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Your Guide to Money and Entrepreneurship!

OTM Fall 2012.indd 1 1/8/13 6:21 PM

Winter is coming and soon it’ll be time to bundle up in layers of clothing. Why not bundle up in layers of success? Whatever grade you may be in, there are sure to be goals you want to attain and new milestones to pass. A new year will commence, and we will all have New Year’s resolutions-- most often new, beneficial aspects to incorporate into our life and habits.

This season’s magazine issue emphasizes the theme of “Getting Your Money Right”. Many of the topics addressed cover the world of entrepreneurship and how to gear up to start a small, successful business. The articles highlight cautionary steps and key advice on developing agood business mentality. If you have an interest in business sectors such as food, retail, service or technology, you are sure to hear realistic input from people who have started businesses in these fields. Articles throughout the magazine could trigger you to think about your own future business plans.

Life as a young student can sometimes involve making a lot of time and money decisions with or without a job. It’s crucial to hold off on intriguing but unnecessary expenses. Imagine how unwise a fancy outfit purchase will seem if it kept you from affording a college application fee or a tour of your dreams at a prestigious university. Or, picture the convenience of having savings to afford comfortable living expenses during college, whether rooming at a school or the milestone of living in your own apartment, renting.

Read through for advice on budgeting, shopping smart, and saving on college visits. Think smart, be strong, motivated, charismatic, giving and view life as an opportunity for greatness, grateful and proud of your accomplishments. Who knows? The articles in the magazine could inspire a New Year’s resolution to learn more about what it takes to start a small business, or to start saving more for college and be set for life. Whatever your goals may be, working hard toward a secure future at a young age gives you the time you need to realize your dreams.”

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Student Letter

Maribel Arellano

On The Money magazine is written by teens for other teens. On The Money covers entrepreneurship, business, finance, credit, saving and more... providing real world experiences and resources that can help students learn to meet their business, money and career goals. On The Money is provided by the Economic Awareness Council through collaboration with the Chicago Public Library, DePaul University, the Office of the City Treasurer of Chicago, Stephanie D. Neely, and True Star Magazine.

The Economic Awareness Council (EAC) is a financial education non-profit organi-zation that serves over 12,000 individuals each year with programming for students and families.

Magazine Design and Layout by Jessica Alessi

On the Money Magazine would like to thank The Coleman Foundation, HSBC Bank USA, N.A.,the Office of the City Treasurer of Chicago, State Farm Insurance Companies®, the Charter One Founda-tion and TCF Bank for their sponsorship of this issue.

Thanks to our program partner:

Table of Contents

About the EAC

Thank You

About On The Money

Letter From the City Treasurer

Business Men and Women & Fashion Business

Independent Jobs & Spend Less, Save More

Pop-Up Businesses & Getting Gold

Small Food Business: A Recipe for Success

Small Biz vs. Franchise & F.A.T.E. for all People

Starting a Small Business

The 411 on Business

Accounting: the Language of Business

I Want it Now! & College Fly-ins

Pension Reform & Expensive Touchdowns

Homes: Rent vs Buy & Shopping on a Budget

Democrat vs. Republican

In the Know

Saving on Clothing & Environmental Saving

Letter from HSBC

Small Business Expo & Young Entreprenuership

Small Business Mindset & OTM Survey

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Maribel Arellano Junior, University of Illinois at Chicago

(Gage Park High School Graduate)Kamal Bilal

Junior, Whitney Young High SchoolDarius Clay

Senior, Chicago Talent DevelopmentJoshua Conner

Senior, Phoenix Military AcademyPierce Conway

Senior, Jones College PrepDemetrius Drummer

Junior, Lindblom Math & Science AcademyDavon Fullilove

Sophomore, Air Force Academy High SchoolStephanie Greene

Senior, Walter Payton College PrepDayanara Guyton

Senior, Phoenix Military AcademyEmpress Howard

Sophomore, Martin Luther King Jr. College Preparatory High School

Courtney James Junior, Austin Business Entrepreneurship & Academy

Tia James Senior, Walter Payton College Prep

Sade C. Johnson Senior, Gwendolyn Brooks College Preparatory Academy

Tanesha Jordan Senior, North Lawndale College Prep

Toni Lymas Senior, Prosser Career Academy

Kaprisha Martin Junior, North Lawndale College Prep

Alex Mitchell Junior, Whitney Young High School

Justin Mitchell Junior, Whitney Young High School

Sana Moore Junior, Chicago High School for the Arts

Crystal Stonewall Sophomore, Chicago High School for Agricultural Sciences

Deniz Tatargil Senior, Walther Payton College Prep

Leo Thomas Freshman, Hyde Park Academy High School

-Happy reading and best wishes for a bright, exciting future!

OTM Fall 2012.indd 2 1/8/13 6:21 PM

A Letter from Chicago Treasurer, Stephanie D. NeelyYou are never too young to “Get Your Money Right.” As Treasurer of the City of Chicago I am often asked about the best investments. I tell people, especially young people, invest in your education -- it will pay you dividends for your entire life.

Studies show that over the course of a working lifetime people with a college degree will earn close to $3 million dollars more than someone with just a high school diploma and the value of that degree will only continue to increase.

The cost of a four-year college degree is higher than ever and still rising. As a result, student debt in America has reached more than $1 trillion, surpassing even credit card debt. The average college senior is now graduating with $26,000 in debt and facing a difficult job market.

Paying for that higher education is going to take hard work and resourcefulness from you and your family. You can start by developing a healthy relationship with money.

Learn to budget your money, live within your means and develop a savings habit. College students with their own savings are 30% more likely to graduate from college; running out of money is the number one reason people drop out of college.

The second thing you can do is make sure you know all your options for higher education. There are multiple ways to get a college degree and many ways to pay for it:

• Lookforallsourcesof“freemoney”suchas scholarshipsandgrants.• MakesuretocompleteyourFAFSAfederal studentaidformassoonaspossible.• Also,consider2-yearcommunitycollegesasa placetostart.Theaveragetuitionisjust$3,000 ayearandmost4-yearcollegeswillaccept transfercredits.Youcansavebetweentenand fiftythousanddollarsonaverage.• Beawarethatnotallschoolloansarecreated equal,andloansfromfor-profitschoolsusually costmore.

You CAN make college happen for yourselves: it just means you and your families have to work smarter than ever at planning for a college future.

Remember, it’s your money, your choice.

Stephanie D. NeelyTreasurer, City of Chicago

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Do you learn about personal finances in school? Do you learn about it at home? While some may answer ‘yes’ to these questions, others might say ‘no’. Those involved in teaching and promoting financial education as a part of our day jobs often hear that the same education should also be incorporated into homes and classrooms. The challenge, however, is that studies over the years have shown that not all parents and teachers themselves are comfortable with financial education topics, so asking them to help teach it may not be realistic. Certainly, the saying “You can’t teach what you don’t know” applies.

Good news for you, your teachers and your parents is here! The Youth Committee of the President’s Advisory Council on Financial Capability (or PACFC, for short) has introduced a framework of basic building blocks that is designed to help kids aged 3 to 18+ learn the fundamentals of finances. This framework is broken into different age groups – 3-5 years; 6-10 years; 11-13 years; 14-18; and 18+ years. As a financial educator, I can assure you that we can all find value in this new framework!

The website, www.moneyasyougrow.org, is easy to use, straightforward, and contains a wealth of information for anyone looking to learn (or help others learn) about money. Beginning with what money is for and how it is obtained, to how to spend, save and invest it, the site contains information and activities to help kids and students of all ages learn what they need to know to help build a solid platform of money fundamentals.

At a minimum, be sure to download or print a copy of the 8 ½” x 11” “Money As You Grow” chart for easy reference. Students should keep a copy in their folders, parents can tape a copy to the refrigerators, and teachers can tape a copy to the classroom wall. Learning and committing the 20 lessons to memory will serve you well!

