Reuters Money

Online privacy leaks worsen; “Do not track” gains steam

Are you being tracked right now? If you thought you were just browsing aimlessly, doing a little shopping or checking sports scores without identifying yourself, you could be mistaken about your level of privacy.

A new study from a Stanford University researcher has found that a lot of  the little bits and pieces of supposedly anonymous data being deposited by your web browser are actually being gathered and reassembled by dozens of companies and sold. And stopping that from happening takes more than a little bit of effort, helped by a growing movement for “do not track” legislation.

More companies know more about you than previously thought and stopping them from secretly building profiles of you is a lot harder than just pressing a button, researcher Jonathan Mayer says.

He adds:

“Click the local Home Depot ad and your email address gets handed to a dozen companies monitoring you. Your web browsing, past, present, and future, is now associated with your identity… Keep tabs on your favorite teams with Bleacher Report and you pass your full name to a dozen again. This isn’t a 1984-esque scaremongering hypothetical. This is what’s happening today.”

Mayer, of Stanford’s Computer Security Laboratory, says more than half of the sites surveyed share your information with other sites. As an example, he notes that  even when you’re on a typical commercial news site there will be multiple companies collecting information as a matter of course: including the site itself, a video delivery service, advertising networks and social networks.

Previously, privacy advocates suggested that opting out of so-called behavioral advertising was a means of avoiding having your online usage patterns tracked. But Mayer says that stopping targeted advertising doesn’t stop the data collection.

Consumers Union regulatory counsel Ioana Rusu says companies can not only find out who you are and where you’ve been, but also alter offers that you see based on nothing other than the websites you’ve visited — something that can paint a grossly distorted picture of someone. She cited the example of a credit card company that presented different offers to users based on their online profile.

Want to put your kid on road to Millionaire Row by 21? Here’s how

While some youngsters long to become rock stars or Hollywood heavyweights, others now gravitate towards another stripe of pop-cultural celebrity: the whiz kid who becomes a millionaire before age 21.

That’s not hard to fathom now, given the likes of Facebook’s Mark Zuckerberg and other tech hotshots. But for Susan Beacham — founder of Money Savvy Generation — steady strokes and ingrained habits set kids on the course to riches. And Beacham should know: She practices what she preaches with her two teenage daughters, Allison, 19, and Amanda, 17.

“If you know how to behave like a millionaire by the time you’re 21, you may not have the cool million in hand, but you’ll be on your way,” says Beacham, whose Chicago-area company develops products that teach basic personal finance skills to school-age children. “You’ll have the seed money and have established the good behaviors.”

What follows are five key tips from Beacham, wealth management experts and at least one tyke tycoon who made his first million as a teen. Follow them and chances are excellent your child will have the tools he or she needs to make a million — along with a good chunk of starter funds to boot.

Delay gratification Kids learn early on to spend and enjoy the fruits of consumer society. But Beacham says wealth builders master their urges and live modestly. She cites a study of 1,000 kids published by the National Academy of Sciences that followed children from birth to age 32. The most impulsive “were roughly three times as likely by adulthood to report multiple health problems and addictions, earning less than $20,000 a year, becoming a single parent or committing a crime.”

“Self-control is the key to wealth,” Beacham says. “And the good news for those of us who have kids who weren’t born with the ability to delay gratification is that self-control can be learned.”

Work “Warren Buffet wasn’t a millionaire by age 21,” Beacham says, “but by the time he finished college, he’d accumulated more than $90,000 in savings, measured in 2009 dollars.” Buffett was a hard worker, and by this Beacham doesn’t mean to get a mind-numbing job, but rather to learn the ropes of wealth — especially as an apprentice or entrepreneur.

Back-to-school is about backpacks, lunchboxes and money skills

The following is a guest piece by Dan Greenshields, CFA, and President of ING DIRECT Investing, a subsidiary of ING Bank, fsb. The opinions expressed are his own.

