Current Events in September 2012

Retirement planning has undergone a radical change in the last decade. Times have changed and so has the way people are thinking about retirement.

Before 2008 many financial planners talked to their clients about buying a vineyard or opening a New England bed and breakfast in their golden years. After all, stocks would continue to gain in value and so would the equity in their home.

Then came the reality check of 2008. Now, it seems, the goal is to just have enough money to live the rest of your life above the poverty line.

Doubts about pensions and Social Security

In the past, many could rely on pension plans and Social Security benefits, but pension plans are increasingly rare and Social Security benefits should not be used as a sole source of retirement, financial planners now say.

Problem number one is Americans are living longer. Not really a problem except that if you stop working at age 65 and live to be 95, there's 30 years of living expenses you have to cover.

According to a recent Employee Benefit Research Institute study (EBRI), nearly 47 percent of early baby boomers, ages 56 to 62, are at risk of outliving their retirement savings. To make sure that doesn't happen requires a plan. A realistic plan.

A realistic plan

"To develop a sustainable strategy that meets your specific needs, some important considerations would be your age at retirement, life expectancy, living expenses and the rate of return you expect from your investments," said Dean Urbanski, Vice President, BMO Harris Financial Advisors, Inc.

A realistic retirement should include these steps:

• Reduce living expenses
• Develop a withdrawal strategy
• Carefully allocate your assets
• Choose a post-retirement career
• Improve your health

While most planners begin their strategy on the income side, it may be best to look first at the expense side and housing is one of the biggest expenses. If your home is nearly paid for, step up efforts to pay it off early.

If you still have a large mortgage consider downsizing. If you have equity in a home consider selling it, now that the housing market is beginning to recover, and relocating to an area where the cost of living is less. Living without a mortgage is an excellent way to make your retirement funds go further.

Withdrawal strategy

If you have retirement savings, you must come up with a withdrawal strategy. Knowing how much money should be withdrawn from your retirement savings each year is a critical factor in building a retirement plan.

Withdraw too much and you are likely to outlive your assets; take too little and you may unnecessarily sacrifice your standard of living, especially in the early years of retirement.

Asset allocation

Asset Allocation is another important consideration. As individuals seek increased income in retirement, they often shift their holdings more toward bonds and cash. This may or may not be a good move, as there are other key investment considerations beyond having a need for income. Confer with your financial advisor to determine the appropriate allocation for your needs, investment objective, risk profile and time frame.

If possible, your retirement assets should keep working, providing an income stream. This income can be used to meet your day-to-day expenses.

One possible option is to allocate a portion of your savings to an annuity. Annuities are an investment tool that can provide guaranteed income for the rest of your life, no matter how long you live.

While not guaranteed, another source of income are stocks that pay dividends. While many retirement people shy away from equities, a diversified portfolio of income producing stocks and funds reduces some of the risk while providing steady cash flow.

Have a plan

"Whatever your specific plans, it's crucial that you enter retirement with a strategy for turning your savings into a retirement 'paycheck' that will allow you to live retirement on your own terms," Urbanksi said.

In addition to the “paycheck” you receive from your retirement savings, consider an actual paycheck from a full or part-time job. In other words, just because you retire doesn't mean you have to stop working.

Many people, however, can't wait to retire. The last thing they want to do is consider another job. But consider this: most people don't hate work, they just hate their jobs. What if you could find a job doing something that actually gives you pleasure, even at a reduced paycheck? The income from that job would supplement the income from your investments, pension and Social Security.

Finally, remaining in good health during retirement will have a major positive economic effect. Staying active in both mind and body will help you be more productive and, should you choose to, work longer.

Despite previous studies suggesting the contrary, statins -- cholesterol-lowering drugs -- may not prevent blood clots (venous thrombo-embolism) in adults, according to a large analysis by international researchers published in this week's PLOS Medicine. 

In 2009, an additional analysis of data from a randomized controlled trial called the JUPITER trial reported that the statin rosuvastatin cut by half the risk of venous thromboembolic events among apparently healthy adults. However, this finding was based on a small number of patients who had thromboembolic events (34 vs 60). 

To gather more evidence about the possible benefits of statins, a group of international researchers led by Kazem Rahimi from the George Centre for Healthcare Innovation at the University of Oxford in the UK, combined the results (performed a meta-analysis) of 29 suitable published and unpublished randomized controlled trials of the effects of statins involving over 100 000 participants and more than 1000 events: Only two studies presented venous thrombotic events in the published report, but such events had been recorded as adverse events in all of the included trials, which the authors were able to include in their analysis. 

'Small, if any, effect' 

In the combined analysis, the authors found that venous thrombosis occurred in 0.9% of people taking statins compared with 1% of people not taking statins, which suggests that statins have a very small, if any, effect. These results did not change when the authors excluded the findings of the JUPITER trial. The authors also found that there was no effect at all in people taking high doses and low doses of statins. 

"This study provides a more detailed assessment of the potential effects of statins (or higher dose statins) on venous thromboembolic events than has previously been possible,” the authors wrote. “We were unable to confirm the large proportional reduction in risk suggested by some previous studies. 

"However,” they concluded, “a more modest but perhaps clinically worthwhile reduction in venous thromboembolic events in some or all types of patient cannot be ruled out." 

In an accompanying Perspective article, Frits Rosendaal from the Leiden University Medical Center in The Netherlands (uninvolved in the study) argues that even if the study cannot provide definite answers to the statin question, some tentative conclusions can be drawn. 

"Firstly, that for the association between statins and venous thrombosis the methodologically strongest analysis shows at most a very small effect,” he says. “Secondly, if we do not wish to discard the possibility of a beneficial effect for the whole class, any such effects are limited to rosuvastatin."

Election years provide an opportunity for political leaders and the parties they represent to raise and debate crucial issues. This can not only help voters make an informed decision but can also contribute to an elightened public dialogue about how best to address these issues to achieve the most desirable long-term solution.

To say that this seldom occurs is the mildest of understatement. In this year's election cycle, both parties and their candidates have carelessly and recklessly thrown around misstatements, distortions and outright lies in hopes of eking out another vote or two in crucial swing states.

Few topics have been more cynically misused and abused in the current campaign than tax policy. The Democratic candidate, Barack Obama, has proposed to raise taxes on those who have invested in America by putting their money in stocks and bonds, where it finances the operations of corporations and governments, thereby creating jobs and helping to grow the economy.

The Republican candidate, Mitt Romney, has lately spent his time denigrating voters who don't pay federal income taxes, suggesting they will vote for Obama to keep the cash flowing their way.

"There are 47 percent who are with him, who are dependent on government, who believe that, that they are victims, who believe that government has the responsibility to care for them. Who believe that they are entitled to health care, to food, to housing," Romney said in a secretly-recorded video.

This has become a GOP rallying point lately, with former White House Press Secretary Ari Fleisher saying on CNN last night that these supposed free loaders are "getting government for free."

Is it true?

Is it true that a large segment of American society is getting a free ride, contributing nothing to the greater good?

Not according to most reasonable economists. In a timely analysis, the Center on Budget and Policy Priorities reports that when all federal, state, and local taxes are taken into account, the bottom fifth of households pays about 16 percent of their income in taxes, on average.

After all, the fact that someone is not required to pay income tax in a given year does not mean that that person does not pay other taxes, including:

• Payroll taxes. These are levied on all workers. Lower-income workers generally pay nearly 10 percent of their income on payroll taxes. Higher-income workers pay a much smaller percentage.
• Sales taxes. Among the least progressive of all taxes, sales taxes hit lower-income people harder than those with higher incomes. Oddly, even Democrats have recently applauded the extension of sales taxes to online purchases.   
• Gas tax. Everyone pays taxes on the gas they pump into their tanks to get to work, to the doctor or to class. Lower-income Americans are more likely to have older cars that get poorer gas mileage and thus may pay more in gas taxes than their wealthier counterparts.
• Property tax. Nearly everyone pays property taxes, which go to support local schools and municipal government.  Even renters pay property tax, as nearly all landlords jack up the rent sufficiently to cover the tax on each unit. Of course, landlords can deduct the property tax from their return; their tenants can't.

Is it permanent?

Gov. Romney and the others who denigrate those who have fallen on hard times seem not to have considered that this condition is quite possibly temporary.

Many of those who have not paid federal income tax in recent years are those both candidates say they want to help -- workers who have lost their jobs as a result of globalization and the financial meltdown that is still rippling through the economy. The most recent jobs report finds only 96,000 new jobs were created in August, leaving the unemployment rate at 8.1%, a figure that everyone agrees would be much higher if it included those who have given up and quit looking for work.

If and when the economy begins to perk and new jobs are created at a faster clip, many of those who are not unemployed may return to work and begin paying income taxes again.

Likewise, many of those who have not paid taxes for the last year or two are students, who presumably will become taxpayers when they graduate and find steady work. 

Millions more have fallen out of the work force because of illness -- their own or others -- while others have simply become too old to work.

Eventually, those who are elderly, ill or disabled may be expected to die, which will persumably remove them from Mr. Romney's list of slackers.

No assets

President Obama, who won election on a promise that he would work to mend fences and reduce partisanship, has chosen to demagogue the taxation issue, proposing to persecute the rich rather than offering a comprehensive proposal for tax reform.

Fundamentally, as Obama well knows, the United States economy will remain on shaky ground as long as most Americans essentially have no assets. A study released today finds that in 2010 the typical middle class family had financial assets of $27,300 – including retirement savings but not pensions.

When debt is calculated into the equation, many families today have a negative net worth -- more debt than assets, leaving them helpless to respond to setbacks and changing conditions. The housing crisis, for one, would have been much less damaging if most families were not mortgaged to the hilt.

Why is it like this? Part of the reason is a tax policy that rewards spending and penalizes investment. Taxpayers -- all of us, not just the wealthy -- are encouraged to deduct expenses but, with few exceptions, are taxed on interest and dividends that we have earned.

Obama, who knows better, has advocated increasing the tax rate on dividends and interest, in effect falling into Romney's trap by encouraging Americans to spend, spend, spend and discouraging them from saving and investing so that they can care for themselves and their families and provide capital that creates prosperity and jobs.

Consumption tax

In its early years, the United States had no income tax. The federal government raised money through sales and excise taxes.  Investments were not taxed and families were encouraged to buy property, open savings accounts and make other investments.

For years, economists and Congressional staff members have talked longingly of replacing the current hodge-podge of taxes with a consumption tax that would reward Americans for saving money while taxing them when they spend it.

With a deduction that protected lower-income Americans, such a system could keep the lights on in Washington while enabling middle-class families to accumulate wealth that could help them through troubled times and eventually be passed on to their children. 

There are other options that deserve discussion but you'll hear none of them from the candidates who have chosen the path of divisive demagoguery this year. Americans deserve better.  

According to the Centers for Disease Control and Prevention (CDC) nearly 1 in 3 U.S. adults have high blood pressure, which equates to about 68 million people.

Managing hypertension can simultaneously be easy and difficult, depending on several factors like health coverage, finances, and getting the knowledge of how to do it.

And when it comes to eating right for both preventing and managing high blood pressure it can be a challenge to develop proper eating habits as well as maintain dietary consistency.

To get some eating tips for managing high blood pressure we reached out to author and registered dietician Joan Salge-Blake, who is also a nutrition professor at Boston University. Professor Salge-Blake previously spoke to us about her take on the organic food debate.

Salge-Blake says when it comes to high blood pressure, a big misconception is that people diagnosed with it have to stay away from salt altogether.

“They [high blood pressure patients] don’t have to avoid it, they just have to get it down,” she told ConsumerAffairs. “The problem is that the majority of the foods and the sodium that we take in is from processed foods, so the consumer doesn’t really have control over that. The good news is that Kraft, General Mills and many big corporations are committed over the next several years to reducing the amount of sodium in their products."

"They’re working to do that, because really as a consumer who uses these products we’re just held basically to whatever is available out there. So that has to happen for the American public to get their sodium down,” she says.

Supermarket "pretty healthy"

Salge-Blake also points out that most grocery stores already provide enough food items for consumers to avoid a great deal of sodium. She says anything in the produce section is okay and if we’re able to select foods grown and made naturally, it makes the average supermarket still a pretty healthy place to shop.

“Anything from Mother Nature, fruits and vegetables are naturally low in sodium,” she says. "The whole grains are going to be just fine, I wouldn’t worry about the sodium in lean dairy products, and by itself lean meat, fish or poultry. So if you can get away from buying things more processed it would be better.”

“For example, the whole grains in brown rice are very low in sodium," she adds. "Now if you get seasoned brown rice or one of those little packets, the sodium goes up. But the good news is there’s plain brown rice and the sodium is low, so what the consumer can do is just use a nutrition label -- to see in the category in which they're buying -- which one would be lower in sodium, and typically it’s the ones that are not seasoned,” she said.

But can one lower their blood pressure by simply eating healthy foods? I mean, is prescription medicine always the first line of defense when you’re first diagnosed with hypertension?

“There are many lifestyle habits that can help you lower your blood pressure should it be high,” says Salge- Blake. "One of the first things you should do is look at your weight and if you’re overweight, you should think about trying to get some weight off because we know that even by losing 10 percent of your body weight can have a dramatic effect on lowering your blood pressure."  

"So you want to get more potassium-rich foods in your diet, and believe it or not, those are fruits and vegetables and lean dairy, so going back to Mother Nature again that would be a really, really good thing to do."

“You want to be exercising, and you want to watch your alcohol intake should you consume alcohol. Consume small amounts because it could increase your blood pressure, so you want to keep it to a more moderate amount,” Salge-Blake warns.

Not always enough

But sometimes eating right and exercising just aren't enough, as many people live a healthy lifestyle but still have high blood pressure, and for them, prescription medicine is typically the way to go. However, the risks of being on such medicines can easily lure one towards a level of complacency after seeing their blood pressure numbers drop to healthier levels.  

Some may think, "Hey my blood pressure counts are good now, I guess I can ease up on the exercising and all that healthy eating for a while," which is a dangerous form of logic, says Salge-Blake.

“That’s the magic of the medicine,” she said. “It’s beautiful because for some people they may not be able to control it with diet alone. Some people may say, ‘gee, I’ll just take the hypertension pill and not worry about it’. But what you want to think about is not just hypertension, when you’re eating a well-balanced diet, you’re also fighting heart disease which is the number one killer of Americans."

“We’ll also be getting a diet that would be best in preventing diabetes. Typically if you have high blood pressure, you [should] say ‘Let me start now to see if I can change my diet to get that lower, and guess what, I may help myself reduce the risk of Type-2 diabetes later in life. That’s the way you have to look at it.'"

"You have to look at it like ‘This [high blood pressure] is the first signal that what I’m eating may not be good for my health’, and correct it before another signal, i.e. your glucose starts to get a little bit too high and you start developing a risk for Type-2 diabetes,” she says.

Prescription may be needed

Salge-Blake also said high blood pressure patients may not be able to pinpoint and cure the condition from proper diet and exercise, but they’ll be able to manage it better, while also diminishing the chances of getting another condition and taking yet another type of medication.

She also states that once you’re diagnosed with hypertension, your first line of defense should be trying to lower your blood pressure on your own, and if that doesn’t work talk to your doctor about getting the right prescription.

But once you start taking medication, don’t stop exercising or eating right, because if you continue to live the same type of lifestyle, you may eventually have to increase the strength of your medicine. She also says that just because you’re on a high blood pressure medication doesn’t mean you’ll necessarily be on it for the rest of your life.

“I’ve had clients, who have come to me on hypertension medication, and through their diet they lost weight, and made changes and they were able to lower their dose and get off it [the medication]. So not necessarily is it something that you’ll stay on for the rest of your life,” she says.

If you are fortunate enough to have money to invest, or have investments in your retirement accounts, you may be wondering how the Federal Reserve's new round of Quantitative Easing (QE) will affect you.

It's generally agreed that, in the short run at least, it will reduce the value of the U.S. dollar. So if you have cash lying around, its value is going to go down.

Lots of things you can exchange for money, however, have already begun to go up in price. For the most part, only assets of a finite nature are being affected. If you buy a new car, for example, don't expect it to go up in price. The normal laws of automotive depreciation still apply.

But if you are invested in the stock market – especially if you are in the right stocks – those investments should go up in value, not necessarily because the underlying companies are increasing in value but to reflect the cheaper dollar.

Stocks of oil companies should do particularly well because oil prices are also rising in response to the Fed's QE3.

Gold on the rise once again

And then there's gold. In recent years gold has gone from being a precious metal to being an alternative currency. In recent months the governments of India and China have been heavy purchasers of gold as a hedge against the declining dollar. As the dollar gets weaker the price of gold goes higher.

There's more than one way to buy gold, of course. The commercials on cable TV for the most part only push what's called “physical” gold. With these purchases the consumer takes delivery of the actual gold – either bullion or coins.

Physical gold is favored by consumers who are pessimistic about the future, or in extreme cases, worried that the world is headed for an economic collapse. They want to make sure that when and if that happens they have something they can trade for life's necessities.

But assuming the world isn't going to end, buying physical gold may not be the best, most efficient way to obtain the precious metal. If you have an online brokerage account, you can purchase shares of an exchange fund based on actual gold assets or purchase stock in a gold mining company. Both tend to rise and fall with the price of gold.

If purchasing a gold mining stock however, there are other issues that could affect the price of the stock – just like the stock of any other type of company. If the mining company isn't well run, or has lots of labor issues, the stock could lose value even when gold prices are rising.

Mark-up

When buying gold coins there are also ways to lose. A coin has other value beside the gold that's in it. The dealer will sometimes mark up a coin more to reflect that perceived value. In other words, its possible to overpay for a gold coin.

Like any investment, talking with a trusted financial advisor is an important step. Independent research also is helpful.

But the status quote isn't an option. QE3 has changed the investing landscape. They don't call it inflation any more but the cost of a lot of important things are going up. Your investments should be one of them.

Whatever sinks to the depths is bound to eventually rise.

At least that’s what many Americans now believe, as a new report indicates that consumers are feeling more optimistic about their personal finances and the overall economy than they did this time last year.

According to Chase Bank’s “Pulse of the Consumer Survey” 64 percent of Americans believe the economy has reached a place of stability compared to 33 percent in 2011. This may be due to the belief among some consumers that the economy has already reached its lowest point, and it can only show improvement from this point on.

Whether this is true is debatable, but it appears to be a widely-held belief.

The report also shows that putting away enough money for retirement is the chief concern among consumers, as 64 percent said they worry about having enough for their golden years, but only 34 percent of those surveyed admitted to actually saving more money since the economy fell in 2008.

Not enough savings

And being able to live comfortably isn’t the only financial concern among consumers, as way more than half (74 percent) of Americans said they’re worried about their current savings, however only 36 percent of consumers said they made an effort to add more to their savings accounts since the economic collapse.

But as the economy shows signs of consistent improvement, many are still concerned about paying off their everyday expenses. The survey shows that 40 percent of consumers are worried about things like paying their mortgage or rent on time, and making steady payments on their credit card bills.

The survey also showed that 53 percent of Americans are still concerned about getting good deals when they shop, which seems like a low percentage in this area, as one would easily assume that most people would want to save a buck or two.

It also seems the economic crash put a jolt in many consumers, as 78 percent of those surveyed said they’ve modified their spending ways since the economy fell.

In addition, 61 percent of consumers admitted to paying off credit card bills quicker compared to four years ago, and 54 percent said the economic downturn has encouraged them to start a monthly budget since then, the survey reveals.

Unexpected expense

The researchers also asked participants how they would pay for an unexpected $1,500 expense that abruptly popped-up.

Almost half (49 percent) said a credit card would be used, and many of those same consumers said they would make gradual payments until the entire amount is paid off. The report also indicates that 45 percent of consumers said that getting the most bang for their buck when purchasing items, is what  gives them the most amount of financial enthusiasm.

Other clear signs that consumers are feeling better about their personal finances as well as the economy, is the fact that 38 percent of Americans said they’re now saving up to purchase a car, and 24 percent they’re planning to take their ultimate vacation trip in the next five years.

Additionally, 20 percent of respondents said they see themselves purchasing a new home or condo between now and the year 2017.

All of these percentages show an increase in consumers making major purchases in the next five years, compared to last year when there was an 11 percent increase of people saying they would purchase a car, and a 13 percent rise in the amount of consumers that plan to buy a new house or condominium.

And when it comes to managing their personal finances most consumers (70 percent) prefer online banking as a successful way to manage their income, which may not be surprising. This same percentage said that credit card websites are preferable when it comes to making timely payments and trying to budget money, compared to the traditional way of mailing payments in.

Dubious about mobile apps

However, banking on mobile apps doesn’t seem to be catching on with consumers just yet, as only 24 percent said they conduct financial transactions on their smartphones.

“All signs point to mobile payments and online banking increasing at a rapid pace over the next few years, said Chief Executive Officer for Chase Card Services Eileen Serra.”

She also says although the economy is showing definite signs of improvement, people still need to seek out effective methods to properly budget their money and control their financial futures.

“We’re encouraged that consumers think the economy and their personal finances are on the upswing, but there is still work to be done,” Serra noted. “Consumers continue to need the correct financial tools and services to better manage their everyday expenses—that is a critical first step to gaining full control over their financial future," she said.

Two pieces of data in the latest Real-Time Home Price Tracker from real estate firm Redfin point to continued improvement in the housing market.

Homes are spending less time on the market and when they sell, they are going for higher prices. The latest report shows the percentage of homes selling within 14 days of their listing was 27.6 percent in August, compared with 26.7 percent in July.

In the 19 major real estate markets Redfin monitors, prices were up five percent over August 2001.

Fewer homes for sale

A third piece of data may point to the reasons prices are up and time on the market is down. The number of homes for sale continues to decline. Inventory plunged 28.5 percent year-over-year and was down 4.5 percent from July.

With fewer homes to choose from, a classic supply and demand dynamic comes into play. In some markets homes have gone for more than the asking price because of multiple contracts. In the early days of the housing crunch there was a huge inventory of homes, helping to depress sales and prices.

"In our business, Redfin saw a monster surge in August closings," said Redfin CEO Glenn Kelman. "While September now seems likely to be down nearly 20 percent from August's peak, we were surprised after Labor Day to see a relatively large number of new customers begin touring homes for the first time, which has given us reason to be optimistic about the rest of the fall and even the year ahead.”

Why aren't there more sellers?

While housing demand appears to be picking up, there has not been a corresponding increase in sellers. Kelman says he thinks many homeowners sense the market is turning and are holding out for more price gains in the coming year.

Another reason is that many homeowners who bought at the top of the housing bubble are still “underwater,” owing more on their mortgage than their home is worth. They might like to sell, but can't without taking a huge loss.

In the August report, Phoenix had the highest gain in home prices, with the average rising 31 percent year-over-year. Chicago, which has been hard hit by foreclosures, had the worst showing with the average price dropping four percent.

The top six fastest-selling markets are all in California:San Jose, San Francisco, Ventura, Inland Empire, San Diego, and Los Angeles. Boston is the slowest-selling market.

A ConsumerAffairs report yesterday advised parents that just giving their children an allowance was no substitute for providing them with financial literacy training.

A report today casts doubt on whether many parents are equipped to provide that training and suggests that many adults are in dire need of a refresher course in managing their personal finances.

The analysis by the Consumer Federation of America and Primerica found that two-thirds of middle class Americans acknowledge having made financial mistakes, often costly ones.

The new report also concluded that the financial condition of most middle class families is challenging. For example, in 2010 the typical middle class family had financial assets of $27,300 – including retirement savings but not pensions – which was 28 percent less than the $37,800 held in 2007.

The comprehensive analysis includes a national survey of 2015 representative adult Americans by ORC International in July of this year and a statistical examination of the Federal Reserve Board’s 2010 Survey of Consumer Finances, by Professor Catherine Montalto of The Ohio State University.

In the ORC International survey, 843 out of 2015 respondents reported household incomes between $30,000 and $100,000 and were considered to be middle class. Key findings from an analysis of the survey data are:

• Two-thirds of middle class Americans (67%) said that, in the past, they had made at least one “really bad financial decision,” and nearly half of those questioned (47%) acknowledged that they had made more than one bad decision. The typical (median) cost of these bad decisions was $5,000, but the average cost was $23,000.
• Few of these Americans said their main source of information or advice about specific financial decisions would be from the Internet, books, magazines, or TV. And a number said they would not seek information or advice in making these decisions. For example, for “saving and investing,” only 15 percent said they would rely on the Internet, publications, or TV for the information, yet another 17 percent said they “wouldn’t seek any information or advice, and just make a decision.” However, for this kind of decision, 45 percent said they would use information and advice from a financial professional.
• These middle class Americans are much more risk-averse than those with higher incomes. If given $1,000,000 to invest for retirement, only 21 percent of middle class Americans, compared to 48 percent of higher-income persons (incomes $100,000 and over), would invest mainly in “stocks, bonds, and/or mutual funds.” And 19 percent of the middle class group would “invest” most of their funds in a savings account while 25 percent would invest mainly in real estate.
• Yet, large majorities of these Americans believe their ability to make financial decisions is “good” or “excellent” – for example, 81 percent for ability to budget income and 80 percent for ability to manage credit card debt though only 63 percent for ability to save for retirement and 67 percent for their ability to purchase a mortgage loan.

Surprising results

“Considering their past mistakes and the complexity of the financial services marketplace, we were surprised at how highly most middle class Americans rate their ability to make a variety of financial decisions and how infrequently they rely on information from the Internet and publications,” said CFA Executive Director Stephen Brobeck.

The second source of information was the Federal Reserve Board’s 2010 Survey of Consumer Finances, which was released several months ago. Professor Catherine Montalto of The Ohio State University used its database, and that of the Fed’s 2007 survey, to compute financial statistics for the 40 percent of households in the third and fourth income quintiles -- incomes between $35,600 and $94,600 in 2010. Analysis of these data revealed that:

• This typical middle class family had financial assets of $27,300, including $3,900 in checking and/or savings accounts. These financial assets were 28 percent less than the $37,800 held in 2007.
• Most of these financial assets represented money in contributory retirement accounts, but only about three-fifths of all families (61%) had such an account (though a number of middle class families did have pensions).
• For middle class families, the typical debt payments to income ratio was 20 percent with only 9 percent having debt payments that were overdue by 60 days or more. But nearly half (49%) still carried credit card debt from month to month, and the typical (median) debt for these families was $2,700.
• The decline in housing prices was the main reason that the net assets of the typical middle income family declined 35 percent, from $145,600 to $94,700.

“Families without a lot of resources are balancing difficult and expensive priorities such as saving enough for college and retirement or paying off a mortgage and consumer debt. When you consider these demands within the context of the last decade’s falling incomes, we are nearing a crisis in this country,” said John Addison, Primerica Co-CEO. “Primerica’s representatives specialize in working with families that earn between $30-$100,000, and trust me, this can be a lonely field to be in. The trend on Wall Street is to work with wealthier and wealthier clients, but this report lays out very clearly the urgent need for more financial services aimed at middle income earners.”

Other findings from the analysis of the Fed data include:

• Only 21 percent of the middle class families had a cash value life insurance policy, 15 percent stocks outside a retirement account, 14 percent certificates of deposit, and 13 percent U.S. Savings Bonds.
• Over half of these families (53%) had installment debt whose typical amount was $13,500. Almost all of this debt represented auto loans and student loans.
• These families held consumer and mortgage debt that was, typically, $85,400 in 2007 and $84,400 in 2010.

There is no doubt dog is man's best friend, but she can be expensive. There's food, flea and tick medicine and periodic visits to the vet, which can be as expensive as some trips to the doctor.

Then there's your insurance premiums, one of the hidden costs of living with a dog. The Hanover Insurance Group says dog bite claims are on the rise and accounted for more than one-third of all homeowners insurance liability claim dollars in 2011.

If you have a dog living in your household, your insurance company may increase your premium to reflect that. The Insurance Information Institute reports the cost of dog bite claims -- reflected in both medical costs and jury awards -- rose 53.4 percent from 2003 to 2011.

Some breeds aren't covered

While dog bites are covered under most homeowner liability policies, some policies exclude certain breeds. Before adopting, rescuing or buying a dog, The Hanover recommends checking with your insurance agent to see if the breed you are planning to add to your household can be covered.

Some dog owners have taken the precaution of purchasing an umbrella policy to add additional liability coverage. These policies kick in when a liability claim exceeds the normal homeowners policy coverage. Mark Desrochers, president of The Hanover's personal lines business, says a one million dollar umbrella policy can cost between $100 and $300 per year.

Advice

If you don't have a dog but are planning on getting one, the Insurance Information Institute offers these tips for reducing the risk of dog bites:

• Consult with a professional (e.g., veterinarian, animal behaviorist or responsible breeder) to learn about suitable breeds of dogs for your household and neighborhood
• Spend time with a dog before buying or adopting it. Use caution when bringing a dog into a home with an infant or toddler. A dog with a history of aggression is inappropriate in a household with children
• Be sensitive to cues that a child is fearful of or apprehensive about a dog. If a child is or seems fearful or apprehensive, delay acquiring a dog. Never leave infants or young children alone with any dog
• Have your dog spayed or neutered. Studies show that dogs are three times more likely to bite if they are not neutered
• Socialize your dog so it knows how to act with other people and animals
• Teach children to refrain from disturbing a dog that is eating or sleeping
• Play non-aggressive games with your dog, such as "go fetch." Playing aggressive games like "tug-of-war" can encourage inappropriate behavior
• Avoid exposing your dog to new situations in which you are unsure of its response
• Never approach a strange dog and always avoid eye contact with a dog that appears threatening
• Immediately seek professional advice from veterinarians, animal behaviorists, or responsible breeders if your dog develops aggressive or undesirable behaviors

Of course, most dogs are friendly and loving creatures and the insurance industry acknowledges that. Still, they're paid to look at the risks and in recent years, the risks have been rising. The numbers don't lie.

How would you like to be able to go through life without the risk of a broken bone? We're not there yet, but there's hope on the horizon. 

A big international study has identified a special gene that regulates bone density and bone strength. The gene can be used as a risk marker for fractures and opens up opportunities for preventive medicine against fractures. 

The study, led by the Sahlgrenska Academy, University of Gothenburg, Sweden, was published in the journal PLoS Genetics. 

Huge study 

The international study, which involved more than 50 researchers from Europe, North America and Australia and was led by Associate Professor Mattias Lorentzon and Professor Claes Ohlsson at the Sahlgrenska Academy, University of Gothenburg, is based on extensive genetic analyses of the genetic material of 10,000 patients and experimental studies in mice. 

Through the combined studies, researchers have succeeded in identifying a special gene, Wnt16, with a strong link to bone density and so-called cortical bone thickness, which is decisive to bone strength. 

The genetic variation studied by the international research network could predict, for example, the risk of a forearm fracture in a large patient group of older women. 

"In the experimental study, we could then establish that the gene had a crucial effect on the thickness and density of the femur. In mice without the Wnt16 gene, the strength of the femur was up to 61 per cent lower," according to Mattias Lorentzon at the Institute of Medicine, the Sahlgrenska Academy, University of Gothenburg. 

Anti-fracture medicine 

The discovery opens up opportunities to develop new medicines to prevent the most common fractures. 

"Low cortical bone mass is a decisive factor in, for example, hip and forearm fractures. Unfortunately, the treatments currently used for brittleness of the bones have very little effect on the cortical bone mass," says Mattias Lorentzon. 

"If we can learn to stimulate the signaling routes of the Wnt16 gene, we could strengthen the skeleton in these parts too, thereby preventing the most common and serious fractures. The discovery of Wnt16 and its regulation of cortical bone mass is therefore very important," according to Mattias Lorentzon.

Peterson Company is recalling Ricotta Salata Frescolina brand cheese that came from its supplier, Forever Cheese of Long Island City, NY. 

Forever Cheese recalled this cheese product due to possible Listeria monocytogenes contamination, an organism which can cause serious and sometimes fatal infections in young children, frail or elderly people, and others with weakened immune systems. 

The cheese was sold to distributors, retailers and restaurants in Washington state and Oregon between July 17 and September 10, 2012. 

The cheese is Ricotta Salata Frescolina brand, cut into 7 ounce pieces, with manufacturer codes 7022, 7212, 7272 and 7432. There is a total of 390 pounds in distribution. 

The potential for contamination was noted after an illness was reported in connection with eating the cheese. Each and every distributor, retailer and restaurant has been contacted in an effort to recall any and all remaining product in the marketplace. 

If you believe that you have purchased any of this cheese please contact your distributor or retailer for a full refund. If you have any questions call Scott Williams or Kelly Beale at Peterson Company at 253-249-2453 Monday through Friday 9 am – 5pm PST and mention Recall, or email Recall@petersoncheese.com. 

In the race for fuel efficiency, Ford is touting improvements in the 2013 Ford Fusion models, with the Fusion hybrid earning a rating of 47 miles per gallon (MPG) in both city and highway driving. Ford points out that tops the Toyota Camry hybrid by eight MPG highway, four MPG city.

While high MPG has long been expected in compacts and subcompacts, larger cars are gradually increasing their mileage ratings. Ford calls the Fusion the most fuel-efficient car of its mid-size class.

"The new Fusion is part of our plan to offer vehicles with the very best quality, fuel efficiency, safety, smart design and value," said Alan Mulally, Ford president and CEO. "We are absolutely committed to class-leading fuel efficiency as a reason to buy Ford vehicles, with customers able to choose the fuel-efficient powertrain that best fits their lifestyle."

Five power-train options

Ford says it has achieved this fuel efficiency by designing five different power-train options for the Fusion. It offers hybrid and plug-in hybrid variants and two fuel-efficient EcoBoost four-cylinder engines for customers.

In addition, Ford has added the option of an auto start-stop system, which automatically shuts off the engine at stationary idle to help save fuel. Fusion is available in front-wheel-drive and all-wheel-drive configurations with both six-speed automatic and six-speed manual transmissions.

Besides the hybrid models, Ford is heavily promoting the gasoline engine versions of the Fusion. It says the 1.6-liter version gets 25 mpg city, 37 mpg highway, 29 mpg combined; the 2.0-liter version gets 22 mpg city, 34 mpg highway, 26 mpg combined.

"Ford is bringing power of choice to mid-size sedan buyers," said Mark Fields, Ford's president of The Americas. "More than two million customers this year will purchase mid-size cars. Our new Fusion delivers the fuel savings people truly want and value, with technologies that cost two to three times the price on some German sedans."

Consumers choosing mid-size cars

Ford is putting a lot of emphasis behind its new Fusion because it believes American drivers prefer a mid-size car to a compact. At the same time, they want and expect fuel saving technology that will help them save money on ever more expensive gasoline.

According to the automaker, the mid-size car segment is the fastest-growing segment in America this year. Overall U.S. industry sales are up 15 percent in 2012, while mid-size car sales have grown 26 percent.

To turn out the new Fusion, Ford said it is adding 1,200 hourly jobs and investing $555 million at its Flat Rock Assembly Plant in Flat Rock, Mich. The new models are expected to be in showrooms later this fall.

An enzyme that could represent a powerful new tool for combating Alzheimer's disease has been discovered by researchers at Mayo Clinic in Florida. The enzyme -- known as BACE2 -- destroys beta-amyloid, a toxic protein fragment that litters the brains of patients who have the disease. 

The findings were published online in the science journal Molecular Neurodegeneration. 

Alzheimer's disease is the most common memory disorder. It affects more that 5.5 million people in the United States. Despite the disorder's enormous financial and personal toll, effective treatments have not yet been found. 

More effective than other enzymes 

The Mayo research team, led by Malcolm A. Leissring, Ph.D., a neuroscientist at Mayo Clinic in Florida, made the discovery by testing hundreds of enzymes for the ability to lower beta-amyloid levels. BACE2 was found to lower beta-amyloid more effectively than all other enzymes tested. The discovery is interesting because BACE2 is closely related to another enzyme, known as BACE1, involved in producing beta-amyloid. 

"Despite their close similarity, the two enzymes have completely opposite effects on beta-amyloid -- BACE1 giveth, while BACE2 taketh away," Dr. Leissring says. 

Beta-amyloid is a fragment of a larger protein, known as APP, and is produced by enzymes that cut APP at two places. BACE1 is the enzyme responsible for making the first cut that generates beta-amyloid. 

The research showed that BACE2 cuts beta-amyloid into smaller pieces, thereby destroying it, instead. Although other enzymes are known to break down beta-amyloid, BACE2 is particularly efficient at this function, the study found. 

Previous work had shown that BACE2 can also lower beta-amyloid levels by a second mechanism: by cutting APP at a different spot from BACE1. BACE2 cuts in the middle of the beta-amyloid portion, which prevents beta-amyloid production. 

Attractive treatment candidate 

"The fact that BACE2 can lower beta-amyloid by two distinct mechanisms makes this enzyme an especially attractive candidate for gene therapy to treat Alzheimer's disease," says first author Samer Abdul-Hay, Ph.D., a neuroscientist at Mayo Clinic in Florida. 

The discovery suggests that impairments in BACE2 might increase the risk of Alzheimer's disease. This is important because certain drugs in clinical use -- for example, antiviral drugs used to treat human immunodeficiency virus (HIV) -- work by inhibiting enzymes similar to BACE2. 

Although BACE2 can lower beta-amyloid by two distinct mechanisms, only the newly discovered mechanism -- beta-amyloid destruction -- is likely relevant to the disease, the researchers note. This is because the second mechanism, which involves BACE2 cutting APP, does not occur in the brain.

The researchers have obtained a grant from the National Institutes of Health to study whether blocking beta-amyloid destruction by BACE2 can increase the risk for Alzheimer's disease in a mouse model of the disease.

Charities are supposed to be just that. They collect money for a worthy cause and, because there is no profit involved, they are tax-exempt organizations.

But the state of New Jersey has reached a settlement with one charity it said was using its tax-exempt status to purchase millions of dollars’ worth of luxury cars without paying sales tax and then selling them all over Europe, Asia and North America.

New Jersey Attorney General Jeffrey S. Chiesa says the state received $25,000 in certified checks from the defendants, toward a total required payment of $65,000. The defendants have also agreed to pay $18,000 to the NYU Langone Medical Center -- a concession the state demanded due to the charity’s claims that it would “supply needed funds to families or individuals battling cancer.”

'Elaborate ruse'

"The defendants allegedly created an elaborate ruse, abusing the 501(c)(3) status of a purported charity in order to buy and export millions of dollars worth of luxury vehicles," Chiesa said. “What is particularly galling is that, as alleged in our lawsuit, the defendants claimed to be raising money for cancer patients. Our settlement agreement fulfills that promise by requiring donations for a medical treatment and research center.”

The state claims the defendants conspired to purchase the cars in the name of the charity. The lawsuit charged the defendants with violations of New Jersey’s Consumer Fraud Act, Charities Registration and Investigation Act, and Charities Regulations.

“Government provides legitimate charities with tax-exempt status as a way to help them perform the good works that are the purpose for the charity’s existence, not as a loophole for those who wish to help themselves to a profit at the government’s expense,” Eric T. Kanefsky, Acting Director of the New Jersey Division of Consumer Affairs, said.

Purchased 71 cars

The charity, Tri-County Charity Center, allegedly purchased a total of 71 luxury and other motor vehicles from 2009 through 2011, spending more than $2.3 million without paying sales tax. Chiesa says the organization then quickly exported many of the vehicles to destinations including Canada, China, Finland, Georgia, Germany, Lithuania, Russia, South Korea and Sweden.

The settlement requires the defendants to prove they have stopped operating as a charity in New Jersey and shut down their Website.

Two companies that recommend long-term care facilities for senior citizens have agreed to settle Federal Trade Commission (FTC) charges that they misled consumers to think that they had researched the facilities and had detailed knowledge about them. 

The proposed settlements, which prohibit the companies from misrepresenting their services in the future, resolve the FTC’s first cases involving Internet-based concerns that offer placement assistance for seniors who need institution-based, long-term care. 

“Senior citizens need honest information when they’re considering long term care options,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “Companies that claim to know which facilities to recommend to consumers need to be able to back up their claims or they will hear from the FTC.” 

According to two administrative complaints issued by the FTC, CarePatrol Inc. and ABCSP Inc. offer consumers free assistance to obtain placements at care facilities for senior citizens, and state that the facilities pay the companies for the placements. CarePatrol operates via franchises in 12 states; ABCSP, which also does business as “Always Best Care,” operates via a network of franchisees throughout the nation. 

CarePatrol Charges 

As alleged in one complaint, CarePatrol’s claims include: 

• “We Grade Each and Every Facility From ‘A’ to ‘F’ Based on Their Last State Survey. Our Local Senior Care Consultants also Pre-Screen every home we recommend.”
• “…CarePatrol’s local, Nationally Certified Advisors look beyond the chandeliers and fancy lobbies to monitor each community’s care history and state violations so we can recommend: The Safest Options For Your Loved One.”

ABCSP Charges

The complaint against ABCSP alleges that its claims include:

• “We provide the best choices to our clients while maintaining the highest standards for living arrangements. . . . we match our clients with the top three or four most appropriate living options based upon individual needs, custom screening and available budgets. . . .”
• “Our Care Coordinators are local and have personally viewed virtually all of the assisted living communities in your area.”

Misrepresentations charged

CarePatrol allegedly misrepresented that it monitors or grades the care history and violations of virtually all, or a substantial majority, of assisted living facilities (ALFs) in a consumer’s desired location, that it provides services through a network of senior care consultants located in every state, and that it monitors or grades facilities based on a review of the facilities’ latest state inspection reports. 

According to the FTC complaint, in most states listed on CarePatrol’s website, the company has not monitored or graded any facilities; it does not operate through senior care consultants in every state; and in numerous instances, it does not monitor or grade facilities based on the most recent state inspection reports. 

ABCSP allegedly misrepresented that its placement recommendations for ALFs and residential care homes in different geographic regions are based on the personal knowledge of its personnel or agents regarding virtually all, or a substantial majority, of the facilities in those regions. 

According to the complaint, the company typically does not know which ALFs and residential care homes have contracts with its franchisees, and in numerous regions, its recommendations are not based on the personal knowledge of its personnel or agents. 

Both complaints note that there are at least 39,000 ALFs and thousands of smaller, residential care homes in the United States. 

Under proposed consent orders that apply for the next 20 years, CarePatrol and ABCSP are barred from making false or unsubstantiated representations about their placement services.

A settlement between a health club and the state of Washington highlights a number of complaints consumers often voice about health club contracts in general.

Washington Attorney General Rob McKenna charged a Liberty Lake, Wash., health club, Physzique, with violating state consumer protection laws. His office responded to complaints that are not uncommon from customers of many health clubs.

“Consumers complained that the contracts signed with Physzique obligated them to a year’s worth of dues, when they had been told they had a right to cancel,” said Assistant Attorney General Brooks Clemmons. “Our investigation also found that several other sections of Physzique’s contracts violate state requirements for health club contracts.”

Illegal omission

The attorney general’s office filed a complaint alleging that Physzique failed to include in their contracts, as required by state law, notices that the club may not raise fees more than once a year and that customers have the right to cancel if they move more than 25 miles from the facility.

Physzique contracts also authorized the health club to increase the amount debited from customer accounts from month to month. State law only allows health clubs to increase fees or dues once a year.

“Physzique also used deceptive advertising, along with health claims that can’t be backed up with scientific evidence,” said Clemmons. “These are misleading tactics that violate state laws to protect consumers.”

Consumers across the country, members of many different health clubs and fitness franchises, have often complained of being misled when they signed up for a trial membership and encountering resistance when they tried to cancel memberships.

Free, unless you don't come

According to the Washington complaint, Physzique provided free trial offers, free consultations or free visits that required “winners” to supply credit card information so that the health club could charge prospective members if they did not show up for their “free” visits.

Spokane’s Better Business Bureau (BBB) reports that the free or reduced services were either bought using the Website Groupon or solicited at events such as bridal fairs through raffles where complainants noticed that not only did they “win” but so did their sister, friend, etc.

The BBB said it received 14 complaints against Physzique in the last 12 months and visited, as a secret shopper, in order to investigate the complaints. The BBB also alerted the attorney general’s office to Physzique’s business practices. The Spokane BBB gives the Liberty Lake business an “F” rating due to failing to cooperate with BBB efforts to address a pattern of complaints and misleading advertisements.

$175 for failing to show up

According to McKenna's office, the health club charged prospective customers $175 if they did not show up for their scheduled consultation, even if those visits were offered as a free trial. That's a violation of Washington’s Prizes and Promotions Act.

Under the settlement Physzique will change language to make clear that patrons are signing contracts and disclose all material terms. They are prohibited from soliciting customers guaranteeing specific weight loss or percent body fat reduction without possessing competent and reliable scientific evidence to support such claims.

Physzique will also pay $15,000 in attorneys’ fees and costs. The consent decree also requires $20,000 in civil penalties, which are suspended as long as the health club abides by the terms of the agreement.

The digital video recorder, or DVR, is one of those things that seemed almost revolutionary when it was invented, but just a few years later, it's kind of yesterday's news.

You can record a show and watch it later? Big deal. You can record two shows while watching another one? So what? Who needs to do that when there's Netflix, Amazon, Hulu and all those other streaming services?

It's really like comparing iTunes and Spotify or Pandora. Sure, you can download a track or a whole CD from iTunes and lots of people still do. But everyday more people figure out they can have all their music everywhere, anytime, on any Internet-connected device. Eventually, iTunes must -- so to speak -- streamify.

The same is true of video. Nearly everyone who's not in a coma at least occasionally streams video and as more TVs and DVD players come with built-in connectivity, the numbers are expected to grow exponentially.

Hang around an electronics department at your local big box store, eavesdrop a little while and you'll find that a major decision point in many DVD purchases is what streaming services it's able to receive. 

This is not a small phenomenon we're talking about. No. 1 video streamer Netflix is already estimated to use 30% of the available Internet bandwidth in the United States during peak hours. 

More after this ...

There is just one little cloud looming over all this sunny prognosticating -- and it is, yes, advertising.

No one follows media trends more closely than Madison Avenue and at the moment, the Mad Men are lusting after streaming video, seeing it as a magic river of data that lacks nothing except a swarming schools of ads, spots, commercials, call them what you will. 

"Video on demand is going to play a major role in how people consume video going forward," said Alan Wurtzel, president-media and research development at NBC Universal, quoted by Advertising Age. 

Why are ad people so fired up about this? Well, it's pretty simple. You can't fast-forward past commercials when you're watching streaming video. The DVR and its ancestor, the VCR, have caused enough heartburn in adland to keep the Rolaids factory working overtime for decades.

After all, it's the ads that foot the bill for all those prime-time shows. Viewers who skip past the commercials have cost the TV business untold millions of dollars in lost ad revenue.

But, you say, there are no ads on Netflix or Amazon Video. True, but this is today and it's tomorrow we're talking about.

Two Pandoras

If you go back to the Pandora model, there are really two Pandoras -- the one you can get for free and the one you subscribe to. (Actually, there are tiers but let's keep it simple for now). The free one has ads, the paid one doesn't.

While no one is talking about it publicly right now, you can expect something similar in the world of streaming video as it displaces the DVR and, for that matter, over-the-air and cable broadcasts.

Even TiVo, which invented the DVR, is now shifting its emphasis to enabling consumers find what they want to watch wherever it may be in the omnisphere (nice word, eh?) on whatever device they happen to be using at the moment.

For example, TiVoStream, a new service that lets TiVo owners stream shows they've recorded to their iPhone. 

So is all this a bad thing? Well, it's a good thing for the networks and program producers in that it gives them more control over their products and should at least protect and perhaps enhance their revenue stream.

Is that a bad thing for consumers? Perhaps those who think everything should be free will think so. But if everything was free, we wouldn't have much other than what YouTube offered in its early days. Or what Facebook offers today.

Free content sounds good in theory but it takes a lot of money to produce the high-production-value programming Americans and consumers everywhere have come to expect. Streaming video may well turn out to keep the lights on in Hollywood, at 30 Rock and all the other fantasy factories.

Besides, think how much more entertainment-cabinet space you'll have when that bulky DVR is gone. You've already pitched all your old DVDs and CDs, haven't you?

When you're a kid, it's nice to get an allowance.

Even though I didn't do much to get mine when I was a child, receiving a few bucks from my folks always gave me a slight feeling of accomplishment back then.

In a recent survey released by the American Institute of CPAs (AICPA) it was found that 61 percent of parents give their kids a steady allowance and 54 percent said they started doling out money to their children once the child reached 8 years old.

“These findings make clear that it can pay to be a kid,” said Jordin Amin who is chairman of AICPA's Financial Literacy Commission in a statement.

“Parents need to make sure they're also passing along financial sense with those dollars and cents. Earning, budgeting and saving are all important lessons that can be tied to allowances, lessons that can help put children on solid financial footing," Amin said.

$65 a month

The survey also revealed that kids were paid an average of $65 a month, with 89 percent of parents requiring their children to do some type of job for at least an hour a week.

In addition, 48 percent of children were paid for good grades, and the average going rate for an "A" is $16.60, according to the report.

Although such a high percentage of parents shell out a consistent amount of allowance on a regular basis, they ironically don't spend much time talking to their kids about how to manage those dollars.

The most popular topics parents spoke to their children about instead of money management were good manners (95 percent), proper eating ways and good grades (87 percent), warnings against drugs and alcohol (84 percent) and the dangers of cigarette smoking (82 percent).

It's safe to assume that many parents assume kids will learn the lessons of personal finance at school, but in a separate survey conducted by the National Jumpstart Coalition for Personal Financial Literacy, over half of children (58.3 percent) learned money management tips from home, instead of the classroom.

The Jumpstart survey also showed that only 19.5 percent of children learned money management from home and 17.6 learned it through financial trial and error.

Importance of saving

The AICPA says parents should still monitor their kids’ money after allowance is given, and children should learn the importance of saving a portion of their cash for long term purchasing goals, like buying a new skateboard, or saving up some spending money for a school trip.

According to AICPA this will teach children to balance their funds, which will hopefully be carried over in to their adult life.

The accountants organization also says parents shouldn't be hiding all of the household’s financial decisions from their children, as discussing some things with them can give them a far better perspective on how to budget funds.

So if you're saving money for a new car for example, explaining to your kids what it will take to budget in order to pay for it, will help them tremendously in their future.

Another suggestion is to put limits on the allowance you give, so children can understand it’s not a legal right of theirs to receive it. Parents should let their kids know that allowance can be taken away or raised if certain accomplishments are reached, like doing extra chores or getting good grades in school, says the AICPA.

The report by the CPA group also shows that parents who give their kids a steady allowance usually don't pay for other expenses like cell-phone bills, expenses to join sports teams, or other costs  many adolescents run into.

It also revealed that 47 percent of parents expect to financially support their children until they reach 22 years of age.

Bank account

Other financial experts say it's of great benefit to your child if you open a bank account for them, as it allows children the opportunity to see their allowance grow with each savings deposit, which will provide a huge incentive for them to keep adding to their balance.

For younger kids a piggy bank or a home-safe of some kind that shows the tally amount is also good for kids to have, say experts.

“As parents we feel a strong commitment to our children and ensuring they have all that they need to succeed,” said Amin. “One of the best gifts we can give them is a solid education on managing money," he says.

The party's over, California. Amazonstarted charging sales tax on California purchases over the weekend and other retailers will be doing so as well.  The exact amount of the tax ranges from 7.25% to 9.75%, depending on how much various cities and counties add on.

The deal was sealed just one year ago, when Gov. Jerry Brown signed "landmark" legislation imposing sales tax on online purchases. Brown said then that it would "create tens of thousands of jobs and inject hundreds of millions of dollars" into the state's moribund economy. 

State tax officials are expecting to take in as much as $100 million in taxes just on Amazon purchases during the first year, plus another couple of hundred million from other online retailers.

A hundred million here, a hundred million there ... pretty soon you're talking about real money.

As for those tens of thousands of jobs Brown promised, the only ones we know about so far as 35 new auditors, collectors, clerks and lawyers that the Board of Equalization plans to hire.  That, if you haven't guessed, is the official name of the state tax collector agency.

"The agency is ready," said Jerome E. Horton, chairman of the Board of Equalization. He said the agency's 90 investigators will be on the lookout for online retailers who don't collect the tax.

Amazon for years resisted collecting state sales taxes but has now shifted its strategy. Previously, it tried to avoid collecting taxes in major states by putting its distribution centers in adjacent states, enabling it to say it had no operations in, say, California.

But now, Amazon is opening distribution centers in big, populous states and putting them close to big cities, hoping to offer same-day or at least next-day delivery.  Thus, while Amazon gives up the no-tax advantage bricks-and-mortar retailers have complained about for years, it may soon be able to offer such fast delivery that it becomes easier and quicker to order something online than to jump in the car and slog through traffic to get to a physical store.

As part of its deal with Gov. Brown last year, Amazon promised to open two million-square-foot distribution centers in Northern and Southern California and said it would create 10,000 full-time jobs and hire 25,000 seasonal employees by the end of 2015.  Might want to mark your calendar to make sure that happens.

Amazon spokesman Scott Stanzel says the deal means that Amazon will offer  "vast selection and fast delivery" while adding jobs in California.