If you are looking for a bit more depth on some of the money basics, or looking for information on topics not covered by the Money As You Grow –site, be sure to visit www.YourMoneyCounts.com. In particu-lar, the module titled Your Financial Foundation may be just what you’re looking for to help establish a solid, financial platform on which to build your future wealth. You’ll find information in easy-to-under-stand language, with no sales or marketing messages that can get in the way of learning about finances.

In a world in which finances can become overly complex with new and unique products and services, having a strong grasp on the basics will be critical. The more we all learn about money, and the sooner we do it, the better off we’ll all be.

Help for You, Your Teachers,

Your Parents

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If you are gearing up for college, you might be focused on choosing a major. Perhaps you already have an interest in technology and business. It’s a good time to start looking into specific careers you find intriguing. You may plan to work for a great institution or corporation. Or, you may dream of eventually becoming your own boss. That’s great! But aiming to be self-employed and creating a company is tough work, and involves a lot of research and trial and error.

Several years ago, while he was still an Electrical Engineer with Motorola, Brian Frizzell tried to create a marketable traffic-tracking technology. He put effort into the idea while he thought he had a competitive advantage, but he had to be wise and continually assess whether to continue. He remained alert and observant of recent advancements in the industry, eventually realizing that the business idea was not as promising as he once thought. With good judgment and assertiveness, he decided to withdraw and create other goals. He completed his Master’s degree in Business Adminis-tration (MBA) and is now a financial consultant and an angel investor. He is proud when he sees the small companies he worked with strengthen. He hopes to keep working with the growing companies to help them develop even further. Said Al-Hallaj is the Chairman/CEO of AllCell Technologies and a Chemical Engineering professor. He taught for many years at the Illinois Institute of Technology and will teach a course in 2013 at the University of Illinois at Chicago. He works with renewable energy, and his main interest is clean

energy and water technology, both in the U.S. and developing countries. In the course of his research at the Illinois Institute of Technology, he developed and patented a lithium-battery technology. Ambitious and always interested in taking new technology from the lab to the market to meet societal needs, he took the initiative to start a company with a fellow professor. Patents provide an advantage over competitors. It is intellectual property, such as a process, product, or trademark and the owner is usually compensated when others acquire his or her permission to use the protected property. According to Professor Al-Hallaj, it is not that difficult to start a company but it can be rather challenging at first. He also admits that it takes the right people to meet the challenges facing small businesses. His small business “cannot afford people only responsible for A or B. All company members need to be able to write reports and proposals, manage, and perform economic analysis.” However, for ambitious, curious people that want to continually be challenged, having to do a bit of everything to see the company succeed is a benefit. In the corporate world, employees may not have the chance to become well rounded, due to a large number of employees strategically hired to work on narrowed-down tasks. He advises entrepreneurs to be patient. He worked for 11 years to make his company what it is today. With only 5-10 employees until about a year ago, there are now about 25 people involved in his company. He hired people to complement the technical aspects by working on marketing and commercialization. What has allowed him to keep his spirit for over a decade is “managing to maintain growth and survival and consistently being able to distinguish themselves in the market”. As a young adult, it is not too early to look into a future business plan. Find out about workshops and internships, and remain in contact with professionals you meet.

Small Business Mindset for Business and TechnologyMaribel Arellano

The following information comes from a survey of mostly high school teens who are readers of On The Money Magazine. Here is what you had to say about youth employment.

What career do you plan to pursue after finishing High School?

While 76% of students completing the OTM survey had had a paid job experience, 71% of teens believed that there were NOT enough paid job opportunities overall for teens!

80% of the career choices require at least a 4 year Bachelor’s degree!

Yes 29%No 71%

Yes 76%No 24%

The winner of our $20 random drawing is Toni from

Curie Metro High School! Please go to www.otmsurvey.com to take our new survey.

A random response will be selected to win $20.

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While at the 2012 Expo, I was able to speak with owner of Eli’s Cheesecake Marc Shulman. Shulman’s father owned restaurants and inspired him to perfect a cheesecake recipe which he developed into Eli’s Cheesecakes. When asked what advice he would give entrepreneurs, Shulman replied,”Be passionate. Be persistent. And take the long term view”.

I was also able to speak with ‘tell it like it is’ business consultant Carol Roth while at the Expo. Roth is someone who has helped many failing businesses and shared some words of advice. When asked what characteristics entrepreneurs needed to be successful, Roth said “Entrepreneurs must have goals, work smart, and be able to persevere. Most importantly you must build your network. You have to be able to ask for help when needed”. To establish goals and build a network, every entrepreneur should attend the annual Small Business Expo.

Small Business Expo & Chicago City Treasurer Inspire Chicago Entrepreneurs

Pierce Conway

Pierce Conway

Overcoming Challenges as A Young Entrepreneur

Starting a business may be more challenging for a teenager than an adult because teens tend to lack resources needed such as capital, network, and knowledge of the field they wish to enter. Although these challenges facing a young business owner may seem overwhelming, these challenges can be overcome or avoided.

An example of a young business owner who overcame challenges is 21 year old Logan Rush. Rush was only 18 years old when he founded his first company, Millennial Services LLC. After interning at Angie’s List, a company whose website allows people to post customer reviews of products and services, young Rush realized that there was an additional service needed for company’s like Angie’s List to be successful. Rush says, “I remember when I worked for Angie’s List it would take multiple days for the support team to respond to an inquiry. I realized that I could help them improve their customer service.” Rush started Millen-nial Services to provide offsite customer support for online companies. For example, if a customer has an inquiry for a website such as Angie’s List, Rush and his employees will respond instead of employees that worked for the company.

When first starting out, Rush was able to utilize a loan from his parents for start up capital and was lucky enough to have his former employer, Angie’s List, become his first customer. Already having a major client, Millennial Services seemed to be on track to become a successful start up company.

A study from the United Bureau of

Labor found that 75% of teenagers wanted to learn how to start their

own business.

Michael Schlesinger of John Marshall Law School explains the differences between an employee

and independent contractor, “For all employees, an employer must withhold federal and state

taxes from employees’ paychecks which must be turned into the

federal government. This is not the case with independent

contractors.” Since independent contractors are not employees, a start up company like Millenial can substantially reduce over-

head costs by using them.

Rush hired ten of his high school friends as employees but soon realized that they were not getting the job done efficiently. After firing his friends, Rush was faced with the challenge of finding new, capable employees. Rush creatively responded to his dilemma of finding new workers and deciding what kind of workers they would be. He did so by tapping into a market of stay at home moms who were looking for part time jobs. Logan hired two employees to manage a network of 80 independently contracted stay at home moms who are paid based on specific assignments.

Rush is an example of how young entrepreneurs can overcome challenges that they face with creativity and determination. When asked about the success of Millennial Services and future goals for the company, Rush stated “I am proud of the company’s success. My ultimate goal is to be able to sell my company for $50 million dollars”. Like Rush, today’s entrepreneurs must shoot for the stars.

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I originally got my internship through

the Chicago Summer Business Institute

program which places teens in

professional work environments with

the purpose of grooming tomorrow’s

business leaders. (for more info visit

www.chicagobusinessinstitute.com)

For the past 11 years, thousands of aspiring and established entrepreneurs have dedicated a day to learning new skills and networking at the Small Business Expo. The Expo, which took place this year on October 5th, is hosted by the Chicago City Treasurer’s Office with the purpose of providing local business owners with resources to start or grow their business. The exhibitor hall hosted 100 established businesses who want to promote their services. About 30 workshops are hosted with a range of topics, such as “Selling Techniques” and “Social Media for Small Businesses”, which promoted skills to those wished to grow their business.