Parents everywhere are preparing to send their kids back to school. It’s time for new backpacks, lunchboxes, pens, pencils, clothes and electronics.

Back-to-school season also provides a perfect opportunity for parents to pass along to their children the basics of financial literacy. In fact, more than ever, kids may actually be eager for some lessons in saving, investing and budgets.

After all, the media is saturated with coverage of the global markets’ ups and downs. Most young people have probably heard something about the volatility in the economy over the summer and they’ve likely wondered what’s causing it. That curiosity primes them for real-world lessons in personal finance — a topic that largely goes uncovered in schools.

Back-to-school shopping brings a flood of simple questions that can serve as teaching opportunities on budgeting. For instance: How many colored pencils do you really need?  What are the different types and prices of pencils? Is there a sale, discount or promotion at one store or another on the same pencil?

My wife and I have two kids of our own and we can attest to the fact that the list of  “necessary” school supplies seems to get longer each year. Without planning, it’s easy to break your back-to-school budget.

So sit down with the kids and make a budget before you shop — and then stick to it.

Even financial gurus make money mistakes

I bought Lehman Brothers.

There, I said it. My dark secret, finally out in the open. Watching financial stocks drop like stones in the fall of 2008, I figured it was a classic case of investor panic. After Lehman went from over $90 to under $10, I almost felt bad at getting such a bargain. After all, it couldn’t go to zero, right?

And then it did. My modest investment was wiped out, and I couldn’t even stand to look at the Wall Street Journal for a long time afterwards. My point is that even personal-finance journalists, doling out our sage advice, can make bone-headed financial decisions. Really big ones.

That in mind, I asked a few of the nation’s top personal-finance commentators about their own missteps that they’d love to forget. You might enjoy the schadenfreude, of reveling in others’ misery. But hopefully you can also leverage these lessons to avoid similar screw-ups in your own life.

Think of it as a financial group therapy session. Because hey, we’re all human.

Beth Kobliner, author, Get a Financial Life: Personal Finance in Your Twenties and Thirties.

When I was first offered a job as a writer at Time Inc., I was just 22. I remember having an interview with then-managing editor of Money magazine, Landon Jones. That afternoon, he called me up at my office and offered me the job with a starting salary of $30,000. I was thrilled! ‘Yes!’ I shouted into the phone. ‘Sounds great!’ I could finally afford to move out of my parents’ place in Queens and move into Manhattan, into a one-bedroom on the upper, upper East Side.

Parents want to help their kids, but when does it stop?

A weak job market for college and high-school graduates is continuing to drive young adults back into the households and onto the payrolls of their parents, a variety of surveys have confirmed.

Almost 60 percent of parents with non-student children between the ages of 18 and 39 have been helping their kids, according to a survey being released today by the National Endowment of Financial Education. A study released last month by Monster.com found that more than half of all recent grads are living with their parents. And as much as 85 percent of the Class of 2011 expect to move back home, at least for a while, according to a study by market research firm Twentysomething Inc.

Parents and their adult offspring disagree about the reasons for all this intergenerational nesting, says Ted Beck, president of the endowment. The majority of “kids” believe that they are facing more economic pressures than their parents did; that’s a view Beck generally agrees with. “I think it’s more challenging for kids now,” he says. But most parents believe that they had it tougher when they were young than their kids do now. The disconnect can cause family friction.

Financial advisers and therapists are reporting an increase in the number of their clients who are bringing in adult children for some money management lessons, or who are coming to them for advice about ways to handle a returning adult child. “Parents want to help their kids, and, more often than not, they are willing to sacrifice to do that,” says Wendy Weaver, a Bethesda, Maryland, financial adviser who specializes in high-net worth clients. “But sometimes it can be a disservice to the kid.”

Sometimes, the client needs to be told that they can’t afford to dole out as much as they’d like. “They are paying us to say, ‘This is going to hurt you’,” she says.

Beck agrees that sometimes parents are hurting their own finances to help their children. Roughly 26 percent of the helping parents surveyed were actually borrowing money via 401(k) accounts or credit cards to provide the support they believe their adult children need.

