My grandma is awesome. Not just the cute, little old lady kind of awesome –- but the "I don't give a heck what you think about me" kind of awesome.
There are a lot of lessons that a full- (and hot-) blooded Italian learns while growing up. Talking with your hands? Acceptable. Pulling over to the side of the road to knock on a stranger's door and ask to pick figs off of their tree? Definitely OK. Accordion jam sessions in the backyard? Absolute musts.
Being Italian comes with fun life lessons, but having a grandma who emigrated from Italy has also provided me with some of the most practical money advice I can recall. There is a ton I've learned from her, but when it comes to money, these three lessons take the cake ... or the cannoli, whichever you prefer.
1. Decide Where to Save and Where Use Those Savings to Splurge
To this day, my sisters and I still stand horrified at the kitchen sink while cleaning up after family gatherings. Not only are there pots and pans to be washed, but plastic plates, cups, utensils and Baggies -- even Saran Wrap has made it into the mix a few times. My grandma is relentless when it comes to reusing things. And despite the heckling, the whining and the poking fun, she's never backed down.
It wasn't until later in life that I realized that my grandma saves money on things that don't matter so she can spend it on things that do. She may pinch pennies on the day-to-day items, but a few years ago, she splurged and took the whole family (grandkids and all) on a seven-day Mexican cruise. That was a family vacation I'll never forget. And it happened because she has her priorities straight. Why spend extravagantly on the mundane when experiences with loved ones matter most?
2. Be Persistent
Have an old set of pots where one has a scratch? My grandma is the master of negotiation. It doesn't matter if the company doesn't make the product anymore or if she bought it 15 years ago. This woman will pull out her files, search for the warranty, and demand a replacement item even if the warranty has expired. She'll climb a customer service call center chain until she reaches the top, and can sweet-talk her way into a new vacuum, set of pots, or some other household appliance.
To this day, I'm not sure if anyone in our family (or community, for that matter) has ever told her "no." Persistence is key when you want something, whether it's a job, growing your income, a new home, a vacation -- or just a replacement coffee pot.
3. One Person's Trash Is Another's Treasure
My grandma started downsizing some years ago, which people often do when they age. What transpired over the following few years resulted in some holidays and birthdays to remember. %VIRTUAL-article-sponsoredlinks%Members of our family began to receive clean (but used) coffee cups with a $20 bill inside, or random blankets or knickknacks from around her house wrapped up in the guise of a birthday gift.
While some (most) of these items have caused us to laugh, we know she is on to something. If she receives a gift card to a restaurant that she's not going to go to –- why hold on to it? Regift it to someone who'll use it. Some of my favorite costume jewelry has come from her gifts. If there's something you've wanted to get rid of, think of a family member or friend who might want it and pass it along. I think the woman is a genius to have decided to stop spending money on gifts and instead get rid of the items she's accumulated over these years. (Donating is another great option.)
Ultimately, our families are a key part of our money histories and beliefs. Growing up exposed to good or bad habits can have their effects on us. My grandma always set an example by working hard and being tenacious, which my Dad picked up on and passed down to me. What kind of money lessons have you learned from your family?
My Grandma's Money Lessons Are More Fantastico Than Yours
Interest rates are low, but that's no excuse to accept 0.01 percent interest rates on your savings. Just a little shopping can find you many FDIC-insured savings accounts paying as much as 1 percent in interest, usually with no fees and easy availability to your money through electronic funds transfers. Compared to the near-zero rates that uninsured money-market mutual funds and other alternatives pay, high-interest savings accounts are a much safer way to save.
Banks still try to get customers to pay more for less, with one recent threat to charge fees for basic deposit accounts if the Federal Reserve cuts interest rates further. But many online banks not only offer fee-free options on their checking and savings accounts but also pay interest, and many have extensive fee-free ATM networks or reimbursement arrangements. If your bank follows through on threats to raise fees, taking your business elsewhere is your best move.
