Wednesday, October 27, 2010

Never Too Young to Learn: Time – The Most Important Factor in the “Money Game”

I wrote a post earlier this year about an experiment that I was doing with my seven year old son (now eight years old) to teach him about saving money and investing for his future. The post describes the steps in detail that I took with my son to start him investing in his own Roth IRA. We found that one of the main rules that you must follow in order to qualify for a Roth IRA is that the money must be “verifiable earned income” – in other words you must have proof that the money was earned and not just a gift from grand mom. So, in our “experiment”, in order to prove “verifiable earned income”, we decided to set up a business for my son, keep good documentation on all income, and then later file taxes on that income. You can read about all the steps we took at The Roth IRA – Not Just For Grownups Anymore!

Just recently, my son hit a milestone in the amount of income that he earned for his newly created business for this year. He cleared his first $250.00 – which is special because it is the minimum initial investment for the fund that we were looking to invest in. Now, I know $250.00 is not something to get too excited about, and my son wasn’t that excited about it either. He was starting to get a little tired of me always trying to find him odd jobs that he could make money doing – from shoveling snow, to spreading mulch, to cat-sitting or tomato-watering or mail-collecting while the neighbors are on vacation, to clearing the yard of dog poop, to mowing the neighbor’s lawn, to cleaning the bathrooms, to weeding. So, I decided at this point I needed to inject some excitement into this “experiment” and give him his first real money lesson.

I asked my son, “Would you like to know what this $250.00 could be worth in the future if you just invested it and left it alone until retirement?” He was pretty curious (and so was I) and he responded with an excited “Yeah!” So, I pulled out my financial calculator, handed it to him and let him do the driving. The first thing we needed to calculate was the number of years he had left until retirement age. We subtracted his age, 8 from the retirement age, 65 and got 57 years (he didn’t need the calculator for this one). Next, I helped him compute five very possible scenarios for his investment:
  • $250 working at 3% rate of return for 57 years would accumulate to $1,347.91
  • $250 working at 6% rate of return for 57 years would accumulate to $6,924.28
  • $250 working at 8% rate of return for 57 years would accumulate to $20,095.28
  • $250 working at 10% rate of return for 57 years would accumulate to $57,190.39
  • $250 working at 12% rate of return for 57 years would accumulate to $159,722.94!
My son had fun pushing in the numbers on the calculator, and he got more and more excited as the rate of return went up. By the time the exercise was over he had mastered the calculator. I told him that 12% is actually very possible over that long of a period of time, based on historical stock market evidence. Also, I mentioned that since the investment would be a Roth IRA, the money would be able to be withdrawn totally tax free! But, not only did he have fun, I think he actually got it – he realized that you can invest a relatively painless amount of money now and in the future it can turn into a pretty significant amount of money because of the powerful compounding effect of time on money.

This little exercise sort of changed my son’s attitude towards work in a positive direction and revived his entrepreneurial spirit. He saw what a measly $250.00 could possibly do over time and then you could just see the gears in his mind start turning as he started calculating his own scenarios of what the numbers would look like if he was to invest even more money.

The moral of the story: Don’t be afraid to teach a young child about money. Children are naturally inquisitive, have a great imagination and they are usually eager to learn. There are really only three factors in the “Money Game” – money, interest and time – where time is the most important. And children have the most important piece to the puzzle already – Time! Teaching your child early and celebrating their milestones can go a long way towards ensuring a better relationship with your child, taking advantage of more compounding periods for their money to grow, instilling in your child good money habits and work ethic as well as providing him with a more secure financial future.

I’d like to end on a quote that I thought was appropriate for this topic from the late great Jim Rohn: What should a child do with a dollar? Here's one philosophy: It's only a child and it's only a dollar, so what difference does it make? Wow, what a philosophy! Where do you suppose everything starts for the future? Here's where it starts—it starts with a child and a dollar. You say, “Well, he's only a child once. Let him spend it all.” Well, when would you hope that would stop? When he's fifty and broke like you?

I'm so excited to share this information with you. If you have enjoyed the information or feel that it would benefit someone else, please share it. If you have any questions or comments, please feel free to contact me.

Monday, October 18, 2010

Success Begins with Believing
Written by Jack Canfield

In order to be successful, we must first define what success means to us, and that means getting CLEAR about what you want, writing it down, and thinking BIG!

If you are going to be successful in creating the life of your dreams, you have to believe that you are capable of making it happen. You have to believe you have the right stuff, that you are able to pull it off. You have to believe in yourself. Whether you call it self-esteem, self-confidence, or self-assurance, it is a deep-seeded belief that you have what it takes – the abilities, inner resources, talents, and skills to create your desired results.

Ultimately, you must learn to control your self-talk, eliminate any negative and limiting beliefs, and maintain a constant state of positive expectations.

