More is 'Caught' Than 'Taught'

Virginia Saves equips Savers with the resources needed to pay off past debts, pay for current needs and wants, and invest for the future. As adults, we actually have to reprogram how we deal with stress and create a new plan. The spending plan is a powerful tool to help reach goals!!
Part of this vision is to supply ideas to parents. The next generation is watching and learning how to handle money. More is ‘caught’ than ‘taught’. If children develop healthy spending and saving habits as young people, they can avoid some of the money troubles their parents have experienced.  Take advantage of teachable moments that will instill good money habits with our children.
How can children learn the value of money?
·    Be realistic. Tell children that they cannot have everything they want. Wants will always outnumber available dollars!
·    Give commission. ‘If you do not work, you do not get paid!’ Teach children the value of work and that work produces money.
·    Have a family spending plan. Living on a budget needs to be modeled to children. This may involve telling the adults in the family that wants will not fit into this month’s spending plan.
·    Require calm money discussions. Talk with respect and without emotional outbursts or manipulation when talking about money in the home.
·    Set family financial goals. ‘When debt free, we will save to go to Disney!’ Get everyone on board to think of strategies to reach the goal.
·    Have fun while cutting back. Have a camp- out in the back yard and make S’mores. This spring break, have a ‘stay-cation’ and visit the sights close to home. Do not forget to pack a picnic lunch!!
Her are a few great resources for parents with young children:
Kids Count- many links to great parent resources

Children and Family- articles from Crown Financial Ministries to help train children (and parents) Children and Finances Part 1
Children and Finances Part 2

Handipoints- training good behavior in children through fun activities

Money Lessons for Children- Great resources for parents and teachers for financial skills

Thrive by 5- great activities and lessons you can use in your home to train pre-schoolers in financial basics

Money Mammals- website to help encourage both savings and giving for children. 

Parents are a child’s first teacher. They will learn more about how to handle money from you than from a high-school Personal Finance Class. Talk to children about smart money choices and help them develop good money habits!

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Good Debt vs. Bad Debt

The third video in the series Financial Planning for Your Future is about debt. Watch this short video and find out what is considered good debt!

Debts used to make purchases that will not increase in value over time is 'bad debt'. In other word, almost all credit card purchases are not going to increase in value, and therefore, are 'bad debt'. Items purchased on a credit card are usually either something that was not in the budget or something to be paid next month for convenience. A checking account debit card will give the convenience of the quick transaction, but not allow money to be spent unless it is in the account.

The budget is key to paying off debt. Budget for expenses and plan to pay more that the minimum on credit cards. is a free site that helps develop a plan to pay debts off more quickly.

What is on your report?

A Credit Report is a snapshot of your credit reputation. Credit reports are commonly used by banks and companies to determine the interest rates when issuing credit to customers. As the customer, a high credit score will result in a lower interest rate which makes a loan less expensive.

According to federal law, everyone is entitled to one report from all three credit bureaus, Equifax, TransUnion and Experian, each year. The only free reports are available at  or call 877-322-8228. The website asks a series of questions, and then allows access to the report. The biggest problems with credit reports are incorrect or outdated information. Because each agency has its own reporting practices, it is important to take a look at all three credit reports.

The most common formula to calculate a credit score is created by the Fair Isaac Corporation, FICO. The FICO score is a formula which uses payment history, the amount owed on credit accounts, length of credit history, new credit and type of credit. The formula is ubiquitous and cannot be calculated by a consumer. The FICO score ranges from 300-850, with approximately 40% of scores are 750 or better.  A Credit Score is use by businesses to determine interest rates for loans, insurance premiums and may even be used when applying for job. The higher the score the less of a credit risk.
The free credit report does not include the credit score. A Credit Score can be purchased by several online sources. The three reporting agencies’ reports may have different information and actually calculate the score slightly differently.

Most of the time is more important to know how to raise a credit score rather than the score. If full payments are made on time, the score will improve overtime.

Tips to raise a credit score:
Pay bills on time.
Make up missed payments and keep all payments current.
Maintain low balances on credit cards and other revolving debt.
Pay off debt instead of transferring it to new account.
Do not open new credit accounts.