“Lately I’m seeing a trend of children who graduate from high school and have no plans whatsoever for after high school,” says Judith Glasser, a Silver Spring, Maryland, clinical psychologist. “Maybe they aren’t ready to launch, so they stay at home. But are the parents supposed to charge them for rent?”

Note to Fed: Show us the numbers

Now that Federal Reserve Chairman Ben S. Bernanke’s historic press conference can be viewed on the home page of the Fed’s website, I decided to watch it again to see what the conflicting opinions were about.

After again finding it interesting and informative, even if it produced no significant news, I toured this rich website and happened to notice, under the News & Events tab, a statement on financial literacy which Bernanke had submitted at a Senate hearing last month.

“The recent crisis demonstrated the critical importance of financial literacy and good financial decision-making, both for the economic welfare of households and for the soundness and stability of the system as a whole,” he had told a Homeland Security and Governmental Affairs subcommittee.

“Good financial choices depend on reliable and useful information, presented in an understandable way.”

To illustrate how the Fed has been helping “informed, educated consumers (to) achieve better outcomes” for themselves, he had mentioned quite a few topics — such as how to apply for a mortgage, how to budget, how to manage a checking account, and how to avoid scams — on which it provides information, much of it under the website’s Consumer Information tab.

Useful as such documents may be, are they all that you need — and could get online from the Fed — to achieve financial literacy and good financial decision-making?

Reading Bernanke’s statement after again hearing him explain to reporters how the Fed made its “financial choices” during the 2007-2008 financial crisis and since, I thought the Fed could do more to help informed, educated consumers in another way.

Women hand over the reins on retirement: survey

You’ve heard the statistics: More women than ever are involved in household finances, with a quarter of them in control. Working women have surpassed men in attainment of higher education — the first time in history.  And yet, women still pass the buck when it comes to their own retirement security, according to a new survey from ING Direct USA and Dailyworth.com.

• Among those surveyed, nearly 40 percent of married women will leave their retirement planning up to their spouse or significant other
• Nearly 30 percent say they have no idea what their main source of retirement income will be

More than 1,000 Americans over the age of 18 participated in the phone survey — the majority of women had some form of higher education (63 percent) owned their own home (74 percent) and considered themselves the head of the household (52 percent).

Why are smart, working women surrendering their own retirement planning? The answer may lie in their self-description — nearly two-thirds (65 percent) of the women surveyed categorized themselves as “traditional” as opposed to “modern.”

“We had anticipated that women would identify themselves as modern and give some excuse for not investing, but when we saw the traditional designation for how they perceive themselves, that set the stage for the other answers that we found, which were surprising given our initial concept,” says Cathy MacFarlane, head of corporate relations for ING Direct USA.

This pervasiveness of antiquated definitions of male and female roles continue to play out in the financial services industry, advisers say.

“Most of the clients that we work with still operate under traditional gender roles. In certain households day to day operations fall under the wife’s supervision and financial matters tend to fall under the male supervision. That’s not always the case, but it seems to be the way things break down more often than not,” says Ben Birken, a certified financial planner with Woodward Financial.

When teaching kids about money, it’s not math — it’s values

Beth Kobliner is a personal finance commentator and journalist, and the author of the New York Times bestseller GET A FINANCIAL LIFE®: Personal Finance in Your Twenties and Thirties. She was appointed by President Obama to the President’s Advisory Council on Financial Capability, a bipartisan committee charged with tackling the problem of financial illiteracy in our country. The opinions expressed here are her own.

Kids are never too young to learn about money. (I’m sure I’m preaching to the choir, blogging on this site!) But even though I’ve been saying that for a while, I never had a trusted resource to share with parents.

So I was thrilled when Sesame Workshop asked me to be an adviser for their new financial education initiative. The finished product, “For Me, for You, for Later: First Steps to Spending, Sharing, and Saving,” includes several videos in which I teach Elmo about money, plus guides for kids and parents/caregivers. And it’s all free!