Control Your Self-Talk

Researchers have found that the average person thinks as many as 50,000 thoughts a day. Sadly, many of those thoughts are negative — I’m not management material... I’ll never lose weight... It doesn’t matter what I do, nothing ever works out for me. This is what psychologists call victim language. Victim language actually keeps you in a victim state of mind. It is a form of self-hypnosis that lulls you into a belief that you are unlovable and incompetent.

In order to get what you want from life, you need to give up this victim language and start talking to yourself like a winner — I can do it... I know there is a solution... I am smart enough and strong enough to figure this out... Everything I eat helps me maintain my perfect body weight.

You Are Always Programming Your Subconscious Mind

Your subconscious mind is like the crew of a ship. You are it's captain. It is your job to give the crew orders. And when you do this, the crew takes everything you say literally. The crew (your subconscious) has no sense of humor. It just blindly follows orders. When you say, “Everything I eat goes straight to my hips,” the crew hears that as an order: Take everything she eats, turn it into fat and put it on her hips. On the other hand, if you say, “Everything I eat helps me maintain my perfect body weight,” the crew will begin to make that into reality by helping you make better food choices, exercise, and maintain the right metabolism rate for you body.

This power of your subconscious mind is the reason you must become very vigilant and pay careful attention to your spoken and internal statements. Unfortunately, most people don’t realize they are committing negative self-talk, which is why it is best to enlist another person — your success partner — in monitoring each other’s speaking. You can have a signal for interrupting each other when you use victim language.

Use Affirmations to Build Self-Confidence

One of the most powerful tools for building worthiness and self-confidence is the repetition of positive statements until they become a natural part of the way you think. These “affirmations” act to crowd out and replace the negative orders you have been sending your crew (your subconscious mind) all these years. I suggest that you create a list of 10 to 20 statements that affirm your belief in your worthiness and your ability to create the life of your dreams.

Of course, what to believe is up to you, but here are some examples of affirmations that have worked for others in the past:
  • I am worthy of love, joy and success.
  • I am smart and make wise choices.
  • I am loveable and capable.
  • I create anything I want.
  • I am able to solve any problem that comes my way.
  • I can handle anything that life hands me.
  • I have all the energy I need to do everything I want to do.
  • I am attracting all the right people into my life.
Believing in Yourself is an Attitude

Believing in yourself is a choice. It’s an attitude you develop over time. It’s now your responsibility to take charge of your own self-concept and your beliefs. It might help to know that the latest brain research now indicates that with enough positive self-talk and positive visualization combined with the proper training, coaching, and practice, anyone can learn to do almost anything.

You must choose to believe that you can do anything you set your mind to – anything at all – because, in fact, you can

Jack Canfield, America's #1 Success Coach, is founder of the billion-dollar book brand Chicken Soup for the Soul©Inspirational Books)© and a leading authority on Peak Performance and Life Success. If you're ready to jump-start your life, make more money, and have more fun and joy in all that you do, get FREE success tips from Jack Canfield now at:

Wednesday, October 13, 2010

A Holiday Gift Idea for a Teen – A Lesson in Money

Tired of giving clothes that your teen will just return, a computer game that will keep your teen from going out doors or cold hard cash that your teen will blow before the day is over? How about this year putting that cash to work by giving your teen a gift that will keep on giving? A lesson in money!

By the way, this could be a lesson for you as well as your teen.

The Idea

Open a “Roth IRA” on January 1, 2011 for your teenage child or grandchild and fund it with $1,000.00 (or whatever you can afford, but for this article I am going to stick with $1000.00).

The Price

With the Roth IRA, the invested money must be earned by the owner for that year. So, the “Teen” has until December 31, 2011 to actually earn the $1,000.00 – twelve months.

Here are some examples to help your teen visualize how easy and possible it is to earn $1000.00 in one year:
  • Earn $83.00 a month or
  • Earn $20.00 a week or
  • Earn $2.74 a day or
  • Earn $2.00 per hour working 2 hours a day, 5 days a week
The Prize

$1,000.00 invested one time could have these results for your teen:

Average annual Rate of return -->@ 8%@ 10%@ 12%
50 years$53,878.18$145,369.92$391,583.40
55 years$80,270.18$239,178.43$711,388.26
60 years$119,590.18$393,522.41$1,292,376.71

Note: It doesn’t matter whose money is invested, so long as the owner of the Roth IRA earns at least the invested amount over that year. Therefore, a parent, or grandparent, could do some very creative “Matching” to inspire the child to work more, earn more, and invest more – and retire earlier, with a better quality of life!

