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How Can ‘Financial Stability’ Be Defined?

The aims of financial management are never ‘completed’. Just like fashion, it is a perrenial and important part of the means in which we plan our lives. Things move on. Just as you wouldn’t likely wear bell-bottoms outside of a period disco event, you needn’t factor in inflation statistics from the 70s in order to manage your households – things change and the means in which we deal with those changes will also change over time.

Financial management is an active, dynamic art, because money is an active, dynamic energy – or it can be thought of as such. This means that when assessing ‘financial stability’ it’s very easy to get confused if not coming at things from a certain mindset. You may earn less one year than the previous, but that doesn’t necessarily mean you’re doing worse off financially.

So, for those just starting to grapple with their financial management, how can ‘financial stability’ be defined, and is it even something we should aim for? Moreover, how can we use this knowledge to avoid falling into difficult financial traps we would rather not have been part of? We think we have some answers to this end:

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Living Within Your Means

Living within your means should be considered sacred wisdom when it comes to managing your financial stability in the best sense. We all know that if we’re struggling for cash, heading out and purchasing a new car on our credit with payments we cannot hope to afford is a silly idea, no matter how many irresponsible salesmen out there may be willing to grant us that opportunity.

That being said, living within your means can become too tight, to the point where you refuse yourself the ability to pay for reliably speedy internet despite working from home all day every day. Living within your means signifies tailoring your daily living situation to you, and from that vantage point saving money as appropriate.


If you’re a bachelor living alone? Perhaps you can easily do without the most luxurious accessories such as silk-lined toilet tissue, or whatever we can exaggerate to seem silly in context. If you’re running a family household, however, purchasing high-quality school uniforms may be worth the investment, as well as a sewing machine for the inevitable repairs you will have to make. This last example shows how worthwhile, intelligent investment in the things that matter and frugality exercised through repairs both have an important place in the daily financial lifestyle of a household.

Overarching Financial Priorities

It’s worth keeping your overarching financial priorities in mind. When we measure stability, we often measure it in response to the environment around us. For example, a boat is not ‘stable’ if it’s docked on land, or at least that’s not the environment we would measure its use within. We would consider it stable if it holds stability within the ocean, in conditions we expect the design to meet. As such, financial stability can be best measured when it’s set against the overarching intent of our financial priorities.

Perhaps the most obvious and fundamental part of this would be considering your survival needs. Are you able to eat three square meals each day, and provide those to your family? Can you pay your rent? Can you purchase new shoes when you need them, or fill your vehicle up with fuel when empty? This might be considered your first financial priority.

Then we have those higher up the pyramid. Are you managing to put away some money in case of emergencies each month? How about saving to build your credit? What about potentially earning enough to settle down and be viable for a mortgage in five years time? It’s these questions that are worth asking, and can help you measure the relativity of your financial situation among many different criteria. This way you can make your budgeting decisions effectively. It could even help you use your financial stability to give grounding to someone else, such as when using a guarantor loans comparison site to help a financially needful (yet earning) relative with a cash injection.

Defending Your Finances

Defending your finances is also a part of financial stability. It can be easy to be a victim of financial fraud if you care little for where you store your documents or how you store them, and the same goes for ignoring suspicious transactions in your bank account. Learning how to shake the card reader section of an ATM can help you also find scanning devices placed by those without scruples.

There are many ways to defend your finances. From ensuring you apply adequate fingerprint protections in your mobile banking app to avoiding taking on loans with predatory pricing terms, it’s important that you have your financial health in mind at all times. This can sometimes be through defensive action, or aggressive action such as disputing an outstanding charge that has since appeared on your credit file.

Overcoming Worries

We all have our financial worries from time to time. It’s not exactly something that is inevitable, but many can find themselves somewhat lacking in their financial allowances or potential and may suffer as a result.

Overcoming those worries can often be found by direct, worthwhile action. Sometimes, you may have to work overtime or take on an extra shift depending on where you work. It can be that through using debt charities you are able to get a handle on your debt and get back to normal, contacting and consolidating creditors to the best degree.

Financial stability is not always supposed to mean having the best and strongest financial sitting, with thousands in the bank and the ability to purchase anything you want without any recourse for the consequences. Instead, it’s about doing what you can to become stronger and more stable in your financial efforts, no matter how humble a starting point you may be beginning from.

With this advice, we hope you can accurately and adequately define financial stability in the best sense possible.

How To Teach Your Children To Be Money-Conscious

You want your children to have the best qualities of you and your partner. Something that might be important to you as money. Now money should never be the thing that controls your life, but it will certainly help define what you do in it. So with that in mind, here are a few tips to teach your children in being more money-conscious.

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Show Them How To Budget

Children are never going to learn how to handle money, and many parents won’t even teach them until they’ve started earning money themselves. It’s also not something that many of us would learn about at school, particularly as it’s not always likely to be something within the school curriculum. Leading by example is important, and so it matters that you are budgeting your household income in order to show them when they are at an age to learn. It’s never too early to teach them about money. Earning pocket money for doing errands around the home is going to help them being grateful but to also know that hard work can be rewarding. 

It might be a good idea to let them see the family finances and that way, they can have an understanding of what they may need to know about going forward. Giving them an insight into a typical budget plan can be very helpful for their own in the future.