Beware of “Credit Repair Agencies” or promises to “fix” credit! These companies charge a customer to dispute or correct information. This can be done by the customer. Some advertisement claim to provide a free credit report but are actually “introductory” offers that convert to expensive subscription services. Expect to see ads for companies try to sell things that are not needed such as credit scores, "Credit Monitoring Service" or a “3-in-1 Report”.  

Credit scores are important in our society. Use the steps described here to improve your credit score!

Free Credit Report:
Understanding Credit Reports

What is a Fiduciary?

This second week in the Financial Planning for Your Future Series gives a new term that may be unfamiliar, Fiduciary. A fiduciary is someone who acts in your best interest, not their own. Watch this short video to learn what to look for in a financial planner.

Week Two: Putting Your Interests First.

Financial Planning my sound like what someone needs if they have 'lots' of money. In actuality, a financial planner can make even small amounts of money grow.

Participate in employer 401K or 403b plans, especially if the employer provides a match. The match is like free money!

Paying off debts is a great way to find money for savings. Remember, basic living expenses and emergency savings come before any investing!

Start small. Think big.

What is the difference between a dream and a goal? 

A dream is a vague idea with undefined steps. “I want to travel to Italy.” This is a dream with no action steps to make the dream a reality. A goal is specific plan with defined steps. “I want to run a 5k on July 4th and I will run one mile, three days a week until the day of the race.” This goal names the ‘what’ and the ‘how’. It defines the desired result and the steps to achieve the goal. Virginia Saves encourages people to create a financial goal and make a plan to achieve it.

When enrolling at Virginia Saves, new savers make a savings commitment. The form asks for a goal, amount saved per month, number of months and total saved amount. A good savings goal has 3 parts: the amount to be saved, the period of time and the purpose of the savings.

Here are two examples:

1. I will save $30 for 12 months for Emergency savings.
            $30 x 12 months = $360
That would be a nice emergency savings. The emergency savings is money set aside for unforeseen problems that arise.

2. I will save $25 for 10 months for Christmas.
            $25 x 10 months (February through November) = $250
Christmas would look pretty Merry with $250 set aside for gift giving. A family with children in the home will enjoy the money saved in December for holiday gifts.  In January, the Ghost of Christmas Past will not visit when the credit card bill is opened.

Both of these examples will help a family’s financial situation.

Success is will be more likely if the goal is realistic.
  • The amount should be 10% or less of income. Attempting to squeeze the budget too tight to save quickly can hurt long term motivation.
  • Start Small. The first savings goal should be relatively small. A new saver should try a small savings goal which can be achieved quickly. A successful experience will add confidence.
  • Total amount saved should cover the expense of the goal. Saving $100 for a plane ticket will not help if the ticket will cost $150.

Here is an example of a goal that needs some adjustment:

I will save $3 a month for 12 months for a reliable used car.
            $3 x 12 months = $36
That is not going to buy much of a car! If the goal is a $2000 car, then the monthly amount saved will need to be increased and the length of time to save will also need to be extended.

A great saving strategy is to ‘Pay Yourself First’. Save money out of each paycheck before paying bills. Another great strategy is to make savings automatic. Set up a direct deposit or transfer savings from a checking account in a savings account.

The amount saved is not as important as starting the habit of saving.  Increase the amount saved each month when possible. Send a portion of a tax refund to savings with the split refund.

Start an Emergency Fund! Money set aside for the unexpected is the first step to a successful financial future.

What is your savings goal? Let Virginia Saves motivate you to discover for yourself the peace of mind that accompanies having money in the bank.

Share your savings goal at!

Take Control of Your Financial Future

Over the next six weeks, videos will be shared in a Financial Planning for Your Future Series on the Savvy Saver. These are short vidoes that will focus on a new area of your financial future each week.

Week one: Taking Control of your Financial Future.

Below you will find more find information about taking control.

Some things are not UNEXPECTED expenses
New Year Financial Resolution

Cupid is on a budget this year!

This year cupid needs to be put on a budget.
About 1 billion Valentine's Day cards are exchanged in US each year. That's the largest seasonal card-sending occasion of the year, next to Christmas. Be creative and find a new way to express love that will not end up in a landfill such as make a poem, rent a movie, or recreate your first date.
Have little ones at home? Save the expense of a sitter; put the kiddos to bed early then cook dinner together and reminisce about fun memories.
Here are three ideas to show love without breaking the bank.

