Where or how can a young person begin to learn about financial management?
There is so much information available regarding things like 401k programs, IRAs, taxes, mutual funds, etc, that it can seem a bit confusing and overwhelming, especially when young people often make so little money that it hardly seems worth the effort to bother saving at all.
Do you know of any websites or other references that go over these basics in a relatively simple and straightforward manner, so that the average beginner can understand how to manage their finances smartly and responsibly?
What would you tell your child about investment and saving when they begin to enter the workforce?
If you want to learn some sound financial basics, I suggest starting at the public library. Look for books by Suze Orman and David Bach, both of whom give clear introductions to personal finance. I like to check them out as audio books and listen to them on my iPod when possible. For you in particular I would recommend Suze Orman’s book "Young, Fabulous & Broke". It’s a great introduction for finance for someone in the earlier years of their financial life.
You can also look for lots of information in a huge range of styles from the large community of personal finance bloggers out there. I run a blog called HealthyWealthyHappyWise over at http://money.kevingunn.org/ . I link to several others that I enjoy along the right column on my page. Some are pretty technical, some are more personal. Almost all of them link to more blogs in the style liked by that blog’s author. Go find ones that suit you. They’ll keep you inspired to keep moving forward and can be a great source of tips, tricks, and potential pitfalls.
Step one in any sound financial plan is to create a spending plan and STICK TO IT. Everything else hinges on that. If you spend even a tiny amount more than you earn, you’re heading for trouble. I wrote fairly extensively on how to get started on a spending plan here: http://money.kevingunn.org/index.php?/archives/5-The-Weekly-Spending-Plan-Part-1-Why-Weekly.html .
Finally, remember that an early start is the key to finishing well-off. Don’t postpone! Get started now.
John D Rockefeller gave his kids a good modest allowance. He also gave them a ledger and required them to keep track of every single penny they spent and what they spent it on. (same thing works for diets.
Many credit unions and banks have pages on their sites for financial training. Also try http://www.youngmoney.com Go through the materials with your kids.
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I would go to a good non-commission brokerage, like Charles Schwab (just for example), and ask them if they have any literature, pamplets, stuff like that. I’ve found that employers who have 401ks usually have a booklet explaining the plan pretty well.
You might also check the public library and big bookstores. There are books at several levels and one level will be right.
Years ago, my boss had what I thought was a great idea to teach his kids money skills. He gave his kids a good allowance, but gave it to them once every three months, so they had to plan ahead and spend their money carefully. He would give it to them by transferring it into bank accounts in their names. Wish my parents had done that!
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There are many sources, books, internet, it never ends but the real key is establishing a behavior pattern so that no matter how small at first, they DO save money as a matter of habit and invest it. But most don’t do this because they enter the world in SPENDING mode without perspective on the effect of debt, the cost of debt, and without a sense of limitations on what they have. A 21 year old doesn’t need a bedroom set as nice as their parents might have. They can have that later when they can afford it, maybe they can save for it, but they can’t just go and put 6778 bucks on a credit card to buy it and think that is somehow ok. If you can nothing else but convince them not get into credit card debt that solves half the problem of young people finance issues right off the bat. They should see a credit card as nothing other than an emergency card, and anything other than that is small money that they can pay off every month so that the balance is ZERO.
References :
If you want to learn some sound financial basics, I suggest starting at the public library. Look for books by Suze Orman and David Bach, both of whom give clear introductions to personal finance. I like to check them out as audio books and listen to them on my iPod when possible. For you in particular I would recommend Suze Orman’s book "Young, Fabulous & Broke". It’s a great introduction for finance for someone in the earlier years of their financial life.
You can also look for lots of information in a huge range of styles from the large community of personal finance bloggers out there. I run a blog called HealthyWealthyHappyWise over at http://money.kevingunn.org/ . I link to several others that I enjoy along the right column on my page. Some are pretty technical, some are more personal. Almost all of them link to more blogs in the style liked by that blog’s author. Go find ones that suit you. They’ll keep you inspired to keep moving forward and can be a great source of tips, tricks, and potential pitfalls.
Step one in any sound financial plan is to create a spending plan and STICK TO IT. Everything else hinges on that. If you spend even a tiny amount more than you earn, you’re heading for trouble. I wrote fairly extensively on how to get started on a spending plan here: http://money.kevingunn.org/index.php?/archives/5-The-Weekly-Spending-Plan-Part-1-Why-Weekly.html .
Finally, remember that an early start is the key to finishing well-off. Don’t postpone! Get started now.
References :
The American Institute of Certified Public Accountants website has articles arranged by Life Stages. Here’s the link to the ones for Childhood:
http://www.360financialliteracy.org/Life+Stages/Childhood/
I’ve found their articles to be really informative and easy to understand. They’ve got lots of calculators.
The way I learned about finances was having a job at a very young age. Labor Laws don’t apply to working for family (Grandpa gets a hard worker for low wages). Every time I looked at something I wanted to buy, I figured out how many hours in the hot sun I’d have to work to pay for it. Most of the time, I decided it wasn’t worth it. I didn’t have an allowance, I worked for my money. My parents gave us the basics – food, shelter, and clothing; they also treated occasionally to items we wanted. The things they didn’t agree with (my sister’s taste in music) we had to buy on our own. I learned to like their music 🙂 ’cause I was cheap. Gifts were what we wanted, but budgeted. Mom would tell us the limit for the year and we would figure out how to get the most of it. Taught us a bit of teamwork & sharing too.
I would focus on teaching a child not to wrack up unsecured debt. Inspire the goal to own their very own house someday! Teach the skills and values of not living beyond your means and a work ethic; saving will be a result of those skills and values.
References :
daveramsey.com
He has lots of GOOD advice on money and debt. Go to his website and listen to his radio show or find station near you to listen to.
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