Teaching Children The Value Of Money

Teaching How To Save

I am often asked how to teach the value of money to children. There are many ways but one of my favorites is the “envelope” method.  T. Harv Eker teaches something similar to it in his book Secrets of the Millionaire Mind.  But John Nordlander, CEO of Cambiare Group, offers this great example that he used to teach his children the value of money.  When he first told me about it during an interview, I loved it so much that I wanted to share it with you:

Inger Johnson: So what is an envelope system?

John Nordlander: Well, the envelope system [started out with the use of] three envelopes [with my children].

Inger Johnson: Three envelopes, okay.

John Nordlander: Three envelopes; the first envelope was, let’s say for example, every dollar we would cut into three pieces.

Inger Johnson: Okay.

John Nordlander: And the first piece was what you can spend, the second what you need to save, and the third what you need to give.  In other words we tried to instill in them early on a sense of philanthropy or giving, giving back.  And so at that time we used three envelopes.  Now as they got older we increased the number of envelopes.

Inger Johnson: Okay, to….

John Nordlander: well, we would increase it to clothes, cars. That’s how we kind of taught budgeting, which is the old fashioned simple; okay I’ve got TV, I’ve got my public service, I’ve got food, I’ve got car., I’ve got gas, I’ve got rent, etc, etc that we moved on into as adults, at least that’s kind of the way I was taught.

Inger Johnson: So you would give them fair allowance and put the allowances in different envelopes and say, here you are.

John Nordlander: No it was their responsibility to define those amounts.  We didn’t tell them what the amounts had to be.

Inger Johnson: So how did they do that?  They had some kind of guidance?

John Nordlander: Well we kind of taught based on [our] values. What we tried to get them to understand was you’re saving now for spending later.  And yeah you want this for spending, but we wanted them to understand that savings at their age was better than spending, although, by the way, you can take from your savings to spend if you need to, if it’s valid.

Inger Johnson: And how was it validated?

John Nordlander: Well depending upon the size, we add in. My son wanted a 10-speed bike and he had saved and saved to get the 10-speed bike and what was happening is he had a tendency of spending everything from the spending envelope almost instantly.

Inger Johnson: Of course.

John Nordlander: Yeah, it’s gone and so I said ‘alright, if you cut back even some more on your spending, you’ll get to your bike quicker.’  And we would use carrots, we’d always keep the carrot out there in front of them and I would make a deal with them.  Okay, if you can get to a certain level, I’ll help you to where you can get, where you need to go.’ There was never half.  It was always like ¾. We just really thought that the earlier that they can learn that you just don’t get everything in life that you want, but you can get the things you’d like if you work at it and if you save.  And then all of us have, here’s the bonus, there’s that unexpected money that comes to us, our gifts.  Somebody gives us a gift and so we try to help them understand that life does have other aspects.  It’s not all work.

What methods have you used to teach your children the value of money?

Creating An e-Book for Passive Income

eBooks

Last December I had the pleasure of interviewing EJ Thornton, publisher and author of Secrets To Creating Passive Income.  As part of a segment I covered with her, How To Create Passive Income Strings, EJ shared with my listeners how to create an eBook.  I was surprised at how easy it really is, thinking that doing such a task could be monumental.  Not true!  Here is what EJ had to share:

EJ Thornton:

The way that the E-book business is going, Kindle, Amazon’s Kindle has just completely monopolized the marketplace.  Now, to start, you want to create several articles down a path.  It only takes 10 or 12 of those articles with a certain theme to create a small e-book.

Inger Johnson:

You were saying the Kindle is actually the number one best selling item.

EJ Thornton:

This past Black Friday and Cyber Monday, it was published that [the Kindle] was the number one [selling] item.  So, Christmas morning, everybody unwraped these Kindles and went out and looked for Kindle books to read.  This is the year [for e-books].  It’s really, really fun.

But, even just ten articles, you can collect and combine those into a small Kindle e-book.  Sell that for $2.99 on Kindle.  Kindle pays publishers a 70 percent royalty.  That’s 7-0, 70 percent royalty.