As an intern for the Treasurer’s Office during the summer, I was able to help coordinate the Expo. It was great experience being able to communicate with the various entrepreneurs and sponsors who wanted their businesses represented at the Expo. Maintaining a list of which businesses want to exhibit is often a stressful process for the Treasurer’s Office because of the registration process every exhibitor and sponsor must complete. Although this process is often long, it is worth it when the businesses get their services exposed to the Expo’s thousands of attendees. The experience my internship gave me was very rewarding as I got to learn about entrepreneurship and management.

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No matter what the field, running a business is possible. Mark Sussman and Natalia Rodriguez decided to launch a fashion business. Their business is to help other fashion designers start their own businesses. Mark, retail director, and Natalia, as-sistant director, operate Chicago Fine Tailoring Design Institute, which is an 8 week workshop series to assist new design-ers in the fashion field. Mark and Natalia introduce the delicate balance between art and business in these programs. I learned about the work of the Chicago Fine Tailoring Design Institute at a Chicago Ideas Week event. Chicago Ideas week is a city wide event in October dedicated to “the sharing of ideas, inspiring action, and igniting change to positively impact our world” (Chicago Ideas Week, 2012). The fashion industry designs products such as clothing, jewelry, and accessories of the current season as fashion is a seasonal business. Certain styles only sell in spring, summer, fall, or winter. Designers, retailers, and consumers make up the fashion industry. They keep the business in business.

Sussman and Rodriguez describe fashion as a competitive business, especially preserving your market share. Taking classes like those offered at Chicago Fine Tailoring Institute can help. In maintaining a fashion business, controlling your budget is the number one significant skill needed to not go out of business. A lack of specialized education in marketing, pattern making, sewing, and business are barriers for many entrepreneurs in fashion in protecting their business rank. Having professional skills developed will be a benefit to your advantage and your business and this is the work of the Chicago Fine Tailoring Institute. All things are possible if you’re motivated and focused. Next year, keep an eye out for other excit-ing workshops through Chicago Ideas Week.

Check it out at www.chicagoideas.com

There are multiple businesses that have failed, although there are businesses which have succeeded as well. “Young entrepreneurship in the U.S. is on the rise, with the 20-34 age group comprising 29 percent of the total new entrepreneur-ship activity in 2011,” (Beesley,2012), and with future generations, the number is likely to rise. If the procedure required and skills learned are present, then your dream to become an entrepreneur can become reality by the time you are 30! People have done it in the past and have succeeded. An excellent example would be Bill Gates who launched Microsoft Company. His net worth today is $61 billion. At the age 19, Bill Gates turned his ambitions into today’s largest computer software company. Mark Zuckerburg, the creator of Facebook is a prime example of an individual who was determined and aware of creating a network to connect billions of people. He was 21 pursuing his passion for computer networking skills. Although he was young, he knew what his market need and target audience was. Nicole Jones, CEO of Nchantment, gives the advice, “When visioning your vision, be specific.” Connections are the number one key to broadcasting your business. People are available to help you launch your business. It’s easier to connect with others in your interest when you’re young. You’re more active and involved. In undergrad, at work, with internships and programs, there are opportunities where you can meet people with similar business interests. However, people will not always understand your vision and neither are you always going to be encouraged to do what you love! It doesn’t matter how many times you get rejected or isolated from your desires, find a way. “Patience is a key element of success,” as Bill Gates suggests on building your business wealth. SCORE, a nonprofit association, helps develop small businesses across America with the help of more than 13,000 mentors (score.org, 2012). You can partner up and design a product or business that society needs. The help is out there, you just need to interact with others and get the resources.

Fashion Business Entrepreneurship

Business Men and Women Before 30

Dayanara Guyton

Dayanara Guyton

Qualities of an entrepreneur • Motivated • Focused

• Risk taking • Leadership • Organized

• Open to experiences • Knowledgeable on the field

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Imagine being an independent teen making your own decisions. Let’s say that you have a part-time job and you use the money to make purchases of your choosing. Everything in your life is pretty much intact. But suppose you were suddenly relieved from your part-time job – then what are you to do about your financial responsibilities (including wants)? In recent years, teens have been hit hard by the recession when it comes to finding part-time work during the school year and summer. According to the U.S. Bureau of Labor Statistics, as of October 2012, the teen unemployment rate is about 24%.

Despite this stark fact, both male and female teens ages 16-19 will still resort to spending their very last dime to assimilate to the latest trends – both clothing and electronics are included. The real question is: why are so many teens willing to incur debt to keep up with the evolving trends? The brutal truth to this answer is peer pressure. A high school senior from a Chicago Public School who wishes to remain anonymous explains “teens fear being called ‘basic’ when they aren’t dressing like their peers.” A trend of keep-ing up with the trends has been established.

So what does this mean for fashionable and budget conscious teens unwilling to rack up debt? Try buying clothes from a thrift store for inexpensive prices, and look online for possible purchases of electronics at discounted prices. There isn’t an exact statistic stating how many teens are thrifting these days, but it is an inexpensive trend that is definitely on the rise. The thrift industry has been increasing 5% a year (National Association of Resale & Thrift Stores, 2007).

So teens, take a moment to re-evaluate prices before you purchase. The next time you think twice about what your friends will think about the item you wish to buy, consider this: “Are your friends going to help you pay for the item?” If the answer is no, then shop for yourself and let your friends do the same.

Statistics show that about 33% of teens are tempted to overspend

because they are intimidated by the “fancy accessories” worn by their friends.

Senior Tanesha Jordan said she “would rather purchase a non-name branded item because she feels that everyone that dresses the same is the true definition of ‘basic-ness’.”

Spending that Hard Earned Money - Spend Less & Keep More

Independent Jobs for Independent Teens

Sade C. Johnson

Sade C. Johnson

(Alliance & Leicester, 2008)

In recent years, the teen unemployment rate has continuously increased, especially for teens between the ages of 16-19. (Gandell, 2010) This is primarily caused by older people filling most of the available employment positions and thus gradually pushing teens out of the workforce. Fortunately for teens, entrepreneurship opportunities are always an option – especially if you want to generate revenue at your own pace rather than at a supervisor’s pace. Here are a few entrepreneurship options that you should definitely consider as an idea to get yourself employed today!

1. Start your own Babysitting ServiceIf you know you’re good with children and you wouldn’t mind spending countless hours with them, then babysitting services are for you. Start off by offering inexpen-sive child-care services. As demand for your services increase, then so should your prices. An important thing to remember as you babysit, is to do a great job so you can keep your babysitting business booming with referrals or word of mouth.2. Start a Carwash ServiceEnjoy cleaning and need some extra cash on the side? The carwash business may just be right for you. 3. Be a Tutor If you know you are good at certain subjects, why not offer to tutor those who aren’t as good as a means to enhance their ability to achieve in the subject(s)? Before diving into this job, make sure you have a lot of patience and are good working with people as both are essential in an effective progression in tutoring. 4. Good at a sport? Be a sports trainerIf you have mastered the fundamentals of a sport, offer your services to those who wish to participate in the sport in the future.5. Sell Snacks Wherever you decide to sell these snacks, make sure you check with the administration as some places have strict regulations on bartering on their property. (familyeducation.com, 2012)

