Attaining financial knowledge at a young age

The benefits of starting children on the path to financial literacy are undeniable. Last week, we talked about the value of mentors and role models in a family environment that included investing in stocks. This week, let me share lessons from someone who struggled to learn about finances on her own but gained valuable knowledge about spending, saving and responsibility as a result. This is D.D.’s story.

“I learned the value of money the hard way. My parents didn’t teach us how to use a checkbook or about saving money or about paying bills, and there were no classes in schools I attended that taught finances for everyday living . ...

“Growing up in an affluent town as third oldest in a family with eight other siblings was not so easy. I wore hand-me-downs to a school where other kids always seemed to have new clothes and toys. I rarely had lunch money and was embarrassed but understood why it was this way.

“My parents worked very hard to provide for their nine children and to pay the bills. My mom worked at a full-time job and came home late on many nights, and Dad worked two jobs back-to-back for many years, and we didn’t see much of him during the week. My parents did not give us everything (or anything) our hearts desired, and it made the majority of my siblings and I that much more determined to find a way to get what we needed and wanted when we were old enough to do it for ourselves.

“I learned responsibility and independence at an early age. As soon as I was able to contribute, I wanted to, and I did — it was not a requirement set by my parents. My first job at 12 was as a newspaper carrier, and I gave all my profits to my mother to help out.”

“I believe we must learn to be responsible to pay our bills, to save for a rainy day, and maybe even invest a part of our hardearned money into an IRA or other retirement plan. I tell everyone the time to begin saving for retirement is on the first day you begin working. It takes a very long time to save enough money to retire comfortably and on time.

“In my opinion, those who go to college or learn a trade will probably have a better chance to earn more, but it won’t make a difference if they don’t have a little common sense and take responsibility with regard to spending and saving. My grandfather (born in 1894) had a moving business for many years. He always told us if you want something, save your money and pay cash for it. Everything he and my grandmother (born in 1898) owned — their house, land, vehicles, business, etc. — were paid in full . ... Neither of my grandparents finished school past eighth grade, but they lived a very good, comfortable life.”

D.D.’s story is inspiring and instructive. While her parents did not teach her about saving money, paying bills or balancing a checkbook, they did exhibit the values of hard work and responsibility — key elements when striving for financial stability.

If you are in a position to teach children, a good guide is the National Standards for Personal Financial Education published by the Council for Economic Education and Jump$tart Coalition for Personal Financial Literacy (tinyurl.com/ynrfcp77).

Financial literacy is divided into six categories: earning income, spending, saving, investing, managing credit and managing risk.

The intent behind the standards is to “identify knowledge, skills, and decision-making abilities that young people should acquire during their K-12 education,” according to CEE and Jump$tart.

While all essential financial literacy principles may not be picked up at home, it’s the best place to start.

Seasoned investment counsel (tinyurl.com/52nus8hz) and awardwinning columnist and author, Julie Jason, JD, LLM, promotes financial literacy and investor protection. Read her latest book, “The Discerning Investor: Personal Portfolio Management in Retirement for Lawyers (and Their Clients)” (tinyurl.com/4u7h9pjs), published by the American Bar Association. Write to Julie at readers@juliejason.com. While all questions cannot be answered, each email is read and reviewed and can lead to discussion in a future column.