Preparing Children For a Better Financial Future

kids-moneyEvery day, children are faced with all kinds of new learning experiences. One of the most important parts of their lives as adults will be personal finance, yet it is not adequately talked about or taught before their graduation from high school. Whether you are interested in developing a lesson plan about smart financial decisions in your classroom, or wanting ideas for talking to your own kids about this issue, below are some great ways you can teach children about saving money and money management.

Banking Lessons

From birth, open a savings account for your child. Begin a lesson plan for teaching your child about money matters. During their teens, open a checking account for them, but do not give them sole reign on the account. Begin by teaching them the basics of depositing and withdrawing money by using deposit slips and checks. Teach them how to keep the account reconciled; reminding them that their online balance may not be what their balance really is. Get them a debit card, but be careful about teaching them how to use it and how to record their spending. ATM transactions are costly if they are not tracked the right way.

Discuss Money Matters

Years ago it was a no-no to talk about money with kids. Today, it is very important to discuss the basics of money matters. Talk about savings, banking and how to budget their money. Show them some of your bank statements that have fees on them, and discuss how you plan to eliminate those fees eventually. Children enjoy engaging in these types of conversations.

Budget Basics

Teach your children how to budget money as they grow up. Help them keep track of their spending and their allowance earnings. Teach them by showing them how you spend your money and where your paycheck goes.

Needs and Wants

Kids tend to think that what they want is always a need.  Help your kids identify the important things such as clothing, shelter and food. Although they might be able to buy something they want but they do not necessarily need, help them understand that it has to be included in the budget in order to buy it.

Credit Card Lessons

Teach your children about credit cards and how they need to be used with great care. Help them see that buying something now, maybe something they do not really need, on credit could end up in them having too much debt in the future. Use a credit card statement you receive as a tool so show them how interest has to be paid on purchases. Show them that only about 15% of the monthly payment gets applied to the balance and the other 85% is going to the interest. Show them how a $3000 balance can end up taking them almost 40 years to pay off if they only make the minimum payment.

Allowance

Notice how quickly children spend our money? Give them the responsibility to pay their way and see how fast their spending goes down. Let them earn an allowance, and let them use that allowance to pay a bill or for their lunch money. Help them set up a budget. When the money comes from their wallet, you will be surprised to see how their spending habits change.

Everyone wants the best for their kids. Ensuring that they are financially prepared for life is one of the roles of a parent and often of a teacher. Spend time with your children teaching them one of life’s big lessons.

About the Author

Leslie Quinn is a mother of 3 teenagers and a part-time financial consultant.  When she’s not busy advising her clients and children on the best use of their finances, she offers her advice online to various blogs and resources like MBA in Finance Degree Guide.

The College of the Future? All Eyes on New York

cornell nyc techMichael Bloomberg, the often controversial mayor of New York is known for many things. His name was behind a recent attempted super-sized soda ban. He has also been highly involved in the nation’s recent firearm debates and has thus enacted tight gun and ammunition laws in his state.

So, what is Michael Bloomberg’s latest resume check-mark?

The Contest

About a year ago, Bloomberg sought out to tackle another issue: New York’s lagging status in the world of high-tech industry. Sentiments were that New York was falling behind. The mayor, wanting to create a solution, proposed an idea that ultimately went full-steam ahead. That idea was to hold a year-long contest in which local colleges would strive to come up with the best, new, high-tech educational program.

As reported in the New York Times, despite early front-runners such as Stanford and Columbia University, the ultimate winner of Bloomberg’s revolutionary contest would turn out to be Cornell University. So how did they do it?

And the Winner is: Cornell

Cornell’s 1st place win in the contest was not achieved through any typical means. There would be no resoundingly familiar educational programs, or any elements of tradition present for that matter. Cornell’s winning recipe would be anything but typical.

Perched in a very non-eye-catching, 3rd floor space is the new educational program. With an experimental total of eight enrolled students, Cornell’s newly created, one-year master’s program in computer science may just be a sign of things to come on a wider scale. Here, this “beta” educational test is well underway with the rest of the world watching.

The New Norm?