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High Teen Unemployment

Few Minority Teens Employed

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This fall, the Chicago Public Library’s Harold Washington Library Center hosted an exhibit in partnership with Facing History and Ourselves as part of the citywide Now is the Time Project. The exhibit displayed videos, photos, and descriptions of historic civil right movement events and personal stories, including stories of victims of abuse, as well as the stories of advocates who took a stand for justice. An additional component was a student art project, expressing the personal meaning of justice and peace for students. The student art project included a framed display of students’ small paper notes with confessions of participating in or not advocating against a harsh moment of bullying or wrongdoing. Learn more at nowisthetime.org and choosingtoparticipate.org. The Director of the Chicago Exhibit, Bonnie Oberman, describes the point of the event to be “an opportunity for people to really think about how they participate in society and the roles they are playing in their lives.” Bonnie believes the exhibit and project are a way to engage people in learning about injustices that have happened, and still occur, and to encourage people to take the initiative to fight for peace and fair treat ment. Bonnie appreciates the positive feedback she has received from thousands of exhibit viewers. Additionally, Bonnie participated in the development of units for a Chicago Public Schools (CPS) civics course. Along with a personal finance course, the pilot program, Global Citizenship Initiative, started running in 14 high schools this school year. The professionals involved in the course aim to have students more at a par with the rest of the nation by: transforming the teaching practice; preparing students for full and active participation in democ-racy; and enabling students to think critically while doing meaningful things in their community. “It’s not just about being a good student but a great citizen,” says Cortez Hicks (ISAC Corp Member at the Illinois Student Assistance Commission). Curie H.S. senior and student speaker at the opening presentation, AZUCENA Evelyn CARABEZ, spoke about her experience being a Harris Fellow for multiple years. She says the leadership program helped her find herself and allowed her to feel passionate about excelling during her secondary education and obtaining a career. She wants other people to have the confidence to not follow others without fear of judgment. As members of society, even if a majority does not dedicate time for improvement in neighborhoods, we should strive to be leaders in creating a better place to live. This is also important in business. As detailed in the book Good to Great by Jim Collins, leaders embody a paradoxical mix of personal humility and professional will. They are ambitious . . . for the company, not themselves. Fair treatment will allow relationships and productivity to flourish. Find information about special opportunities your school offers and have the motivation to keep up with free city events that allow you to be engaged with people around us and grow in character.

“F.A.T.E” FOR ALL PEOPLE: Fulfill. Advocate. Triumph. Engage.Maribel Arellano

If one wants to be his or her own boss, there are generally two ways to make it happen. The first option is to start up a small business. Starting up a small business can lead to many personal, professional and financial benefits. Personal benefits include making one’s own schedule and working where ever one chooses to. Professional benefits include advancing more rapidly than in a traditional office setting and the absence of a boss’ micromanaging. Lastly, research performed by Thomas Stanley and William Danko for their best-selling book, The Millionaire Next Door, found that self-employed businesspersons were four times more likely to be millionaires than those in traditional employer-employee roles (Six Steps to a Successful Small Business, Abrams). In fact, the same book gives a staggering statistic that 2/3’s of all millionaires started out owning a small business. One must also consider the negatives that come along with owning a small business. Challenges such as high start-up costs, consider-able fluctuations in income, lack of professional mentors, and unforeseen market changes require that small business owners be very self-sufficient.

The second option is to buy a franchise. A franchise is a license granted by a company to an individual to market its products or services in a specific terri-tory (Dictionary.com). (Examples include: Batteries Plus, Jimmy Johns, Edible Arrangements, Subway, etc.) There are both positives and negatives that come with buying a franchise. The positives are relatively low failure rates, help with start-up and other costs, marketing advantages, and brand recognition. The negatives that come with buying a franchise are licensing or franchise fees, the buyer doesn’t actually manage all of the business-related decisions, and it is very expensive to buy a franchise. According to entrepreneur.com/franchise500/index, the average cost of starting up one of the ten most popular franchises is $500,000. Bobby Mitchell, franchise owner of The Onion- Ann Arbor had this to say about owning a franchise. “I liked the idea of the low risks that come with owning a franchise, but I soon realized that the rewards had a relatively low ceiling.” (This means your earnings generally will not have the potentially to increase as much.) No matter which way one goes, the challenges will be tough but the rewards of owning a business may be well worth it.

Small Business vs. Franchise OwnershipAlex Mitchell

Small  Business   Franchise  Positive   Negative   Positive   Negative  Freedom  schedule   High  start  up   Low  failure  rates   Expensive  to  

purchase  Income  potential   Unstable  income   Help  with  start  up   Lack    of  control  over  

business  choices  You  are  your  own  boss  

Lack    of  mentors   Brand  recognition/marketing  

Licensing  fees  

 

Son of Walter Payton, Jarrett Payton, founded the Jarrett Payton Foundation committed to positively impacting the lives of children and adolescents by building leadership skills and working to end bullying. Here are Jarrett Payton’s comments about starting a foundation to improve the lives of others:

“I learned from a very young age that it was important to give back to my community. My parents taught me the important values of charity and helping to take care of others. I always knew I wanted to give back in my own name and begin my own family tradition with a family foundation . . . The projects were close to my heart. “ …”

“I was bullied during my high school years and with it being such an important topic in the world today, I wanted to put a focus on it … Through our work, we hope

to bring light to this topic at a younger age and work to prevent issues like this from working their way into society. One child at a time...” Learn more at: http://www.jarrettpayton.org/

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In 2012 America, there is no way to escape the notion that we are going through an economic rough patch. With the unemployment rate falling to a three year low of 7.8% in September and the recent reelection of President Obama promising that he will keep the coun-try moving “forward,” it seems as though the days of the worsening economy might be behind us. Even during the economic downturn, some young entrepreneurs are finding a way to stay afloat and make the best of the situation. A new crop of temporary businesses are emerging – pop-up businesses.

Pop-up businesses take their goods or services to the customer base, instead of having the customer come to them. In Chicago and around the country, pop-up restaurants and food trucks are becoming the talk of the food scene. Ayinde Howell, seasoned vegan chef and boss over at ieatgrass.com, says that a pop-up restaurant is “more like an event.” Renting out spaces for a few days, he takes to social media to create hype and raise funds. When doing his event in New York City, it cost $17,000 and he brought in $22,000. The cost of the event in San Francisco was around $2,500 and he brought in $3,800. Though these expenses may seem hefty, he says that to open a traditional storefront restaurant, “You have to have at least $200,000 to do it successfully.” He also says that a pop-up is “more finan-cially stable [because you can] control the cost of it.” A desire for innovation seems to run in the Howell family, Ayinde’s sister, Makini, recently embarked on a new journey of her own: ownership of a food truck. Makini, also a seasoned vegan chef and owner of three restau-rants, has hopes of starting Seattle’s first vegan food truck. She is in the process of raising the $28,000 needed for the project to be up and running. A food truck will allow her to reach more customers and expand her already loyal customer base.

Many business owners have found themselves in a fight or flight situation for the past four years. For those that decided to put up a fight, innovation has led the way, and pop-up businesses fall in that category. In the coming years, there are sure to be more creative ideas to take command of markets, but right now, pop-ups are the way to go.

Gold is an icon. It reminds us of treasures from jewelry and watches to coins and western films. Not many people, though, think of it as an investment. During the past decade, gold has a very strong investment, increasing in value 18% on average annually over the past 10 years. (Wall Street Journal, 2012) Historically, gold has increased in value when world events cause the value of the dollar to decrease. In other words, if the dollar is expected to lose value, then those with dollars can trade their currency for gold to avoid their money losing value, thus preserving their purchasing power. Gold therefore has a strong inverse relationship with the dollar because the dollar is the world currency. Gold’s value is influenced by more than inflation, though. It also reacts to market uncertainty. Uncertainty in markets or general world affairs affects gold as well. The most notable example of this is war. When tensions rose between the US and Iran in early 2012, gold prices went up because the uncertainty of the future left people, especially the wealthy, looking for a safe store of their wealth that couldn’t be as easily impacted by war. War could result in purposeful government inflation (in order to fund the expensive military operations) and in wartime governments can collapse, making currencies obsolete. Neither of those situations bode well for people holding the currencies at risk. What’s the rule of thumb? Uncertainty, whether in the market or in larger current affairs, creates upward pressure on global gold prices. Gold generally increases in value with what is otherwise considered bad news. A bad jobs report, printing money (inflation), a war or risk of war, or any sort of uncertainty will put upward pressure on gold prices, whereas the opposite (peace, certainty, good economic times, and stable currency) pushes down gold prices. For gold, bad news is good news. A salesman that requested to stay anonymous said “[Gold] is a great long-term investment and the overhead is small based on the value of the metal.” In other words, the additional charge the salesman adds to the market price is small considering how valuable the gold is. You also need to be careful investing in gold as it does not always increase in value. For example, the price of gold declined by about 50% in the early 1980s and took over 20 years to recover. Gold can be bought physically from some jewelry stores or electronically through gold mining stocks and other tools, so it’s fairly easy to trade. If you’re looking for new investments, perhaps gold deserves a look.

