Many people tend to put some of their savings into money-market accounts for several reasons as there are many advantages of investing your money in a money-market account. Money markets are one of the most conservative ways of investing and saving compared to riskier stocks and mutual funds, and more short-term than certain bonds.

Money-markets hold a value of $1.00 per share, and that rarely changes for better or for worse. It provides some security in that sense, however if money markets are kept for a long time, inflation can eat away at the investment. Money markets are more of a short-term secure way of investing money in hopes of earning a small percentage of a yield that would get reinvested back into the money market until withdrawn.

There are many advantages to money-market funds in terms of their accessibility. It usually takes a few days to get your money out of a money-market account, which is a relatively quick turnaround time. You can also invest in a money-market account at almost any bank or other financial institution.

Money markets also do occasionally present a yield, which automatically gets reinvested back into the money-market account. Therefore, your shares will grow as time goes on if you treat this account as a savings account.

Since money-markets also rarely fall below the $1 share price, on the occasions that this may occur, the sponsor of the fund or the fund company itself may step in to absorb the losses that may be incurred.

By: Joy C. Harrison

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Taking a vacation can be an important part of your yearly routine… after all, it’s been shown in medical studies that individuals who go on vacation at least once per year not only tend to live happier lives but also may have longer lives as well.

Unfortunately, vacations aren’t free; it can sometimes be all that a person can do to scrape together the money to go on their vacation and the person generally comes back to face their various financial problems without the money that they need to repay them. With a little bit of effort throughout the year, however, it is entirely possible to build up a vacation fund without breaking the bank. Below you’ll find some suggestions about how you can save up the extra money that you need while keeping the rest of your finances in check.

Yearly savings

One of the easiest ways to save money for a vacation is to do it a little at a time over the course of a year. Find a large container and designate it as the “change” jar, filling it with loose pocket change and the occasional loose bill at the end of every day. Though it may seem like a small amount, after the end of a year you’ll find that you’ve managed to set aside a pretty significant amount of money. Depending upon how much change you have, you might even have to empty the jar once or twice before the year is up!

Make it a family affair

To help make saving for a vacation more enjoyable, get the entire family in on it and make it somewhat of a game. Set up a small savings account to be used for vacation money, and make a note each time a family member sets aside some money to go into the vacation fund. At the end of the year, you might have whoever had put in the most money have a larger say in where you’re going for the vacation or perhaps they’ll have more spending money allocated to them on a shopping trip.

It’s important to make it fun for any children who might be wanting to participate, and make sure that they have a little bit of extra change or other money to put in from time to time so as to give them an above-average chance of winning the grand prize.

Borrowing for a vacation

Though many people might think it to be an unnecessary expense, taking out a loan to pay for vacation expenses is actually a common occurrence. The loan is often a smaller amount and should only be used to subsidize the money that you’ve saved in other ventures. Taking out a loan can mean the difference between an okay vacation and one that’s truly great, so as long as you can afford to repay the loan later you should at least consider looking for a good loan rate.

Reducing vacation expenses

You might also want to consider ways to make your vacation a bit more friendly on your wallet. Plan visits to certain attractions outside of the peak season, or go on theme vacations that involve a lot of sightseeing or camping in order to have a good time without spending a lot of money. Take the time to plan out your vacation in advance, estimating your expenses and cutting unnecessary expenses where possible. Remember that it’s a vacation, however, and don’t sacrifice a good time for the sake of saving just a little bit of money.

By: Jerry Warner

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One of the easiest rules of thumb in “teaching personal finance for kids” is to give them a quick lesson in the “value of money” and compound interest using the “Rule of 72″. The “Rule of 72″ is a basic and simple way of explaining compound interest to your children using simple arithmetic and money (they all want to learn how to get more money!). For convenience in teaching this rule of thumb to children is that 72 is a convenient choice of numerator, since it has many divisors that are easy to remember: 1, 2, 3, 4, 6, 8, 9, and 12. Although present day digital scientific calculators and spreadsheet programs provide methods to find the accurate doubling time, the rule is useful for illustrating the rule using quick mental calculations or when only a basic calculator is available.

In finance, the Rule of 72 is a method of determining the doubling time a one time investment. For impact, it can also be used to illustrate how fast debt can grow. Simply stated, if you divide the annual rate of return into 72, that will tell you approximately how long it takes to double your money.

For example…

Take a savings account that receives 3% interest. 72 divided by 3 = 24… It would take approximately 24 years to double that deposit. Over a 48 year span, the money would double twice (that hardly keeps up with inflation!)

Another investment scenario may achieve 9%. That would mean the doubling period would take 8 years and it would double 6 times in that same 48 years… a significant difference!

Now how do you actually illustrate this with children?

My favorite way is to raid the penny jar. (you will need at least 100 pennies).

Start off by giving a child 10 pennies and you keep 10 pennies telling the child that they are getting 9% on their savings and that you are only getting 3%.

Count to 8 (each number representing 1 year) and double the amount of pennies for the child. The child will notice that you have not earned twice the amount of pennies yet.

Continue counting and double them again at 16 and again at 24. At this point, double your own stack of pennies once. You will have 20 pennies and they will have 80 pennies. They will get the point when you reinforce that you accepted a lower rate of return. Make a game of it trying different rates of return… make sure that you have enough pennies!

Teaching finance to kids in a fun way that they understand today will help them make wiser and more knowledgeable decisions for themselves in the future.

By: Dave Ouellette

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