Students at the new school are being educated in a completely new manner. From the program itself, to the office space and staff, real-world application is the common component throughout. Instead of sitting in normal classrooms, students experience an office space. They may move from one office or conference room to another. Their curriculum not only discusses computer science, but it explores real-world application and heavily adds this to the normal teachings of computer science.

On an average day, a visitor to this new school will witness an atmosphere strikingly close to a work environment; teachers and students moving around and working on different projects in different areas. Teaching is done from more of a project manager perspective and the traditional blackboard, projector, and desk are of no use here. According to school officials quoted in a recent follow-up New York Times article, the goal is to maintain an environment where there is “constant interaction”, much like a real-life tech firm. And rather than focusing strictly on computer sciences, the approach is to focus equally on the ever-changing, occupational application of this science and experience. Students don’t just learn the science of computers, they learn how that science is applied in a real setting.

This “Applied Sciences NYC”, as dubbed by Mayor Bloomberg, is set to see immense expansion in years to come. Already, plans are underway to complete construction on a large, official facility for this pioneering new approach to higher education. And as we all wait to see the final outcome, yet again, history repeats itself: the world’s eyes are New York bound.

What to Expect In An IRS Audit

auditBeing audited by the IRS is a often regarded as a nightmare proliferated by stories, fear, rumors and cases of actual fraud, all of which end up creating a bit of mystique about the process.

The fact is, any taxpayer can be notified of an audit, so it’s important to understand the differences in how IRS audits occur and what each means in terms of responsibilities.

 

The Desk Audit

This is the lowest level of an IRS audit and probably the most common. In these reviews, the IRS reviews the records provided by a tax payer on a tax return. In most cases,  the IRS finds a math error or miscalculation. The errors tend to be small, under $500, and are often decided with a notice mailed to the tax filer. When you receive one of these notices you have a choice: either agree with the IRS and pay the amount they have determined is due, or appeal the matter. In 99 percent of the cases it’s smarter to just pay the notice and be done with it. It’s a far cheaper path than trying to appeal the issue. Those who do challenge the decision often do so out of ego and don’t realize just paying the desk audit conclusion closes the matter permanently.

A Real Audit

In an actual IRS audit, the taxpayer is summoned to appear at the IRS offices to explain his or her tax return documents. In some cases, an IRS auditor can visit a home or business residence instead. Alternatively, the tax filer can have an attorney or certified tax preparer who worked on the return appear in his name. The process is usually triggered by the IRS finding something in the tax return that doesn’t look right. So the IRS auditor looks at that particular section of the return and expects to see the supporting documentation that backs up the numbers reported on the tax return. These audits can be tricky, however, because they can open up to review the whole tax return. Further, if a tax filer answers the wrong way, the auditor could examine other years’ tax returns as well. The problem with these reviews involves just trying to get the auditor to stop looking at more and more details.

It’s best to review your tax return before appearing and confirm all your documents are in order. If you find a mistake, complete a 1040X amended tax return with the adjustments, and report the taxes due as a result of the changes. This points out the error up front and saves the auditor from spending time looking for it. When the audit is complete, the auditor will have the tax filer or his representative sign an agreement on the changes and findings. The IRS will then send a bill in the mail for the taxes due with penalties and interest added. Alternatively, a tax filer can pay the auditor immediately if at the IRS offices, and close the issue on the spot.

An Investigation

If you are contacted by IRS special agents, this means you are being investigated for a tax crime. You should avoid talking and seek help from a criminal tax defense attorney immediately. An investigation is triggered by the IRS finding something that convinces them a crime has already occurred. Most people destroy their defense just talking to agents trying to show their innocence. A tax filer under investigation needs to defer all questions to a defense attorney experienced in dealing with the IRS.

Audits are no joy, and in most cases a tax filer will end up paying something to close the audit. The challenge is not to avoid the finding, but to minimize the damage and close the audit as quickly as possible.

About the Author

Keith Walters is a tax accountant from Charlotte, North Carolina.  He contributes frequently to Online Accounting Degrees and other web resources about accounting and taxes.

10 Great Business Ideas That Were Actually Stolen

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The recent Samsung versus Apple lawsuits show that technology and patent theft is still a contentious issue in the world of commerce. We say “still” because, throughout modern history, many money-spinning business ideas have been incorrectly credited to the wrong people.