Businesses

Getting Gold

that Stephanie Greene

Deniz Tatargil

PopUp

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Step into the business world, where the recipe for success is capital, experience and actions. First things first, always know what you want to go into. It is very important to have a clear idea of what you want to do in order to plan and shape your idea. Make sure that you do what you’re good at. Starting a business contains a lot of risks, but they are risks you have to take to make a profit.

“The first step was to come up with a business plan to determine if the business ideas are feasible or not. Writing (and re-writing) your business plan is an ongoing process and it’s important to keep evalu-ating all the components of the business,” Said by Lauren Bushnell, Founder of Peerless Bread and Jam, Inc. A business plan is essential. The plan will help figure out how much you need to spend, save, and keep as a failsafe. It’s basically the step by step alternatives that can possibly be beneficial to you. Tanesha Jordan, a student intern in an entrepreneurship program, says “A business plan help gives structure to the sporadicness or confusion of organizing your ideas into actions.” As you go to actually begin building your new business, your plan will be there to help.

All that is left to do is take action! Put all that hard work and thinking into play. The beginning will be hard and strenuous, but it will pay off. On average, new restaurants fail within three years. However, with the right plan in place, you could start a restaurant business that is successful for many years.

Starting a Small Food Business: A Recipe for Success Kaprisha Martin

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• The first thing that should go into a plan is your purpose. Without this, you won’t be able to move into action.• Business plans require researching competitors and determining how you differ from them to plan your marketing strategies.• Finally, compare the strengths of your business to the market need to determine where your business can shine!

Thank you Sweet Beginings, Smarteys.com, the Illinois CPA Society, nchantment, and Bump Non-Profit

Design Studio for speaking to the On the Money Entrepreneurship program.

Ask about our Education Savings Options.

With a little help from State Farm.®

SMS-70161 03-2012

Learn more at:

sweetbeginningsllc.com smarteys.com

icpas.org nchantment.com madebybump.org

OTM Fall 2012.indd 11 1/8/13 6:21 PM

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Advertising is key when it comes to starting a small business. Without advertising, no one will know about your business. If Coca-Cola, Chevrolet, Nike, or any business for that matter didn’t have proper advertising, they wouldn’t be as successful. Advertising is what you remember a business by, and is what motivates you to buy from that company. The fol-lowing article will help with efficient and cheap ways to advertise your product or service. With modern technology, advertising is easier than ever before. In the past, most companies advertised by sending mail using addresses from the phone book. The monetary cost of each envelope, stamp, and paper, along with the work of folding, sealing and sending each envelope, for less than a 1% sales return, is not efficient at all. With the use of email to your specific target market and social networking sites such as Facebook, Twitter and Instagram, you can market your business faster and cheaper. Google AdWords is a resource that allows you to create an ad using keywords and phrases. When people search on Google using one of your keywords, your ad may appear next to the search results. Now, you’re advertising to an audience that’s already interested in you. Andrew Riker, an SEO specialist at WordStream says, “A small daily budget -- $10-$20/day -- can provide you with a large amount of traffic and in turn qualified leads, as long as the ad is relevant.” Advertisements on social media websites are a good way to provide your company with name recognition. On a typical day, 61% of American adults will log on to a social media website. If your name would show up to 6/10 Americans on a daily basis, you would be sure to have a lot of customers. Additionally, partnering with companies similar to yours will allow you to target your audience. Furthermore, donating some of your company’s product or service will also allow for people to sample your business and become interested in your business through word of mouth. With these ways along with many others, you should be able to advertise your business to your target market, cheaply, efficiently, and without the use of a lot of physical labor.

In the last 20 years, nothing has occurred in the Chicago Public Schools as big as ’’The Teacher’s Strike”. The question may linger through your mind about CPS’s financial problems and what caused them. But the stress of the strike on Chicago children and families was clear. During the Chicago teacher’s strike, 350,000 children were left without educational opportunities during the day for 8 days.

Even though the teachers’ strike presented a huge challenge for the children and the families effected, a program called LEAP came to the rescue providing programming for the children who didn’t have anywhere to go to learn Through trying times non-profits have a good chance of finding innovative ways to help advance a community, and LEAP was perfect for the job.

LEAP has been an organization for over twenty years with the mission of helping advance the educational gap of young children. They believe that having a tight grasp on oral language and being able to perform will help students greatly in presenting themselves. During the program during the CPS strike,15 participants from grades 8-12 from Austin ,Gwendolyn Brooks, and other elementary schools participated in skill building, productive debates, and even interviews from 9:00-3:30 daily. The organization was founded by Catherine Gottfred who learned of the language needs of low-income youth in Chicago while volunteer in Cabrini-Green.

As the teachers came to a resolution, students returned to school still fresh with new knowledge because of LEAP.

Advertising: Help Customers Find Your Small Business

The Teacher’s Strike: A Non-profit Founded by Chicago Entrepreneur & Volunteer Comes to the Rescue

Kamal Bilal

Sana Moore

TEACHERS COMMENTS ON THE CPS STRIKE:“Most students, parents, as well as CPS, don’t know that

teachers take money from our paycheck to purchase supplies for the classroom.”

“The strike could’ve been prevented by them being more

organized and prompt with decision making.”

MAYOR’ EMANUEL’S COMMENTS ON THE CPS STRIKE: “This tentative framework is an honest and principled compromise

that is about who we all work for: our students.”

“Now, our most important work continues: providing every child in every community of Chicago an education to match their

potential.” (CNN.com, 2012)

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When one chooses business as his/her major he/she should be prepared to study, not only their desired profession, but finance, marketing operations, human resources, and information systems. There are many aspects in business that are unknown to newly incoming freshmen, and I am here to shed some light on them. For instance many students who graduate with a degree in business administration see themselves later as CEOs and Chiefs in various positions, and make on beginning average salary of $57,132 per year (CNN.com). Students who graduate with a degree in marketing make on average $59,471 per year for their beginning salary (CNN.com).

Business means many things to many different people. For instance, Robert H. Eames, Director at Calvin Center for Innovation in Business, and Professor of Business at Calvin College says, “To me business is the social and creative activity by which we all have the opportunity to work to serve each other by meeting our needs for goods and services to survive and to flourish in the world. Business is where we are able to participate in activities that create value and make the world a better place!”

The on Business411 Tanesha Jordan

Top five schools for business majors

University of Texas - Austin Accounting

Babson College Entrepreneurship

University of Pennsylvania Finance

Michigan State University Supply Chain Management / Logistics

University of South Carolina International Business

http://colleges.usnews.rankingsandreviews.com/best-colleges/rankings/business

Gwen Vryhof Bultema, also from Calvin, who was the coordinator for Calvin Young Women Business Institute said, “Business has far-reaching impact. It touches nearly every corner of our world. I con-sider business an opportunity. It is an opportunity to serve, using an avenue that I am passionate about. It is my hope that I use my interests, my gifts, and my talents to positively influence my community and my world by providing meaningful goods and services, as well as mean-ingful work to my employees.”

Teacher: “So what do you what to major in?”Student: “Um…business…”Teacher: “Do you like people?”Student: “…no…”Teacher: “Do you like math?”Student: “…no…” Teacher: “Then why are you majoring in business?”

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Thank you Nicole Jones & Nchantment for speaking to our On the Money

Entrepreneurship program.

Learn more about Nchantment at www.Nchantment.com.