Inger Johnson:

That’s a lot.

EJ Thornton:

That’s huge.  So, for that $3 book, which is your 10 articles, you’ll make $2 dollars for every $3 dollars that Amazon sells.

Inger Johnson:

I can hear people saying, “Yeah, $2 dollars, big whoop.”  Okay.  So, you sell 100 a month.

EJ Thornton:

What would you have to do in your job to get an extra $200 dollars a month?

Inger Johnson:

Exactly.

EJ Thornton:

It’s very, very easy to do that way.  Once you’ve gotten a collection of 10 articles, do it, then, do it again, and then, do it again.  Usually, if somebody is well versed down a certain niche, or certainly, if you have a practice, a chiropractor could come up with a dozen articles quickly and do it again and do it again and do it again and he could end up with a series of E-books.  After a series of three or four E-books like that, just based on articles, or problems, or even case studies, you could throw that into a physical book.  It would probably be about 150-page book, at that point and just very easy to put together.

You don’t have to sit down and think, “I got to write my magnum opus right now.”

Have you written an e-book, how easy was it for you to put together?  How did you choose your subject?  What did you do to market your book?

So, the Allowance Is No Longer Enough?

As kids get older, their needs change and they may feel that an allowance isn’t enough money and they would like to earn some additional money.  Also, one day, your child will need to earn a living.  Kids can get an edge on the work world by starting early and in doing so they will gain valuable experience working with different people, learning about managing money, have some money to spend once they get older, and/or save for college.

At this point, you child is ready for a job.  Sometimes this transition into the “job” phase of life runs smoothly.  However, often there are some bumps along the road.

I gained some insight into this life-stage in a recent radio interview I did with Doug Root, the owner of Jungle Quest.  Since 1988, first through the YMCA and later through Jungle Quest, Doug has processed thousands of teenage job applications and has hired many, many teenagers.  I’m going to share with you some of his words of wisdom.

Kids:  Why do you want to work?  The answer better not be, “because I need the money or because my parents want me to.”

Parents:  You are not responsible for getting your child a job.  Now, I know you want your kid to get a job.  But that doesn’t mean your kid is motivated to get a job.

So, parents.  How do you make sure your kid really wants a job?  Again, let me say, YOU are not responsible for getting your child a job.  I don’t care how much you want your child to want to get a job.  Unless, they are motivated, they won’t get one and, if they do, it won’t be for long.

The answer:  Dry up familial resources.

Here’s an example. if I’m a kid and I’m 16 years old and I’m getting a $20 a week allowance, what do I need a job for?  If I get a ride to the movies every time I want one, what do I need a job for?  If I get a clothes allowance, what do I need a job for?

So, we’re back in the trap of, well, just pretend to apply for jobs and then mom will yell at me and then, I’ll apply for a job and then, I’ll tell her that I probably got a job, and then, I’ll get another 10 days of not having to mess with it.

Parents… here is what you do.  You basically share their pain.  It’s a lesson out of tough love.  You dry up familial resources.  So, you could say, “starting in 30 days, when you want a ride to the mall, you’re going to have to pay for the gas.”  “In 60 days, we’re going to cut your allowance because now you’re 16 or 17.  Well, “How can I get any money?”  “Well, get a job.”

Another way to add motivation to your teenager is to  offer to give them the allowance back once they have a job.

Let’s say they get $10 bucks a week as an allowance.  Well, come a month from now, no more allowance.  But, if you get a job and your paychecks are $30 dollars, then, I’ll give you your $10 allowance.

So, dry up the allowance.  You can give it back once they get a job.

I’m going to highlight something here.  There are two very different things:

1)    Looking for a job

2)    Getting a job.

A teenager ought to be able to get a job in a month…at the most two months.

Now, its might not be a great job.  In fact it might be a lousy job.  But, that can create motivation too…

All in all, the stage in life when it is time for your teenager to get a job can be trying.  The quicker they get motivated to do it, once they are ready, will make your life and theirs so much more enjoyable.  To hear more insights, click here to listen to the archive of this show.

Have you had experience with this subject?  I’d love you to share it with me.