From the steam engine to television, there have been numerous cases where an inventor’s groundbreaking technical work has been taken advantage of underhandedly. The result? The financial rewards being reaped by somebody else and the historical prestige getting piled on another’s plate.

Read on for 10 brilliant business ideas whose origins may not lie quite where you thought they did.

10. Radio – Marconi vs. Tesla

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In the 1890s, Nikola Tesla discovered that he could use his electrically charged “Tesla coils” to transmit messages over long distances by setting them to resonate at the same frequency. Tesla’s patent for this design was accepted in 1900.

At the same time, a young inventor named Marconi was working on his own device for transmitting signals over long distances; however, the Italian’s patents were repeatedly turned down due to the priority of previous inventors.

Undeterred, Marconi experimented with technologies like the Tesla Oscillator to transmit messages over long distances. Tesla initially tolerated Marconi using his work. He is quoted as having said, “Marconi is a good fellow. Let him continue. He is using seventeen of my patents.”

Yet this changed in 1904, when the US Patent Office decided to award credit for the invention to Marconi. A furious Tesla attempted to sue the Italian, but he didn’t have enough financial resources to successfully prosecute. Moreover, the patent was not restored to Tesla until after the inventor’s death in 1943.

9. Lasers – Gordon Gould vs. Arthur Schawlow & Charles Townes/the US Patent Office

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Gordon Gould was a graduate student at Columbia University when he developed the first practical method for creating a laser. Gould’s 1957 design used two mirrors as an optical resonator to create a coherent, focused beam of light. He also coined the acronym LASER (Light Amplification by Stimulated Emission of Radiation).

Unfortunately, Gould wrongly believed that he needed to create a working model before he could patent the device. This resulted in him failing to stake a claim on his invention until 1959, by which time colleagues from the same laboratory had already filed patents for the laser.

Gould spent the next 30 years in legal battles with the US Patent Office and the corporations using his laser. After a long struggle, he won a victory over the companies using his technology in 1987. He was eventually issued a total of 48 patents and several million dollars in royalties.

8. The Steamboat – John Fitch vs. Robert Fulton and the Steam Boat Industry

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One of the most immediately apparent uses of the steam engine was to increase the speed of water transportation. So it was that, in 1787, on the Delaware River, ex-soldier John Fitch launched the first ever steam-powered boat, which was backed up by banks of oars on each side.

Unfortunately for Fitch, the patent he was granted in 1791 did not give him a monopoly, which left the way clear for later inventors to create similar designs. This meant that inventor Robert Fulton was able to patent a financially viable and profitable paddle steamer in 1807, without needing to pay the deceased Fitch’s estate a penny.

The legal struggles of steamboat builders were partly responsible for the Patent Act of 1790 being passed. This law laid down much more comprehensive procedures for claiming ownership of an invention in America.

7. The Telephone – Alexander Graham Bell vs. Elisha Gray

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Alexander Graham Bell and Elisha Gray both invented the telephone in 1876, but controversy still remains surrounding who succeeded first.

The two inventors were racing to create a device that could transmit intelligible sounds from place to place. On February 14, 1876, Gray submitted a patent to the US Patent Office. Yet on the same day, Bell’s lawyer submitted a full patent application with a very similar diagram.

There is evidence that a patent officer was bribed to give Bell the details of Gray’s invention and that this formed the basis of his harmonic transmitter, which he used to send the world’s first phone call.

Although Bell later took the development of the telephone in other directions for commercial use, there is strong evidence that the crucial first step was supplied to him by Gray’s work.

6. The Moving Picture – Francis Jenkins vs. Thomas Edison

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The video projector is commonly attributed to Thomas Edison, but, like many inventions, it was actually based on the work of earlier designers. Although Edison had developed a projector called the Kinetoscope, its images were blurry and hard to make out.

However, in the early 1890s, inventor Francis Jenkins developed an improved machine called the Phantoscope. This machine displayed images clearly for a short period of time.

Yet the eventual fate of the moving picture proved sketchy, and it shows just how important it is to trust and really know your business partner. Jenkins worked on the modified Phantoscope with Thomas Armat, and soon they both claimed recognition for the invention.