OTM Fall 2012.indd 13 1/8/13 6:21 PM

Do you often challenge yourself? Are you interested in a career within finance or business? If so, then you should consider accounting. Exactly what is account-ing? Accounting is widely varied. There are multiple fields within accounting, like government accountants, corporate accountants or public accountants. All types of accountants offer advice on employee benefits; presenting financial information, and preparing financial records. (http://www.accountingcareersnow.com/, 11/07/2012) I spoke with a corporate accountant named Julie, who is a director at UBS. UBS is a global bank based in Swit-zerland. Julie stated that the favorite part of her job is also the most challenging. “I am the head of a financial controlling team within a large, publically traded finan-cial services firm. My favorite parts of my current role are also its most challenging aspects, including exposure to senior management and leading a team.”

I also interviewed a public accountant named Jason, who is a Tax Manager at Blackman Kallick Plante Moran. His job is not only interesting, but it is fun! There is no “typical day” for Jason. He says that every day is different. He goes through tax returns, researches laws and regula-tions, and attends meetings with clients. His favorite part of his job is the challenge, the variety of tasks to com-plete, and how he is consistently learning.

If you apply yourself to the material, you can also be an accountant. You have to get a bachelor’s degree in accounting. You also have to take 150 hours in college courses. After completing your 150 hours of coursework, you have to take the Certified Public Accountant (CPA) exam. This is a test covering generally accepted account-ing topics and is required to be an accountant. (http://www.icpas.org/cpaexam.htm, 11/07/2012)

Both of the accountants I have interviewed have put in the work to get to where they are in their careers. Jason did not get all of his 150 hours of coursework initially at Elmhurst College; therefore, he went to community college to complete them. Julie did all of her studies at the University of Illinois at Urbana-Champaign. In addition, she was a summer intern at a public a ccounting firm. As Jason said to me, “accounting is the language of business.” Most jobs in business involve understand-ing of accounting and financial statements. If you are interested in finance and like challenges, accounting is definitely a career for you!

Accounting:The Language of Business Darius Clay

“Learn more about the Illinois CPA Society

at www.icpas.org.”

Special Thanks to the DePaul Writing Center!

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OTM Fall 2012.indd 14 1/8/13 6:21 PM

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Choose between an iPhone or graphing calculator. Nikes or a winter coat. Buying a new outfit for the dance or paying your college application fee. Which choice do you think most teens will make? Do most teens recognize the difference between their wants and their needs? Benjamin Franklin once stated, “Our necessities never equal our wants.” Why do our necessities not equal our wants? As a teen living in today’s society, I am starting to notice a disturbing “trend” taking place among my peers. Teens are favoring their wants over their needs. For example, most teens would choose the iPhone over the graphing calculator. While identifying wants and needs may be a challenge for most teens, with the proper tools and guidance it will become easier.

According to 2 teens, Kristopher Stonewall and Demetrius Drummer Jr., the needs of teens include clothes, shoes, food, cars, and workout plans. Wants include electronics, games, and other similar objects. However, according to research, the basic needs of life include food, water, oxygen, living space, and proper temperature, while wants are anything else that does not fit into any of these categories. As anyone can see, both groups have different perspectives of wants and needs. The group of teens feels that less essential material items are critical; while the research group reminds us what is truly necessary for life. According to Teenage Research Unlimited, teenagers on average spend $103 a week, which is equivalent to $5,356 a year. After seeing this shocking amount of money spent, I began to wonder how wisely this money is being spent. Based on a poll done by CoinStar, teens spend 33% of their weekly salary on clothes, 22% on food, and the remainder on music, movies, video games, and other miscellaneous expenses. Based on these statistics, it is clear to conclude that teens spend up to $1 out of every $5 on basic needs while $4 out of every $5 is spent on things they want. Distinguishing between wants and needs may be a challenge, but with the proper tools it will slowly become easy. One important tool to use is having a bank account. According to Nclnet.org, “Only one in five teens have a bank account.” By having a bank account, a teen’s money is in a safe, accessible place at all times, and they can see how much money they actually have which will motivate them to keep saving. If more teens had a bank account, it would be easier for them to use a website such as Mint.com that organizes and categorizes spending. This site can help teens categorize purchases as either wants or needs. Keeping track of your money is even easier today thanks to the help of smart phones; they allow teens to access the tools mentioned before. For example, they allow teens to view their bank account online and help them access a purchase tracking website such as Mint.com at any time and place. Before reading this article, distinguishing wants and needs may have been difficult for teens. But with the proper tools and guidance mentioned throughout the article, that challenge will soon become a normal way of life. Remember, the next time you say “I WANT this,” ask yourself, “do I NEED this.”

If you plan on going to college, chances are that you’ve been told to make sure you visit a college campus to get the “feel” of it and to see if you can picture yourself being there. However, many teens cannot afford to visit schools that are far from home. To help with this, many colleges offer “Diversity Fly-In” programs targeted toward minorities that allow them to visit campus for little to no charge. This is great because many students need financial help to go to college. According to the National Center for Education Statistics, in 2007, 66% of undergraduate students receive some sort of financial aid. When you are looking at colleges it is easy to be convinced by the brochures, letters, websites, and emails that a certain college is for you. But rarely do these informational guides show you the downsides of their college that you wouldn’t be able to see if you don’t visit. For example, you might see in a brochure that the class sizes are really small, but when you visit the college you see that small means 100 people in a lecture hall. Figure out what you want in a college. Then, when you visit, see what the college has that you like or don’t like. As mentioned earlier, those who are applying to colleges that are far away face the dilemma of not being able to afford to visit those campuses. Fortu-nately, many colleges offer a “fly -in” program that allows students to visit. One college that offers this is Carnegie Mellon, a school that has offers business at an undergraduate level, yet is taught by graduate professors, and students there take classes where they run business simulations. To be considered for Carnegie Mellon’s “Celebration of Diversity Weekend”, students have to have a 27 ACT (1800 SAT), and a 3.3 GPA, and must register online. Another school that offers this is Washington University in St. Louis, a well known school with a nationally ranked business program. To receive a travel grant, students must contact their admissions office and a staff member will help you get a travel grant. Be aware that these go quickly so call ASAP. A list of colleges that offer some sort of fly-in program can be found at: http://www.college-path.com/2011-diversity-flyin-list-colleges-pay-seniors-visit-fall/Also, not all colleges that have this program are listed here, so if you are interested in a school, contact them directly to see if they can help.

I Want it Now!

College Fly-In Program: Visit a College You Like for Free???

Crystal Stonewall

Tia James

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The state of Illinois had a ref-erendum on having the state of Illinois fund the Chicago Teachers’ Pension Fund. Yes, Chicago is in Illinois, but Chicago has a huge popula-tion and so it has its own pension plan for teachers and other laborers for the city. I know most of you are asking yourself, “Why do I care?” Well, do you know a teacher? Want to be a teacher? Know someone who wants to be a teacher? Have kids or want to have kids? Then you should care! A pension is retirement savings given to a laborer after they retire. Now, this is not just easy and free money. This money comes from a percentage taken from public employees’ pay-checks. On average, 9% is generally held from an employee’s paycheck for pension and retire-ment savings (New York Times, Walsh, 9/19/12). This isn’t all held by the county, they allocate this dollar amount to different investment managers to invest into different stocks or fixed income investments. Unfortunately, the Chicago Teachers’ Pension Fund is currently low on funds. The Chicago Teachers’ Pension Fund is only 59.7% funded. (Unlike being 103.2% funded like New York.) This means that the teachers that retire will not get the retirement funds they were prom-ised unless some changes are made.