1. Dollar Store to the rescue! 
7 Balloons from the Dollar Tree       $7.00
1 Card from the Dollar Tree              $ .50
1 package of heart window clings   $1.00
1 box of chocolates                             $1.00  
Valentines Day for less than $10!!

2. Show up at her/his work and self-deliver balloons.  8 balloons with a balloon weight and a card = major points!
3. Romantic evening with a bottle of wine over a candle light dinner at home and a single long stem rose.
Other great ideas for Valentine’s Day on a dime can be found at Cost-Conscious Cupid.
The best advice is to plan ahead.  Vendors at the mall are ready to help the last minute shopper overspend. The best gift is well thought out and from the heart!
Happy Valentines Day!

Tax Refund Split to the rescue!

Did it happen again?  Did you say you were going to put some of your tax refund into savings last year, only to realize you spent the whole thing before you had a chance to move the money? If this describes you, then let the option to split the tax refund come to your rescue!
Savings will improve financial security. Life is unpredictable and brings about unexpected events that cause stress. The stress level of an unexpected event such as a major car repair is difficult to handle. The financial burden of the bill from the repair shop is just part of the problem. The need for new transportation arrangements until the vehicle is repaired is not only inconvenient, but can be very expensive. Money in savings helps buffer the impact on the financial situation.
Virginia Saves encourages people to become savers. The tax refund can jumpstart savings and prepare for life’s bumps in the road. Virginia Saves’ partners offer free or low cost, low balance accounts especially designed for our savers. Most people can become savers regardless of income. Start saving a portion of income received every month. Make savings automatic! Automatic transfers are great saving options at most local banking institutions. Start small. Transfer $5 to $25 to a savings account monthly. Think Big. The amount that is saved is not as important as just starting the habit of saving.
According to the IRS, the average refund for electronically filed tax returns in 2009 was approximately $2900. The IRS allows the tax refund to be split among two or three accounts. For example a $1500 tax refund can deposit $500 into a checking account to pay past bills or purchase current needs and deposit $1000 into a savings account for emergency savings. Tax preparers use Form 8888, Direct Deposit of Refund to More Than One Account, to allocate the tax refund to accounts as requested. This form tells the IRS how much money to electronically deposit in each account. It is important to check the box on the 1040 that indicates the splitting of the tax refund and double check the account and routing numbers before the form is submitted. See Frequently Asked Questions about splitting tax refunds.
Do something different this year; save part of your tax refund. You will be glad you did!
Other article about this subject:

Pay Past, Present and Future with Your Refund

Speculating about how your refund can be best spent can be a fun pass-time almost like considering how you might spend any other windfall that might come your way.  Everyone chimes in with their own wishes:  "how about a new TV or a game system, or paying off debt".  While you want to enjoy a little of the bounty that comes your way, it is also important to balance debt reduction and savings as well. 

Having a plan before the money arrives can ensure you get the best use of the funds.  Without a plan, you may find that in two months that you are not financially better off than you were before the refund.  Our temptation is to spend the money on current wants and desires while leaving debt and savings as they were before the bounty.  This is the year all that changes!

Virginia Saves recommends using the 30-40-30 plan to address your past, present and future with your refund in 2011.  It is a simple plan and works like this:

PAST:  Earmark 30% of all of your refund to debt reduction and catching up on past due bills.  This can be a great way to start power paying your debt.  Power paying your debt can accelerate your journey toward financial freedom and increased savings.

PRESENT:  Dedicate 40% of the refund to current needs and wants.  Need that car repaired or wishing for a new computer?  This is the money that can be used to improve your quality of life right now allowing you to splurge and enjoy some of the proceeds.

FUTURE:  Finally put 30% of your tax refund into a savings plan.  This can help jumpstart that emergency fund or be used for larger purchases later. 

There you have it.  A plan to address past, present and future with your refund.  If you use this plan, you will surely find your future looks brighter.  Don't forget to join the saver's movement at  Together we can make our personal economies stronger!