Warn Them About Loans And Borrowing Money

When you find something that might come at the right time for you or your household when they need it. However, they need to remember and be wary of having loans and borrowing money in general. If they become too complacent with knowing that money is effectively free and available to borrow, that could be quite dangerous for those who enjoy spending their money a little too frivolously. So warn them about taking them out and that they should be used in emergency situations too. You as a parent are likely to want to know about financial situations that they’re in when they are young, so always tell them to approach you first for help. It’s better for your child to pay you back, rather than to a bank or loan shark

Encourage Them To Get A Job

When they’re of an age at which they could work, you should be encouraging them to do so. Being able to get a job will help them see and learn the value of money and what it does in their own life. Having savings is important and having a job can help them put some money into their account so that they are well provided for later on in life when they need it. It also helps them to live their lives to the fullest and to show them how money can influence the type of lifestyle that they may want in the future.

Teaching your children these important life lessons is very beneficial to give them the best start in life.

Is There A Credit Gender Gap?

In the US, Moms are 3.6 times more likely than dads to give their kid a credit card, according to a new WalletHub survey released today. Parents can make their child an authorized user on their account and give them their own card tied to the parents’ credit line.

Making a child an authorized user can be good way to teach them responsibility and help them build a credit history before they are old enough to have a credit card account in their own name. However, not all parents decide to give their kids a card. Below are a few key stats from WalletHub’s survey:

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Key Stats

  • 2.4X more daughters have credit cards than sons.
  • Kids in private school are almost twice as likely to have a credit card.
  • Dads are 3.4 times more likely than moms to monitor their kids’ credit card spending.

Q&A with Odysseas Papadimitriou, CEO of WalletHub:

What is an appropriate age to give one’s child a credit card?

“It’s a good idea to give your child a credit card for emergencies when they are in high school,” said WalletHub CEO Odysseas Papadimitriou. “That’s when young people start to exercise their independence more and more, making access to funds for emergencies increasingly important. Plus, adding your child to your credit card account as an authorized user can help them build some credit history, making it easier for them to get their own account after they turn 18. When they’re eligible to get their own account, set your child up with a secured credit card, and have them fund the security deposit themselves. This will give them good practice without too much risk. But it will be their own money at stake, which is important.”

What explains 2.4X more daughters having credit cards than sons?

“My guess is that parents tend to see their daughters as being responsible enough to handle a credit card at an earlier age than their sons,” said Odysseas. “However, the need for financial literacy is gender-agnostic. And the kids who are least responsible may actually need the most hands-on training.”

Should parents closely monitor their kids’ spending?

“Parents should monitor their kids’ spending, both to keep them safe and because it can provide some valuable learning opportunities. But they shouldn’t try to be sneaky about it,” said WalletHub CEO Odysseas Papadimitriou. “Rather, parents should discuss spending decisions with their children in order to help calibrate how they think about money and improve their financial literacy. Credit cards make this whole process a lot easier than cash.”

A copy of the full report can be found at https://wallethub.com/credit-cards#survey.

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Why Pocket Money Is Important

A child or young person having money of their own is an important rite of passage and pocket money can form the basis of excellent financial education in areas such as budgeting, saving and spending. But it doesn’t have to come exclusively out of your purse or wallet.

A big issue (pun intended), I have with automatically giving pocket money, or an allowance, is that it can easily create an entitlement mentality. Anyone who has seen their teenage child hand on hip, open palmed, demanding cash before going out on a Friday night will know instantly what I mean.

The other place where you regularly get money for nothing is from the benefits system and I don’t believe that many parents are deliberately training their kids down that route!

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One of my favourite money experts, Loral Langemeier is quite definitive on the subject:

“NEVER PAY YOUR KIDS AN ALLOWANCE”

Loral argues that the best investment you can give your child is to teach them the value of entrepreneurship and the way that the economy works. So instead of paying pocket money every week, design exercises and activities that are truly focused on basic finance.

OK you may be thinking but how does this work in practice? Here’s an example, you might sit down with your child and organise some basic household tasks or chores such as doing the dishes or clearing the table.  Work with them to assign a monetary value for each one of these tasks.  Each week as they complete the list, pay them an agreed amount minus a small percentage that goes into a savings account specifically for them. This deduction functions a lot like taxes or regular savings accounts they’d have in the real world.

With teenage children you can add a bit more to this model, including how to manage a bank account, deduct expenses that might make sense given their age, or help save for the things that they’d want to buy.

Why do it this way?  Not only does your child learn the importance of how the economy functions, but they also understand the value of their own work and services.  As they develop their entrepreneurial muscles they may want to take on extra work or start a small businesses of their own. Plus you are automatically encouraging them to save.

Martin Lewis founder of Money Saving Expert and regular TV commentator in the UK is a fan of both pocket money and financial education – and he recommends encouraging children to work for their financial rewards, in order to embed a principle that will serve them well throughout life. Rewards for cleaning the family car or doing the washing up after dinner are great tasks to exchange an agreed amount of pocket money for, but it’s less productive to train children to expect payment for tasks they should be doing anyway, like cleaning their room or doing their homework.

In closing this discussion on the importance of pocket money, a quick word about consistency.

If you promise children a specific amount each week or month, make sure you stick to it. Paying pocket money on an ad-hoc basis will teach them that money promises can be broken; and they will value the money they receive less if you seem to attach little value to the act of giving it.

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