Fortunately, according to Kant Desai, Chief of Policy for the City Treasurer of Chicago, even the pensions in the most difficult situa-tions have “about 6 or 7 years before [they] will run out of money.” When asked about the Chicago Teachers’ Pension Fund in the future, a Chicago based investment company representative acknowledged worries about the fund being ‘insolvent.’. Insolvent means there are no funds left to pay for pensions. “We won’t see the money that CPS is supposed to put into our pension,” says a Chicago teacher. There are some ideas to try and bring the funded ratio up, including: suspend-ing increases for cost of living for 5 years; having a 1% yearly increase in the percentage given to the pension fund by current employees for the next 5 to 10 years; or increasing the age of retirement from 65 to 70 years of age because life expectancy in the state has increased to 85 years. What is a young teacher or future teacher to do? Mr. Desai of the City Treasurer’s Office offers some great advice for young workers in any profession. “City workers can protect themselves from pension problems by doing additional saving and investing using their own re-tirement plans. The city offers additional voluntary retirement savings plans to employees,” The union representative interviewed has two other retirement funds where she saves her money for more security. She also fears that when her teaching days are over, her pension will not be there for her, so she buys stocks and bonds, which is advised by Mr. Desai, “Pensions may or may not exist in the future, so the best thing young people can do is to commit to your own savings plan early. Start with a basic savings account. As you build up more and more savings, start exploring the world of investments (stocks and mutual funds). If you spread your money out over different invest-ments your money will be more likely to grow and be there for you when you retire.” Pension funds may not always be here, but there are other opportunities you can take advantage of to ensure once you retire there are funds to fall back on.

One Long Shot: PensionReform - Why Does it Matter to You?

Expensive TouchdownsJustin Mitchell

Demetrius Drummer

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Remember when going to a sports venue wasn’t such an expense? When it cost a dollar to buy a hot dog, not five? I sure don’t. Our generation grew up on high concession stand prices. However, there was a time when going to a sporting event wasn’t such a hassle; when it was both cheap and fun. Crazy, I know. “Yeah, sure.” That’s the response I got from Bobby Mitchell when I asked if he remembered when sporting events were cheap. Bobby is a 49 year old, and father of two. “It has gotten so bad that I have had to go to fewer games. It breaks my heart, because I love sports, and so do my kids. However, I have learned over the past 15 years or so that it is better to sell the tickets you have, instead of using them yourself.” Bobby isn’t alone. Numerous fans choose to watch on TV instead of go to the game. The price of concessions isn’t the only problem. Recently, ticket and souvenirs prices have increased dramatically. The chart below shows the FCI, or the Fan Cost Index, over the past twenty years. The FCI takes into account the cost for a family of four to attend an NFL (The National Football league) football game, including X, Y and Z (list i.e. tickets, hot dogs, whatever is included). From 1991-2009 (Chart above), the cost for a family to attend an NFL game increased by an average of 75%. In Chicago, it now costs $101.55 to buy a ticket, and $5 to buy a hot dog.

Why has it become so expensive? According to the president of one of the largest sports stadium concession companies (he preferred not to be named), the teams, not the food providers, are driving the increase. “Prices are rising not because of the conces-sion companies, but because the owners are looking to maximize their revenue from all sources (food, tickets, park-ing, etc.). They will say that it is so they can field a competitive team and pay the necessary salaries for free agents, contract extensions, etc. I do believe that this is true in some cases. In others, they are trying to maximize their profits (or minimize their losses).” It is no secret that prices of sporting events have become more expen-sive for most sports fans. Some people, as Bobby mentioned above, are attending fewer games. Some have stopped going altogether. But look at the bright side; the FCI for Chicago Bears games increased 86%, whereas the FCI for Dallas Cowboys games increased by a booming 163%. So, next time you’re at a game and a vender screams out “HOT DOGS, $5”, just be glad it’s not worse.

OTM Fall 2012.indd 16 1/8/13 6:21 PM

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Have you ever thought about having a house of your own? Well, before you make the decision on whether you’ll buy a house or rent one, you should evaluate and figure out which one would be better for you. You should take your family size, income, and whether or not you’re looking for a permanent residence into consideration.

Although owning a house may seem better at first than renting one or vice versa, they both have pros and cons that you would have to evaluate in order to make sure you’re making the right decisions. When you buy a house, you can make decisions about everything without answering to a landlord. Another positive thing about owning a house is it’s an investment so you may make money in the long run. Owning a home is still the most common way people in America generate their wealth. Tracy Frizzell, a home owner says, “There’s a chance that your home can go up in value if you keep it long enough. Owning a home has been one of the best investments I have made.” Buying a home also allows you to save money because there are many tax benefits. According to LeeAnne Wright, a mortgage banker with United Home Loans, “Often there are certain allowable deductions like the mortgage interest paid, and in some instances, there are some first time home buyer deductions as well”. Finally, when you rent a house, it’s like you’re paying money towards something that you’ll never own. But when you buy a house, you’re paying a mortgage for something that you own. A tricky concept that comes with buying a house, but also benefits you is equity. Equity is the cash value of your home, not including the outstanding amount you owe. The benefit of building up equity is it will increase the value of what you own.

On the other hand, sometimes when you own a house you will not make money on the house and the maintenance costs can be high. According to Frizzell, “Some of the homes I’ve owned haven’t made any money and sometimes when we have been on a tight budget and something breaks, it’s a real money crunch.” When you rent a house, there is less maintenance responsibility compared to a house where you have to fix or hire someone to fix anything that breaks. Says Teresa Lwin, “It’s easier because you get to call your landlord whenever something is broken, and he’ll either hire someone to come out and fix it or come and fix it himself.” Also, usually, when you’re young, you don’t necessarily know where you’ll be in the next five years, so renting a house might be a better choice so that you can have geographic mobility. Says Lwin, “Renting a home is more flexible if you don’t know when you’re going to have to move…”

Check out an online comparison at http://www.ginniemae.gov/rent_vs_buy

Renting vs. Buying a House: Exploring Your Living Options

Consignment Stores Offer New Options to Teens on a Budget... Toni Lymas

Empress Howard

Have you ever raided your closest and discovered that sweater you wore once or a shirt with the tags still attached? Better yet, do you need (or want) new clothes but feel like you can’t go shopping because you are short on cash? Well stop fretting and start “thrifting” for clothes. Whether you are looking to save money when you buy clothes or to turn that closet into cash, now you can do both, thanks to Plato’s Closet, Buffalo Exchange, Crossroads Trading Co., Rex Recycled Fashions and Le Thrift, five Chicago area resale/consignment stores. All five stores are dedicated to shoppers looking to buy high-quality clothing on a budget without compromising quality or style. For example, at Plato’s Closet and Buffalo Exchange, you can purchase gently used clothing from designers Marc Jacobs and Ralph Lauren and retail stores like J. Crew, Diesel, True Religion, and Gap. Name the brand, chances are it can be found at these stores for much less than the price offered at department and retail stores. Even if you aren’t interested in buying clothes right now, these stores offer shoppers the option of “consigning” their gently used clothing in exchange for cash. However, don’t expect to make the same amount of money you paid for the clothing item. Consignment stores pay sellers around 30-40% of the money received from the sale of the item or store credit, whichever you prefer. In fact, some stores like Plato’s Closet have computers that price your items automatically. That’s right, you can sell that sweater you wore once, or the shirt with the tags still attached to Plato’s Closet, Buffalo Exchange, Crossroads Trading Co. and Le Thrift. A recent article in USA Today states that, “Resale shops are thriving, popping up across the country. Within the last year, the number of resale shops has increased by 7% . . . Much of the recent growth in resale shops can be attributed to young shoppers, many of whom are passing on trips to the mall in favor of thrift stores . . . .” (Tully, 2012). That same article also states that approximately “20% of people shop in thrift stores regularly, compared with about 14% in 2008.” Young shoppers, it’s been proven... shopping isn’t about going to the mall anymore, it’s about buying what you can afford. I got the chance to interview 5 students from Prosser High School about where they shop for clothes and what I found is that it all cames down to saving money. Out of those 5 students, 3 agreed that they like shopping at retail stores but if they could find retail items at cheaper prices they’d prefer to save. A writer for The Daily Titan, the newspaper of California State University says “Many college students experience the dilemma of maintaining lifestyles once had during simpler times. Resale shopping adds to savings that can go towards vacation, outings with friends and college funds.” (Estrada, 2012). So there you have it. Resale/consignment stores are becoming favorites amongst teen shoppers because they offer similar clothing items as the department stores for way less money, allowing teens to save money for other things like college or a vacation. (Hey seniors! What about a car?)