EARNING CASH NOW

Earning Cash Now

“I need work.  What is the best MLM I can get into to get cash now?”

This was a question one of my listeners asked on my show Let’s Talk Dollars With Sense.  I was interviewing Lorin and Dixie Ricker, talk show hosts and Pre-Paid Legal Associates, on the topic of multi-level marketing.  My quick response on the show was this:

“MLMs should not be looked at as a “get rich quick” scheme.  MLMs are, however, great opportunities for people that are looking to supplement their income, are looking to learn about owning their own business or want to build their personal sphere of influence.”

Looking back, I realize that MLM businesses have the tendency to give some people the perception that buying into that business will afford you the opportunity of making a ton of money fast.  I want to explore this thought further.

People’s successes in the MLM business happen for a variety of reasons.  We’ve all heard stories of people joining a business and making thousands of dollars in three months or less, right?  What most people don’t hear is the story behind that success.   That person may have previously owned a business and have already built a large contact list to sell to.  That person may have had prior experience in building websites and utilizing search engine optimization and understands how to drive traffic to his website to increase sales.  Or maybe that successful person already had a background in marketing and was able to create a successful marketing plan that propelled them into making money.  Dixie brought up another reason for success:

Dixie Ricker:

I think that the success depends on the person.

Inger Johnson:

It really depends on the person.  You’ve got to research all of [your options] and see what you’re passionate about.

Dixie Ricker:

And is there a need in the market place for that particular MLM?  If you’re looking at the nutraceuticals, any of them, you’ll be competing with local stores with your vitamins, your make-up or your juices.  You’ll want to take that into consideration too.  Who is your competition?

Click here to listen to the audio of the show.  So how you make money in a network marketing business is going to depend on you.  There are services such as RI Training that you can turn to that will guide you to MLM success.  They provide you with education and tools you’ll need to help you build a strong and profitable business.  These services can be invaluable for the rest of us that may not have previous experience owning a business or are already successful salesman or marketers.

Are you successful in a network marketing business?  I’d love to hear how you made your business success, who helped you, what training did you receive or what experience did you have under your wing that helped you grow your business?

Commonalities Of Network Marketing Companies

Yesterday, I mentioned that I would share with you more about the conversation I had with Lorin and Dixie Ricker, talk show hosts and Pre-Paid Legal Associates, about network marketing and college students. I picked this topic to discuss because there are many college students looking for part-time income and are looking to network marketing to bring in extra income.  During my interview with the Rickers, we shared with listeners some commonalities between the many companies offering the chance to bring in cash.

Here is more of our conversation:

Inger Johnson:

What would you say are some of the commonalities in multilevel marketing companies?

Lorin Ricker:

Well, the commonalities that I find are the organization and the pay structure, the compensation.  Those are the big things for folks.  People join teams.  They join what are called sales organizations where they can, first of all, get the support as a neophyte, as a newbie, get the training and find out exactly how to go about doing business as what is essentially and independent sales agent.

They’re called by different things, you know, independent associate, or reseller, or agent, or whatever the terminology might be, it varies from company to company.  But, you are a member of a team.  You’re not in this by yourself.  You’re not just thrown to the wolves.  You’re surrounded immediately by an organization that wants to get you well prepared, well trained and also want to help you get productive as quickly as possible because that productivity is what starts putting money in your pocket.

The other things, or course, are the [offering of a] compensation plan.  Each has a slightly different model, but they are certainly paying you in direct proportion to the value that you’re bringing to the market in any regard.

During the conversation, we had a caller, Clay, who also brought to light the following:

Clay Stevens:

You know, every company has a product, or a set or products, or a product line, and that’s part of your offering.

Inger Johnson:

Bear in mind that a product can also be a service.  A lot of younger folks might not understand that.

Clay Stevens:

In fact, I think [The Rickers] have a service rather than a “product.”

Lorin Ricker:

We do.

Clay Stevens:

In the network marketing direct sales model, you get paid, as Lorin just suggested, in direct proportion to the value that you bring to every conversation.  The higher your value, we call those personal effectiveness points, or PEPS, the higher your PEPS, the more money you’ll make in this industry. So, you’re trading value for income and that income can go on, and on, and on.