After the split, Armat went on to work for Thomas Edison, and from the Phantoscope they developed the “Edison Vitascope.” Perhaps, though, without the wrangling between Jenkins and Armat, the name synonymous with motion pictures would have been different.

5. Intermittent Windshield Wipers – Robert Kearns vs. Ford and Chrysler

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Incredibly, this case features a design stolen by three different companies simultaneously. In 1964, Robert Kearns invented the intermittent windscreen wiper, which cleaned the glass every few seconds rather than continuously, providing the driver with better visibility.

Kearns took his design to the “big three” automobile companies: Ford, General Motors, and Chrysler. All three refused to use the invention under license, yet they later began offering intermittent windscreen wipers as optional equipment in their cars.

An outraged Kearns sued Ford in 1978 and Chrysler in 1982, eventually winning almost $30 million in compensation. He said: “I don’t think the goal was the magnitude of the money. What I saw [as] my role was to defend the patent system. If I don’t go further, there really isn’t a patent system.”

4. Graphical User Interface – Apple vs. Xerox

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The graphical user interface (GUI) was essential in the creation of easy and intuitive personal computing, but the history of this breakthrough idea is murky. Xerox developed the first fully functional version in 1981, yet the technology quickly found its way to competitors Apple.

It is often said that Steve Jobs “stole” the idea for the GUI from Xerox after various visits to the company in the 1980s. This is not quite true. Xerox was provided with a healthy share of Apple stock in exchange for engineer visits.

Even so, the first Apple Macintosh did incorporate a number of the features of the Xerox PARC, and Apple did hire some of the best Xerox engineers to work on their prototype machines.

A lawsuit by Xerox against Apple was eventually thrown out of court around the same time as the Apple versus Microsoft suit, because the presiding judge felt that the complaints were inappropriate. Still, ultimately the GUI was the beginning of a business goldmine for Steve Jobs and Apple.

3. Television – Philo Farnsworth vs. Vladimir Zworykin and RCA

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Philo Taylor Farnsworth was a brilliant American inventor who claimed to have 165 patents to his name. Before he even turned 15, he had begun developing the image dissector, a piece of technology that would make modern television possible. And in 1927, at the age of 21, Farnsworth put together the first working version.

However, in 1930, Vladimir Zworykin, who was a scientist for electronics company RCA, visited Farnsworth’s lab. Zworykin had developed a similar model in 1923, but a patent was not granted until 1938, after he had made substantial alterations to the original design.

A decade-long patent battle ensued over priority of the invention, with RCA losing both the initial court case and the appeal in 1936. However, although Farnsworth won the court case, in many history books, Zworykin is still recorded as the inventor of television. While Farnsworth received royalties from RCA for his patents, he never gained the wealth or recognition that he deserved.

2. The Sewing Machine – Elias Howe vs. Isaac Singer

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The sewing machine is commonly associated with Isaac Singer and the Singer Corporation. However, inventor Elias Howe originally patented the design in 1846.

In 1849, Howe sued Isaac Singer for taking his idea, and the resulting litigation dragged on for several years. It was eventually settled by a compromise, with both parties forming a patent pool for their companies and Howe receiving royalties from future sales of his device.

Ironically, the first sewing machine came from an even earlier inventor. Walter Hunt created a sewing machine with a needle eye in 1834, but he decided not to patent it because he thought it would lead to unemployment.

1. Monopoly – Clarence B. Darrow vs. Lizzie Magie

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Monopoly has a long and checkered history. A Quaker named Lizzie Magie created the game in 1903. At the time, it was named “The Landlord’s Game,” and it was designed to teach people about the unfairness of land ownership.

Over the next 30 years, the game became popular with college students, Quakers, and socialists. The original name was eventually dropped and the board game became known as Monopoly.

In the 1930s, an unemployed heater salesman named Clarence B. Darrow saw the business potential of Monopoly and patented it. After successfully selling homemade versions of the game, he managed to sell the idea to toy company, Parker Brothers.

In an ironic twist, in the 1970s, the owners of Parker Brothers, General Mills, sued an economics professor for marketing a parody game called Anti-Monopoly. The suit was rejected on appeal when it was realized that the original game of Monopoly was, in fact, stolen.