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As teenagers, much of the economic rhetoric debated by the President and Congress over the past four years will greatly affect us. When deciding on a future college or career, student loans, Pell Grants and job stimulus should be a concern of every student looking for an enriching post secondary education opportunity. Teenagers also must understand the differences between each party on economic and financial issues. Here at On the Money, we give you a breakdown on the Democratic and Republican stance on the economy. As teenagers we must take it upon ourselves to understand which party’s ide-als best serve our country’s present and future needs. The Democrats propose continuing tax cuts for those making under $250,000 but raising taxes on those making more than $250,000 per year to raise revenue, but some say this may include many small businesses. Democrats propose to use innova-tion led by the government in areas like clean energy and infrastructure to stimulate the job market. The Republicans propose continuing tax cuts for all income levels but eliminating many deductions to make our tax code more simple and (some say) efficient and to raise revenue. Republicans propose using tax cuts to stimulate small businesses growth. Our economy might have met a better fate if we could only have a bipartisan agreement.

One Student’s Take on Politics

Interview with Carlos Ballesteros, Claremont McKenna College in

Claremont, California.

Carlos has voted for the Green Party and was attracted by its focus on a “steady-state economy” that was “ecologically sustainable”. Carlos

notes that, “You don’t always have to vote for the same party! Your

vote is the best form of democracy you have. Don’t go around wasting

time on someone you think you HAVE to vote for. Instead, you

should understand the candidate’s position, look at his or her past

record in public policy, make sure to read up on key issues that will affect your future and understand

where the candidate stands on such issues …”

Democrat vs. Republican: On the Money Teen Friendly Economic Debate

Here at, “On the Money”, we understand how complicated the lingo that the Democratic and Republican party use can be.

Here is a breakdown of the most complex terms and phrases used by the political parties.

1. Subsidize: to provide money for a course of action 2. Clean Energy Economy: using solar, wind, and thermal energy to expand the job market. 3. Job Stimulus: any way in which the government provides aid to increase jobs. 4. Income: money earned.5. Infrastructure: basic facilities used by society like roads, power lines, and sewers.6. Inflation: increases in prices of goods and services.7. Home Owner: A person whom owns a house.8. Deficit: A shortage of funds. 9. Capital Gain: Increase over the original amount invested.10. Dividend: Net earnings of a corporation. 11. Interest: Amount charged for borrowing money. 12. Student Loans: Money borrowed with interest for a student pursing or continuing a college education. 13. Pell Grant: A government program that provides money for undergraduates in college.

Political Jargon 101

Joshua Conner

18

Intern with On The MoneyDo you like to write or have an interest in money or

business? Do you want to make some extra cash and build your resume? Contact On The Money to learn more about our internship

program and possible openings.

Email us at otm@econcouncil.org

OTM Fall 2012.indd 18 1/8/13 6:21 PM

19

Are you having a hard time finding good quality clothing with low prices? So are many other teens. Teen spending in 2011 was $170 billion (double the amount spent in 2001) (ABC News, 2012). Most teens have problems setting a budget when buying clothing. Tanesha, an intern at On the Money, says that she finds her good quality clothing by traveling to different stores and com-paring prices. Tanesha’s budget when shopping is usually twenty-five dollars. Her less expensive, quality clothing stores that she shops at are K-Mart, Target, and JCPenny. The Edge Magazine (www.edge.org 2012) recommends considering thrift (or gently used) clothing stores or department stores like Wal-Mart or Kmart that have lower prices. Tanesha is just one out of many teens that knows how to find good quality clothing at lower prices. Retail business owners that own clothing or fashion apparel stores also have problems finding name brand and quality items at cheaper prices for their stores. Nicole Jones, a business owner, says she finds quality clothing at cheaper prices by going on the web and making price comparisons. She also looks at the competitor’s price and tries to beat it. |Nicole also tries not to spend thousands of dollars on items whose quality is not sustainable. When buying clothes for herself, Nicole sets her budget by putting up funds into a savings account and setting money away for her purchases. In conclusion, setting a budget and knowing the value of name brand quality clothing with low prices are both very important when saving. That way you don’t have to worry about going into debt or going over your budget.

Global warming, pollution, etc. Did you know that there are many threats to our environment? Did you know that just by changing a light bulb you can help the environment? Have you heard of Compact Florescent Light (CFL) bulbs? Environmental experts say people should consider CFL bulbs because they are more environmen-tally efficient and could potentially help prevent global warming. What makes these light bulbs so much more efficient is the fact that with regular light bulbs they only last up to about a year, but “CFL bulbs last anywhere from 8-10 years” (Perrin, 2012). “It also only uses ¼ of the amount of energy for regular light bulbs and still provides the same amount of light” (Perrin, 2012). This all not only helps the earth but it SAVES YOU MONEY TOO! You can find CFL bulbs in just about any local store that sells light bulbs like Home Depot or any other small hardware stores. These light bulbs would only cost around a dollar and fifty cents and long term could save you lots of money that can be used for other things, and according to the U.S. Energy Star program, “[a CFL bulb] pays for itself in about six months” (www.mnn.com). In conclusion these light bulbs are overall more efficient and safer for the environment. They only use ¼ of the amount of energy that regular light bulbs use and provide the same light. They last ten times longer than regular light bulbs, and long term will save you the cost of 9 light bulbs each time you buy one. These are the reasons why more people should use C.F.L bulbs rather than any other if you care about the survival of mankind. Compact fluorescent light bulbs are often mentioned as one of the easiest ways to shrink your power bill and your carbon footprint. They present the quintessential green-green situation: saving money and helping the environment. What’s not to like?

Saving on High Quality Clothing

Shining a Light on Environmental Saving

Davon Fullilove

Leo Thomas

CFL Return on Investment (How much money can you save by switching to CFLs?)

Cost: $165 ($2.75 per CFL & 60 bulbs in home)Savings: $204 per year

Payback: $2,719 over the life of the bulbs (assumes 10,000 hour life = ~13 years) (1)

ROI (Return): $2,554 after the $165 investment over 13 years – a return of 1,547% over 13 years

OTM Fall 2012.indd 19 1/8/13 6:21 PM

Visit

OTMSURVEY.COM

to take our

Money Smart Survey

and be entered to

win

$20

1) What is the teen unemployment rate, as noted on page 8? Graph this % on the chart at right. Finding a job is tough! Use the resume template on EconCouncil.org (resource page) to create your own resume! Be prepared!

2) Identify the 3 steps of creating a business plan high- lighted on page 11. Step 1Step 2Step 3What business idea would you like to explore? Complete step 1 & highlight the purpose for this business idea.Business Idea:

3) On page 15, Crystal Stonewall notes that teens spend over $5,000 per year on average and 80% of this spending is on “wants” not “needs”. Calculate how much would be spent on wants vs. needs at right. Define a want & a need & high-light 1 strategy you have to reduce spending. Want:

Need:

Strategy:

In the Know

Wants = 80% of $5,000 = $_______

Needs = 20% of $5,000 = $ _______

Teen Volume, a citywide initiative, works together with YOUmedia to give teens in Chicagounique opportunities at the Library through programming, books and online resources.

With programs designed by teens for teens, you can meet an author, discover a new book,learn how to manage your money, volunteer, join a performance group and much more!

For more information about programs happening citywide, visit the For Teens pageat chipublib.org, e-mail teen volume@ chipublib.org, or ask a librarian today!

Scan this barcode to access the OTM Survey!

OTM Fall 2012.indd 20 1/8/13 6:21 PM