Free Family Finance

Good news on the youth front:

Despite all the signs that young adults are becoming ever more dependent on their parents, they may be O.K. when it comes to saving, according to a study to be published early next year in The Journal of Consumer Affairs.

The study found that while those under 30 generally saved less than older adults in real dollars, when adjusted for factors like income levels, more young adults than older adults said they spent less than their income. The researchers found that about 61 percent of 25-year-olds and 58 percent of 35-year-olds said they would be spending less than their income, compared with about 56 percent of 45 and 55-year-olds who said the same. Spending less than one’s income was assumed by the researchers to mean saving.

Similarly, according to a Fidelity Investments study released earlier this month, more than 70 percent of employed adults aged 22 to 33 have set the goal of daily money management and budgeting as their biggest focus. More than 18 percent said saving for retirement was their “most crucial goal,” up from 13 percent in 2008.

A few thoughts:

• I wonder if the younger generation’s dependency upon their parents is directly related to their saving. Maybe they are only saving money because they are living with mom & dad. I would like to see the younger generation saving independently of familial assistance.
• Certainly the Fidelity study is hopeful. If 70% of young adults are budgeting, they are well on their way to success. If you don’t budget, you can’t do anything else…well.
• Maybe this is yet another upside to the great recession.

Article | Young Adults May Be Saving After All – Bucks Blog – NYTimes.com.

Photo | Nieve44/La Luz.

In our nation’s increasingly ‘universal’ economy, increased tax pressure is being applied to those deemed wealthy. Although this has historically been a successful method for raising government funds, the wealthy are starting to fight back. However, the fight is somewhat anticlimactic because the wealthy aren’t slinging fists. They are simply walking away:

Raising taxes on the wealthy has become a popular budget fix for many states.

The problem: the wealthy sometimes leave. California’s rich are leaving for lower-tax states. The state (slogan: “We’ll Owe You”) has among the highest tax regimes in the country, with a top marginal tax rate of 9.3% and an additional 1% tax on those earning $1 million or more a year.

Three states with no personal income taxes—Nevada, Texas, and Washington—are among the top five destinations for the highest-income fifth of California households, according to the Institutes own data.

The real lesson here is that high taxes and broken government chase away rich and poor alike

If this trend continues, what will our country do? For years, I have predicted this trend would come, even on a national scale. I am fearful that we will drive global businesses from our country, as they will seek shelter from the heavy burden of taxes.

via Rich (and Poor) Flee California Taxes – The Wealth Report – WSJ.

Although the modern media reports nothing but doom & gloom, there is a ‘Upside to the Downswing’ of the U.S. economy. You could make a strong parallel to the gardening practice of pruning.

Webster’s Dictionary gives two definitions for pruning:

• to reduce by eliminating superfluous matter
• to cut back parts for more fruitful growth

In this short series, we will look at ways that the recession has eliminated superfluous matter and generated more fruitful growth.

From Sign Company to Fro-Yo

Bruce Smythe learned about Menchie’s Frozen Yogurt during a visit last fall to California to see two of his children.

The prepare-it-yourself yogurt shop with its “fun, family atmosphere” made such an impression on the president and COO of ImagePoint that he decided to buy franchise rights to the concept as an investment for his kids.

But when the Knoxville sign maker shut down operations earlier this year, Smythe did something he had never done before – he became an entrepreneur.

Smythe, like other professionals who have lost jobs because of the economic downturn, is reinventing himself as a business owner.

From Sign Company to IT Consulting

Instead of wallowing in sorrow, Rob Simpson and two of his coworkers regrouped on the same day ImagePoint shut its doors.

“We all went home to our computers and went to work,” says Simpson, 51, former director of information technology for ImagePoint, where he worked for 16 years.

Simpson along with Jeff Herd, former ImagePoint data administrator, and Donna Tilley, who served as the sign company’s manager of application development, started BlueFire Consulting, an IT and business solutions company.

From Wholesale to Dollar Store

“You talk about it but not with a lot of passion because you get comfortable,” he says. “When you work for a corporation, it’s kind of hard to walk away.”

It wasn’t until Rob Karpick was laid off last fall that he began thinking about starting his own business. The 40-year-old is trying to launch a new dollar store called Dollars & Sense.

“I began to think what can I do. I looked back at my past and it just clicked that this is what I should do,” he says, noting his experience in buying, merchandising and wholesale.

“It’s been an interesting journey. It’s made me do a lot of soul searching and ask myself what do I really want,” he says. “It’s been scary, fun, exciting and depressing, a little bit of everything. Sometimes you want to throw your hands up but it will be good.”

The unassuming nudge we need to embark on our dreams…is one upside to the downswing.

via Closings prompt executives to become their own bosses : Business Journal : Knoxville News Sentinel.