Bankrate reports that the average credit card charges around 16 percent in interest. That's a guaranteed money-maker for the banks that issue cards, but a big loser for those who carry balances on their cards. With many cards offering promotional interest rates as low as 0 percent, using them to get rid of high-interest cards is a no-brainer move and can help you pay your debt down faster.
Mistakes on your credit history can keep you from getting a loan that you want to buy your next home or car, but they can also have consequences you'd never imagine. Increasingly, insurance companies, apartment rental agents, and even prospective employers order copies of your credit report to see if you're financially responsible. Be sure to take advantage of your free credit check at the government's annualcreditreport.com website to make sure the three big credit-rating agencies have everything right before mistakes come back to bite you.
Payday loans have gotten more tightly regulated recently, but banks and other financial institutions still offer ways to let you get quicker access at your cash -- for a hefty fee. Resorting to short-term money fixes can land you in even more problematic situations down the road, because those solutions often create debt spirals from which it's hard to emerge unscathed. Set up an emergency fund instead and be prepared in advance for the money woes that life throws your way.
Interest rates have risen during the last half of 2013, with a typical 30-year mortgage carrying a 4.5 percent interest rate. But many homeowners still carry higher-interest mortgages from before the financial crisis. Now that home prices have risen, you might be able to refinance for the first time, and many homeowners have used lower rates to cut hundreds from their mortgage payment or shift to a shorter-term 15-year mortgage to pay off their debt faster.
Too many people never update their insurance coverage to deal with changes in their coverage needs, whether it comes from changes in family status for life insurance, health conditions for health-care or long-term care insurance, or even what types of property you own for homeowners' insurance. Don't wait for disaster to strike; check with your insurer or agent to see if your current coverage meets your needs.
In the past, investors had to pay hundreds or even thousands of dollars just to make a simple stock purchase. Now, though, the rise of discount brokers, low-fee index funds and exchange-traded funds, and freely available investment news and advice have made it silly to spend large amounts to get access to the financial markets. If you're still paying your broker too much to invest, look into alternatives that can help you avoid cutting serious money out of your retirement nest egg.
Everyone likes a tax break, and one of the best ones for you to use involves making contributions to a tax-favored retirement account. By putting money in an IRA or 401(k), you can reduce your current taxable income and save on your taxes while also preparing for the future. With 401(k)s, your employer might even chip in a bit on your behalf. Even when times are tough, finding even small amounts to save can put time on your side and make a big difference down the road.
Many investors found out the hard way this year that bonds aren't as safe as they thought, with some major bond funds posting double-digit percentage losses in 2013. Despite those losses, bonds still carry substantial risk in 2014, with many calling for imminent interest-rate hikes that would erode their value further. Even now, bond rates are so low that they don't compensate you much for their risk.
If you pay full price for just about anything these days, you're paying too much. The rise of deep-discount stores has led to falling prices at stores and shopping malls. Moreover, online tools like coupon sites, daily-deal offers, discounted gift cards, and cash-back credit-card deals can cut your costs as well. With all these tools, you won't find many situations in which you have no chance of getting a bargain on the items you want.
In the past, many young adults focused on getting into as strong a college as they could, figuring that their degree would pay them enough to make up for the costs they incurred. With college graduates facing a more challenging job environment than ever, smart students are thinking about college costs before they make a decision on a school. By maximizing financial aid and looking at lower-tuition schools with nearly as strong educational quality, you can avoid creating a big debt hole that you'll struggle with for years into the future.
If you don't have a will, a power of attorney for financial and health-care matters, and an advance directive to tell medical professionals whether you want certain life-preserving measures taken if something happens to you, then you're putting your family at risk. Many people don't have even these basic estate-planning documents, but getting them in place is easier and less expensive than most believe. Get your affairs taken care of in 2014 and save your loved ones some big future hassles.
Resolving to be more financially astute and to avoid common mistakes will help you get your finances in order more quickly. These tips should give you more money to help you meet all your financial goals.