You can click here to listen to the rest of the program.  Meanwhile, I’ll wrap this conversation up tomorrow when I share with you what Lorin and Dixie had to say when a listener asked what the best MLM would be if you needed cash now.

Do you have experience with network marketing?  What commonalities do you find some companies have or even some major differences?

College Students Enrolling into Multilevel Marketing Companies

CNNMoney.com reports that 2011 will be moderately stronger than it was in 2010 and Federal Reserve Chairman Ben Bernanke tells us that the U.S. economic recovery is “finally getting stronger”.  With unemployment at 9.4%, its lowest level since May 2009, there is news that those with less experience and education are less likely to be hired than those with more experience and a higher level of education.

Enter Network Marketing.

Many young people are looking into other avenues of income and with the lack of available jobs, network marketing is seeing a tremendous boost than ever before.

In an interview with Lorin and Dixie Ricker, then talk show hosts for Get Your Life Back and Walking a Walk, we discussed the ins and outs of networking marketing, also known as direct sales or multilevel marketing (MLM). The Rickers have been in network marketing for years and have learned a great deal about many different companies.

When asked if it would be a good idea for college students to enroll into a multilevel marketing company, here is what the Rickers had to say:

Dixie Ricker:

I don’t think it’s a bad choice as long as the student can keep his focuses on his main objective, which is school, but use the MLM as not residual income, as another avenue of making money.

Lorin Ricker:

I’ll certainly second that motion as long as the student understands that the opportunity with a true business model is going to be an adjunct to their education at that point.  It can be an excellent way to supplement, to provide part-time income, which every student needs, there’s no doubt about that.  It is going to give that student a dose of the real world, sometimes, which might be flying in contradiction to what they’re learning in school, but a well-balanced student should be able to take that all into account.

Again, don’t get distracted from your main objective while you’re in school, which is to complete school and to do well at it.  But, I’ve seen instance after instance where some very good college students have become very successful, very quickly because they’re not only applying the knowledge that they’re getting in school, but they’re also gaining from the benefits of participating in a good MLM company.

The Rickers also had great insight as to the differences they’ve experienced in the many choices of MLM companies.  In tomorrow’s post, I’ll share with you what they’ve learned.  It’s an insight that can help others decide what company might work best for themselves.  Meanwhile, to listen to my interview with the Rickers, click here.

Passive Income Ideas

Passive Income

Recently I had the pleasure of interviewing EJ Thornton, publisher and author of Secrets To Creating Passive Income.  I’ve known EJ for a year now and she never ceases to amaze me.  Every time I talk to her I learn more and more about creating passive income.  During the interview, EJ shared some examples of how to create passive income.  So, of course, I want to share one strategy that I thought was brilliant!  Here is an excerpt from the interview:

EJ Thornton:

In [my book] Secrets to Creating Passive Income, the main example that I use is a thing we call Spock Boxes.  That came from a single problem that my husband had, John.  Every time he saw a car top carrier, he would comment that it was aerodynamically mounted backwards.  The sleek end was in the front and the big blunt end is in the back and that aerodynamically is just wrong.  You need the blunt end in the front so that the air streams back down off the point.  It’s much more aerodynamically efficient.  Every time he’s see one, which is several times, every time we’d go out and he would talk about it.  I said finally, “Honey, if I give you a platform, will you be quiet?”  He said, “Okay.”

So, he wrote up about a three-paragraph argument about why he thinks Spock Boxes should be turned around.  He calls them Spock Boxes because they look like the box that Spock was buried in, in Star Trek 2 and was shot out into space.

Inger Johnson:

That’s a great description

EJ Thornton:

So we looked on amazon.com and low and behold they sold them.  We put his article in the middle of this web page and several links into amazon.com to find out more about Spock Boxes.  We called this page Fuel Efficient, How to make your car top carrier more fuel efficient, got a ton of hits right off the bat and, of course, they would read the article there and, whether they believed it was irrelevant or not, they would click on in Amazon.  If they bought a car top carrier, which is a several hundred dollar ticket item, we would make 7 percent commission off of them.

