begin saving for their major goals? Even if it’s not a lot, the power of compounding interest can get students that much closer to their long-term goals.

So start saving today, and encourage your friends and family to as well. A couple of easy ways get started that won’t cost you much, but will payoff later: Save your spare change and put it in a secure place at home; Set aside and save any $1 bills you receive as change. Starting small may sound silly, but go back and count your savings after 6 months or a year, and I’ll bet you’ll find you’re glad you started when you did.

If you haven’t already, join the weProsper community.  Also, send us your comments, thoughts and concerns about our articles and what we’re doing to enhance financial literacy education nationwide.  Remember, together we will prosper!

In the spectrum of financial literacy, there is so much content and complexity that often times an ambitious impulse to learn can lead to a sense of despair because of the breadth of the subject matter. However, like mastering anything, the best results tend to come from a stepping stone approach. In terms of financial literacy, one of the simplest things to do to start understanding your financial situation is to sit down and create a budget. Inside iThryv Professor, we have a Budgeting Widget, where you can completely customize input categories and time frames. You can create a budget that spans any length of time and has a level of detail that you control. Not only can you plan your spending, but you can update the budget as you make purchases to understand what spending power you still have available. As you reconcile your spending with your plan, you can see with pie charts how your spending has been distributed.

“Why a budget?” you may ask. The answer is fairly simple. There are those things we control, and those things we cannot. Within a typical month, most spending decisions are under our control, save our rent and utilities, but even then, there are tradeoffs we make (Do I want to afford the electric bill for keeping the house at 68 degrees Fahrenheit?). By sitting down and first acknowledging your needs (housing and food expenses), you can regain a full consciousness of how and why you spend money. Start simple. Then, as you become better at identifying and estimating expenses, you can add more detail. By understanding what we can control, we can plan for both the typical, but also the unexpected.

Budgeting can be a great exercise for the whole family. Have you considered helping your kids identify their wants, needs, and available money? While they may not understand the complexity of your budget, they can certainly begin to learn about earning, saving, and spending money, as you can show them the tradeoffs that one must make to live on a budget.

If you haven’t already, join our financial literacy community at www.weprosper.org. Take the time today to sit down and organize and plan your next week, month or year of spending with iThryv Professor. Be sure to put back a little for those unexpected expenses, and enjoy the rest of your July!

Times are different today than they were 15 years ago, and certainly a world apart from 30 years ago. What did kids do without video game consoles, computers, instant messenger clients and cell phones? It’s hard to imagine our lives today without these items, and many critics like to harp on the fact that these things have driven many of our children to obesity. Kids no longer have the daily backyard baseball game and visit to the pool with friends. Instead, many times they sit cooped up inside visiting with friends through social media sites and text messaging.

Although their modes of interaction have changed, I’ll argue that the ambition and desire to be great still lies within the “Trophy Generation”. While many view the millennium generation as having a sense of entitlement, the summer time is a great opportunity to allow kids to explore their entrepreneurial drive and learn valuable life lessons. There are many small business opportunities that lie within the range of a single neighborhood.

One of the many great things about iThryv Professor is the Make$ section. In that section, we have created 3-4 page business plans that are “kid friendly”. From the business basics, to neighborhood flier templates and marketing strategy, these business plans give kids a foundation for their entrepreneurial dreams. Not only will the kids have a reason to get off the couch, but they’ll learn all kinds of life lessons about earning, saving, and investing money. As parents and educators, nurturing innovation and the drive to create business around a passion is something in which we can all take part. Show some of these ideas to your kids, and make this summer one to remember!

We want to hear from you! How are you helping to foster the entrepreneurial drive and talents that your kids are exhibiting, or how have you helped them discover their passions?

iThryv Professor is now available to all weProsper members. If you’re already a member, but registered before June 1, 2009, we encourage you to register again to receive your iThryv Professor user name and password. Tell your friends and family about us and let us know what you think here on the blog. Remember, together we will prosper!

Remember your first official paycheck? You probably spent a fair amount of time counting up the hours you had worked and calculating how much money you’d make based on your hourly wage. Ten hours a week for two weeks, at $12 per hour, means $240!  We bet you were surprised when you opened the envelope and discovered a completely different, lower figure. You weren’t expecting that someone would be giving away your hard-earned money without your permission.

Few teenagers know what exactly their employers are withholding from their paychecks. State and federal income taxes, social security, unemployment insurance, workers’ compensation… all of these deductions add up to less cash in the bank. Without understanding where the money is going, this can be a frustrating—and confusing—experience.

Teach a young person what to expect from his or her paycheck by explaining the different types of deductions, and discussing the pros and cons of taxes. They might feel a little better about the whole process when they learn that the taxes they pay are funding public schools, paying for repairs of roads and bridges, and keeping their favorite parks green.