The Lesson

Starting your teen investing as soon as possible can have many benefits, such as:
  • Learning the power of compounding interest over time.
  • Growing closer to your teen through the teaching process.
  • Gaining a greater sense of responsibility that comes along with ownership.
  • Learning great habits that can build self confidence and can lead to great success not only in finances, but in life!
Remember, the holidays will be here before you know it, so plan ahead. This year do something that can really make a positive impact on your teen!

I'm so excited to share this information with you. If you have enjoyed the information or feel that it would benefit someone else, please share it. If you have any questions or comments, please feel free to contact me.

Monday, October 4, 2010

Chunk-Down that Goal and Get Out of Overwhelm
Written by Jack Canfield

Sometimes our biggest life goals seem so overwhelming.

We rarely see them as a series of small, achievable tasks, but in reality, breaking down a large goal into smaller tasks—and accomplishing them one at a time—is exactly how any big goal gets achieved.

After you have decided what you really want, with specific deadlines, the next step is to determine all of the individual action steps you will need to take to accomplish your goal.

How to Chunk It Down

There are several ways to figure out the action steps you will need to take to accomplish any goal. One is to consult with people who have already done what you want to do and ask what steps they took. From their experience, they can give you all of the necessary steps as well as advice on what pitfalls to avoid.

Another way is to purchase a book or manual that outlines the process.

Yet another way is to start from the end and look backward. You simply close your eyes and imagine that it is now the future and you have already achieved your goal. Then just look back and see what you had to do to get to where you now are. What was the last thing you did? And then the thing before that, and then the thing before that, until you arrive at the first action you had to start with.

Remember that it is okay not to know how to do something.

It’s okay to ask for guidance and advice from those who do know. Sometimes you can get it free, and sometimes you have to pay for it. Get used to asking, “Can you tell me how to go about...?” and “What would I have to do to...?” and “How did you...?”

Keep researching and asking until you can create a realistic action plan that will get you from where you are to where you want to go.

What will you need to do? How much money will you need to save or raise? What new skills will you need to learn? What resources will you need to mobilize? Who will you need to enroll in your vision? Who will you need to ask for assistance? What new disciplines or habits will you need to build into your life?

Another valuable technique for creating an action plan for your goals is called mind mapping.

How to Use Mind Mapping

Mind mapping is a simple but powerful process for creating a detailed to do list for achieving your goal. It lets you determine what information you’ll need to gather, who you’ll need to talk to, what small steps you’ll need to take, how much money you’ll need to earn or raise, which deadlines you’ll need to meet, and so on—for each and every goal.

When I began creating my first educational audio program—a breakthrough goal that led to extraordinary gains for me and my business—I used mind mapping to help me “chunk down” that very large goal into all the individual tasks I would need to complete to produce a finished product.

To mind-map your own goals, follow these steps as illustrated in the example:

1.) Center circle: In the center circle, jot down the name of your stated goal—in this case, Create an Audio Educational Program.

2.) Outside circles: Next, divide the goal into the major categories of tasks you’ll need to accomplish to achieve the greater goal—in this case, Title, Studio, Topics, Audience, and so on.

3.) Spokes: Then, draw spokes radiating outward from each mini-circle and label each one (such as Write Copy, Color Picture for Back Cover, and Arrange Lunch.)

On a separate line connected to the minicircle, write every single step you’ll need to take. Break down each one of the more detailed task spokes with action items to help you create your master to do list.

Next, Make a Daily To-Do List

Once you’ve completed a mind map for your goal, convert all of the to-do items into daily action items by listing each one on your daily to-do lists and committing to a completion date for each one. Then schedule them in the appropriate order into your calendar and do whatever it takes to stay on schedule.

Do First Things First

The goal is to stay on schedule and complete the most important item first. In his excellent book, Eat That Frog!: 21 Great Ways to Stop Procrastinating and Get More Done in Less Time, Brian Tracy reveals not just how to conquer procrastination but also how to prioritize and complete all of your action items.

In his unique system, Brian advises goal setters to identify the one to five things you must accomplish on any given day, and then pick the one you absolutely must do first. This becomes your biggest and ugliest frog.

He then suggests you accomplish that task first—in essence, eat that frog first—and, by so doing; make the rest of your day much, much easier. It’s a great strategy. But unfortunately, most of us leave the biggest and ugliest frog for last, hoping it will go away or somehow become easier. It never does. However, when you accomplish your toughest task early in the day, it sets the tone for the rest of your day.

By chunking down your goals, and then taking daily action on them, you create momentum and build your confidence, both of which move you farther and faster toward the achievement of your goals.

Now go take some action!

Jack Canfield, America's #1 Success Coach, is founder of the billion-dollar book brand Chicken Soup for the Soul©Inspirational Books)© and a leading authority on Peak Performance and Life Success. If you're ready to jump-start your life, make more money, and have more fun and joy in all that you do, get FREE success tips from Jack Canfield now at: