What can we as Caribbean people do to be more responsible for their financial situations?

What can we teach our children so that when the next economic downturn comes along they’ll be prepared.

One possible answer is to become better educated about what it takes to be financially secure. It’s no easy task, under the present circumstances, when so many of the different islands are struggling to get a financial foot-hold on their economy.

But besides educating our children about financial responsibility, we must keep a positive attitude, and more importantly passing on this behavior to our kids.

Here are some simple lessons we can teach kids as a part of their long-term preparation for adulthood. Not forget the basics: spend less, save and (cautiously) invest more, and always follow a plan.

1. Start by being honest with yourself about your situation, and then take positive steps to better understand and cope with your present situation.

2. Manage and track your spending.

3. Start a savings account, and save as much as you can.

4. Reduce credit card spending — try your best to stay out off debt.

5. Continue to learn — you are protecting yourself when you maintain a marketable skill.

6. Maintain health insurance.

7. Open a retirement account and add to it monthly. Take responsibility for your own future.

Even in a fluctuating job market, consider yourself capable, and acknowledge your potential by maintaining a positive attitude, and being kind to yourself. Recognizing the significance of our contributions and the validity of our participation, is an important factor in the development of our self-concept. It also helps build the confidence we’ll need to get over the financial hump.

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During these tough economic times, more families need to economize and save. But cutting back everywhere isn’t always the best course.

Sure you’re cutting back to save money,but you and your family have to eat, house yourselves and stay healthy.

But once you’ve taken care of the essentials, financial experts say there are additional areas that require real investment, whether you are spending time or money.

The Wall Street Journal recently rounded up six places it pays to spend more cash, not less.

In a nutshell, the WSJ suggests it’s worth your money to:

1. Pay for expert advice.
2. Pay to bring down debt.
3. Pay yourself.
4. Pay for little indulgences.
5. Pay for some things you could do yourself.
6. Comparison shop.

Tips like paying for a little indulgences may sound a bit condescending, but even they can pay off big-time in the long run:

Indulging in the occasional guilty pleasure—a $4 latte, for example—can be a good idea when times are lean, says Erica Sandberg, author of “Expecting Money: The Essential Financial Plan for New and Growing Families.”

“It’s a very dreary existence when you cut down your expenses to an absolute skeletal budget,” Ms. Sandberg says. “If you do that too long, it’s like a diet, and you are going to raid the refrigerator.”

Be sure to take some time out to read WSJ article [Scrimp to Save More Than Money – via Consumerist] for a more in-dept explanation behind each expense – and while we’re on the topic to “Saving or Spending money” we’d love to hear what expenses you think are worth paying for in the midst of this global recession. Let’s hear what you’re to say in the comment.

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This is the same out-of-hand credit is presently taking the Caribbean by storm, banks in the Caribbean who were once very reluctant in issuing credit cards likewise debit card to just anyone – nowadays anyone with a job is pre-approved for one of these cards.

The fact of the matter is, almost 75% of the people who apply for these credit, debit or charge cards have no clue how these cards work and then after a couple of years find themselves in a debt – trying desperately to keep up with the minimum payments. It’s time for a little personal finance 101.

One of my favorite personal finance weblog ‘The Simple Dollar’ take a beginner’s look at the pros and cons of three kinds of plastic: charge cards, debit cards, and credit cards – explaining the differences between each, including the advantages and disadvantage of each payment method. For example:

Charge cards are often confused with credit cards, but they actually function in a fairly different fashion. Like credit cards, charge cards extend credit to you from the issuer, but you’re required to pay the full balance at the end of the month. Some charge cards also have an annual membership fee. Charge cards are typically associated with American Express; many store chains often issue their own charge cards as well which can only be used at that store.

To be honest, I’ve always assumed charge cards were the same as credit cards, but then I may be behind the curve on this one, and so might be a lots of people. The point of this post is to make people understand each of these cards might work better than another for specific types of purchases, so knowing which to use in any given situation is important. Click the link above to read more about these charge cards and how you can protect yourself.

If you use more that one type of plastic, let’s hear how you divide up your spending among them in the comments.

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