It’s certain that the current economic climate will force the next generation to be much more aware of their financial responsibilities. No one knows how or when we will emerge from this recession, but it is clear that a heavy burden will be placed on our children to pay off the staggering debt that we have accumulated. The era of mass consumption and spending on credit has come to an end, and the behaviors we have honed as a country over the past two decades must now change.

Here at weProsper, we are committed to providing youths with the strongest possible foundation on which to build their financial future. The road ahead is a long one, but if we equip our children with the skills and tools they need to take control of their finances, they, and the country, will prosper once more.

Traditionally, consumer debt has represented less than 50% of our gross domestic product. But in 2007, the amount of debt, including mortgages and credit cards, equaled $13 trillion—or 100% of the country’s GDP. Only one other time in American history has our household debt reached the same level of our GDP. And that was in 1929.

For all the blame being heaped on Wall Street, banks, and toxic assets, Beim asserts that our problems today go much deeper: “The problem is not the banks, greedy though they may be, overpaid though they may be. The problem is us.” We have overborrowed, Beim says: “We’ve been living very high on the hog. Our living standard has been rising dramatically in the last 25 years. And we have been borrowing much of the money to make that prosperity happen.”

Simply put, Americans have too much debt. We have become a nation of spenders, not savers. And the only way out of this mess is to drastically change our ways. Beim, and the guys from Planet Money, don’t hold back when they say it’s going to be painful. There’s no easy fix for the banks, or for our society. Breaking old habits is going to be hard, but the government is not going to be able to solve this economic crisis on its own. We’re all in this together.

No matter their age, children are intuitive and they will pick up on tension and stress in the home. It’s important to make sure that your children understand that this financial crisis is not the fault of anyone in your family—especially them—but that it is affecting people around the world. Don’t sugarcoat the truth, but do reassure them that you will get through this together as a family.

Let them ask questions, and address their concerns. As a family, take a proactive approach to financial planning. Build a household budget, set savings goals, and encourage your children to contribute their own ideas on how to pitch in and save. There is no better time to teach your children the life skills they will need to succeed in even the toughest economic climate.

What’s not up for debate is the fact that too many Americans are now suffering because they signed mortgages they couldn’t afford, applied for credit they didn’t understand, and lacked the skills to build a financial safety net of savings.

As Charles Schwab, chairman of The President’s Advisory Council on Financial Literacy, wrote in a January report, “While there are many causes to the economic problems facing the country, it is undeniable that a lack of financial literacy is a contributing factor.”

At weProsper, we believe that financial literacy should be a part of state education standards, and we are working with organizations like Jump$tart and Junior Achievement to bring personal finance education into schools nationwide. However, learning does not end in the classroom. Without the cooperation of parents, educators, financial institutions, and communities, we cannot build a better financial future for our children. We all must work together to improve financial literacy.

According to the Bureau of Economic Analysis, the personal saving rate in the United States dipped below zero in 2005 and averaged just over 0.5% in 2007. Most don’t have enough in savings to cover their living expenses, let alone pay down their accumulated debt. Defaults are on the rise as credit card payments become increasingly difficult to manage, and cities across the country are seeing the highest levels of foreclosures ever.

While we can’t undo the past, we can change our behavior to better prepare for the future. There’s a lot of wisdom to that old adage about the rainy day. The path to financial security starts with incremental steps, and even by saving a little each day you can build up your rainy day fund faster than you think. Switch your $4 latte habit to home-brewed Joe and bank an extra $1000 this year. Commute on public transit or carpool and watch your gas bills plummet. And while you’re making lunch for the kids, pack an extra one for yourself. PB&J once a week won’t hurt your waistband, or your budget.

The U.S. consumer debt load is now measured in the trillions and continues to climb every year. The more debt we carry, the more we must work simply to pay the interest. Recent figures indicate that the average consumer spends 90% of disposable income paying down debt. This has many consequences, including overwhelming financial stress, people working late in their lives, and the leveraging of our children’s futures.

Statistics:

* The current generation spends $1.22 dollars for every dollar earned
* There are 1.2 billion credit cards in the U.S.
* 60% of all credit card users carry a balance from month to month
* 13% of the population owes $25k or more and carry a balance every month
* $15 billion dollars are spent in late fees every year by U.S. citizens
* 30% of profit from credit card companies is from late penalties
* 1 in 4 bankruptcies are filed by people under the age of 25

weProsper aims to teach young people about financial literacy so that they can better understand the complexities and consequences of consumer debt. By learning good habits early in life, children and teenagers will be better equipped to maintain control of their finances and avoid the dangers of credit card debt. Don’t become another statistic: read more about how iThryv Professor can help kids succeed.