Best part: There’s no math required. This isn’t about teaching that five pennies equal a nickel. Instead, Sesame focuses on concepts that 3- to 5-year-olds can understand, and encourages parents to make use of everyday teachable moments. Here are a few ways to get started:

• Going grocery shopping? Talk about things you need (like apples or milk) and things you want (like cookies). It’s important for kids to know the difference!
• Having a playdate? Encourage your child to share his shovel in the sandbox, and you’re planting the seeds of charitable giving.
• At the toy store? If your daughter wants a scooter, but doesn’t have enough in her piggy bank, explain that she can save her allowance to buy it. Sometimes we have to wait for things we really want.

You can find more tips (and even a rap about saving!) at sesamestreet.org/save. Please share the videos and guides with all the little kiddies you know (kids, grandkids, nieces, nephews) and tell me their reactions or ask me a question. You can find me at bethkobliner.com, Twitter, or Facebook.

Social Security cuts annual statement mailings

Here’s a chicken-or-egg question for you: is Social Security’s future really imperiled, or do Americans just think it’s falling apart because Washington keeps shooting the program in the foot?

Consider the Social Security Administration’s (SSA) decision to stop sending out the annual benefit statement we all get in the mail. The agency plans to save $30 million by suspending mailings for the remainder of the current fiscal year, which ends in September, and an additional $60 million next year by restricting mailings to workers 60 and older.

Statements usually are sent out about three months before your birthday; the suspension will start in April, which means everyone with birthdays in July and later won’t get a paper statement this year. Next year, the SSA intends to resume sending statements to Americans over age 60; it’s working on an online download option for everyone else.

SSA Commissioner Michael Astrue told a Senate appropriations committee about the suspension in testimony last month; Kiplinger’s Personal Finance ace Mary Beth Franklin picked up on it with her story yesterday.

Like all federal agencies, the SSA is operating at FY 2010 levels due to the ongoing Washington budget stalemate. “We’re halfway through the current fiscal budget year,” an agency spokesman says. “We needed to start making cuts.”

Personally, I’m okay with online access to just about everything — it’s greener and saves money. But the paper Social Security statement is different. It provides a valuable annual reminder of what you can expect to receive and how benefits are calculated. It also prompts us all to make Social Security part of our long-range retirement plans.

In fact, the SSA had been working on ways to improve the annual statement, says Cindy Hounsell, president of the Women’s Institute for a Secure Retirement (WISER), a nonprofit group that works to promote financial education and planning among low- and moderate-income women. Ideas under consideration included new inserts customized for young people and women, who rely on Social Security more heavily than men stay out of poverty in old age.

Can you pass a high school financial literacy test?

When it comes to money, are you smarter than a high school student? Now’s your chance to find out.

Students across the country are taking part in the National Financial Capability Challenge, a voluntary test running from March 7 to April 8 aimed at ramping up knowledge in basic financial matters such as spending, savings and investing.

It’s all part of the Treasury Department’s goal to ingrain basic financial savvy into the minds of youngsters.

“We have a long way to go in this country before students in this country are financially literate,” says Matt Yale, deputy chief of staff at the Department of Education. “This isn’t like U.S. History — everyone learns U.S. History. This is a topic that’s almost taboo because nobody wants to talk about it.”

According to Yale, the problem is two-fold: Many parents don’t feel comfortable talking about money matters, and it’s hard to cram more curriculum into an already-packed school day. The result? Kids who don’t know how a credit card works, how to save for a 401(k), or what a 401(k) even is.

“By the time kids learn about this in college, it’s too late,” Yale says.

So do you know more than your teenager? The Treasury gave Reuters a sneak peek at the types of questions appearing on this year’s exam. It’s worth noting that last year’s average score was 70 percent — the test “isn’t designed to fail anyone,” Yale says — but even those with a passing score shouldn’t be too smug. There’s always room to learn.