From pinching pennies to punching up your portfolio, how to navigate financial literacy at every life stage
Empowering
every stage
BY MICHELLE JACOBY
FINANCIAL LITERACY MONTH is upon us, serving as a reminder for people of all ages to improve their understanding of money matters and to practice healthy financial habits. Here’s a helpful guide to setting yourself—and your loved ones—up for stability and success.
Children and teens One of the most valuable gifts parents can give their children is the gift of money know-how. Teaching children and teens responsible spending
Young adults As we all know, life is unpredictable— which is why establishing emergency funds can help young adults build a solid financial foundation. Situations like medical emergencies and unexpected car repairs can pop up at any time, and having a financial safety net (experts recommend setting aside three to six months’ worth of living expenses) will help ensure your young adult’s financial standing doesn’t get derailed. Investing is also an important component of financial planning for young adults. With time on their side, they can benefit from the power of compounding. Young people entering the workforce should explore retirement accounts like 401(k)s and take advantage of their employer’s matching program. An IRA is also a good retirement savings option because it allows investors to take advantage of tax benefits, helping them accumulate wealth over time. Pre-retirement and older adults If you’re approaching retirement, it’s crucial to determine how ready you are. Evaluate your retirement savings and income sources, and estimate potential
and saving habits can set them up for lifetimes of successful money management. For parents of young children, one of the easiest concepts to teach is basic savings. A simple way to do this is by instilling a chore system in your household and having your children set aside a portion of their allowance into an interest-earning savings account. This not only gets them into the habit of saving, but also shows them how their money can grow with earned interest. For older children and teens, teaching the art of budgeting is another way to get them on the road to financial success. Have a discussion with your child, stressing the difference between needs and wants, then work with them in creating a simple budget. If your children are eyeing big-ticket items, help them set actionable goals that will help them with their purchase. Examples include getting an after- school job, providing services like babysitting and lawn mowing, or selling gently used items. Your children will not only feel accomplished, but you will be helping them develop a sense of financial responsibility.
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