We didn’t have to make that product or even sell that product, we just had to facilitate that customer going into Amazon through our web site.  They came in because they found our article.  All it was, was three-paragraphs! Anybody can write three paragraphs and move forward.

Inger Johnson:

That’s awesome.

EJ Thornton:

Now, when I saw how successful that was, I thought, that’s pretty duplicatable.  Now, we have more than, I think, 90 websites, or so, each dedicated to a specific niche.

I wanted to share this with you because it’s the simplest of ideas that can reap big rewards.  EJ reveals that “Everybody has the raw material to create product with their experience, or dream….it just takes a single idea.  They say ideas are God’s gold coin and just to flush out an idea is really pretty simple.  You need to brainstorm and then, go forward and figure out what you want to actually accomplish with a certain message.”

EJ shared with me a few other ideas, which I will share with you again at another time.  Meanwhile, you can check out her book, Creating Passive Income, here or you can listen to the audio interview Passive Income.

What ideas have you had and acted on to pull in passive income?

What Does It Mean To Be Insured?

WHAT IS INSURANCE?

When you ask this question to different people you’ll get varying responses.  I recently interviewed Holly Mullins, an insurance agent for Farmers Insurance and I asked her this very question.  Here is how she explained it:

“…insurance is something that can get you back to where your life needs to be after some sort of loss.  If you have a house fire, it’s to get your home back up to where it was…it’s getting you back to normal life.  If something happens, you have a car accident and your car’s damaged, it’s about getting your car fixed as soon as possible to get you back to normal life and not having a lot of expenses incurred on your end,”

Holly also mentioned that some people view insurance as a means to “make money” and sometimes quite the opposite, a waste of money. Of course, these are misconceptions.

As a young adult and starting out, it’s important to have insurance.  Consult with an expert such as Holly to help you put together the right package for you.  Having insurance just on your car doesn’t mean that you’re fully covered either.  If you’re renting or have started out as an entrepreneur, you’ll need coverage here too for protection.

You know my motto: the secret to financial security is controlling the things that you can control.  Having the right coverage is in your control.

How do you find a good agent or insurance company to insure you?  I’ll answer this question next so be sure to check back!

What is insurance to you?

A CASE FOR RENTING YOUR STARTER HOME

Earlier this year I interviewed Jennifer Pollock, CRS and a local Realtor, about the first time home buying experience. The show was geared toward young adults and college students wondering about the possibility of owning their first home.  As Jennifer shared some great tips and resources during the interview, our discussion turned toward what to do when you have a starter home and are either ready to upgrade or have found that you have become a victim of the recovering economy.  Here is what was discussed:

Guest Jennifer Pollock: I just met a young man [who] bought a four bedroom, three bath home and his friends are basically paying his mortgage.  He’s paying about $200 a month while his buddies are paying him $600 each.

Host Inger Johnson: And he’s getting equity in the tax rate?

Guest Jennifer Pollock: He’s getting the tax write off and he’s getting the equity and they’re paying for the privilege of living with him and he’s really not even paying the mortgage. So there’s things to think about and yes you could buy a home with a friend and split the cost.

In this case, the young man decided to save on his mortgage payment by renting to friends.  Not that renting rooms is a new idea but for a young adult or college student, it’s an idea that can be overlooked.

In the case of someone looking to upgrade but possibly having trouble selling the home, renting the home is an opportunity to save money by eliminating the cost of paying two mortgages (or a mortgage and a rental).

For those looking to purchase their first home but wonder if they can maintain mortgage payments, renting out a bedroom or two could make all the difference for you.

Do you have other ideas that you’ve implemented or have seen others do to help them save on their mortgage? Share them here.

Why work?

The easy answer to that question, of course, is to “make money”.  But is that really the answer?

What would you do if you won the lottery and never had to worry about money? What would your sister or brother do?  What would your mom or dad do?  What would your best friend do? Everyone will have a different answer to that question. (more…)