Dr. Lewis Mandell, PH. D, the University of Washington, concludes that “financial education, as currently administered, does not appear to have any lasting impact…current methods don’t work.” To do financial health right, it will take financial interest and action steps on your part, with a coordinated program of financial knowledge at home and in our K-12 education system.
Since “action steps” are often the missing link or key to achieving financial results, what exactly do I mean by action steps? So far, I haven’t clearly defined them, other than having you establish a Roth IRA in your teens. Of course, a Roth IRA is still the ultimate action step of The Kid$Vest Project. But incremental events or learning moments received at home or in school, can logically guide you toward this most important goal. Some examples of these actions steps include:
- Having your parents initiate a college 529 savings plan for you as soon as possible, if they haven’t already done so when you were born. Then having discussions about the plan as you grow-up.
- Having family dinner table discussions about money—BSI, needs vs. wants, etc.
- Going with your parents to the grocery store or auto mechanic so you can experience how your parents handle real-life situations.
- Playing games like Monopoly, Risk, or Cribbage for family fun and financial education.
- Suggesting an allowance based on work efforts at home and learning how to allocate this income for budgeting, saving, and investing programs.
- Reading financial or business books and articles you can study at home—including The Kid$Vest Project.
- Consider entrepreneurial ideas such as lemonade stands, paper routes, or lawnmowing services to earn cash for savings and your Roth IRA.
- As you earn income form part or full-time jobs, learn and practice how to budget, save, and invest these dollars for your future success.
- Obtain a credit card that must be paid off monthly to learn about debt and credit establishment, but only if you believe you are financially capable.
- Seek out advice from parents, teachers, or reading material describing upcoming large expenses such as cars and college. If you do so before you actually have to make these financial decisions, you likely will be more prudent about decisions that could impact your life for years to come.
- Learn and understand what your individual strengths, gifts, and passions are so your career and trade school discussions become more meaningful and productive.
- Discussing career and potential gap year decisions with peers, parents and teachers.
- Have your parents play the ‘match game’ with you, if they can afford it. Whatever you save in a summer or annually, they can match your funds in your savings and/or Roth IRA accounts. This is family at its best!
- Start a brokerage account and play with a few stocks of your choice—i.e. Disney, Nike, Google, or Facebook. But only if you have interest in doing so and get guidance from parents or investment advisors.
- Watch your parents to see how they budget, save, and invest so you learn what to do—or what not to do. You can learn positive strategies from almost anyone!
- Apply the principles of The Kid$Vest Financial Binder at least annually (see in Services).
- Learning and understanding the value of hard work and the importance of working part or full-time in your teens—with some of the money going into your Roth IRA.
You, with parent and teacher assistance, can best decide how to discuss or implement these subjects at the dinner table or in the classroom. And please feel free to come up with additional action steps you think are important, as my list is certainly not all encompassing.
To be sure, the listed action steps above are not ground breaking or profound, simply useful building blocks you can obtain toward a solid financial foundation. Like all learned skills, the more often financial education is discussed and repeated, the more knowledge and retention of the concepts are ingrained. And importantly, the more likely they will be applied. Remember, a great plan without implementation still ends up in failure.
If there is no “pot of gold at the end of the rainbow,” you will most likely lose interest or not commit to an action plan. This could make all the difference in your financial success, especially when you want to retire in forty-fifty years. And why is this? Let's all say it together please. It's because of the miracle of compound interest. Or, as the author of the book, Warren Buffett Ground Rules, Jeremy Miller, says, "Compound interest can make anyone a long-term winner."