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They suggest parents who count on money from their children could actually harm their adult kids’ financial well-being, perpetuating a cycle of poverty.

“One of the best ways to get yourself out of poverty is to get an education, acquire skills to get the better job and experience some type of mobility,” said Krista Kay Payne, the lead author of the study.

“The young adult child isn’t paying rent on their own and is getting some help from parents by co-residing, but we’re hypothesizing that they feel they have to contribute to the household so they can’t use the money to get more education.”

It’s worth the read, especially because I’m featured in the article!

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While parents usually have all the right answers, sometimes they don’t. Sometimes, as hard as a parent might try, they just don’t have the right information, and there is nothing wrong with that – if everyone knew every answer, life would be pretty boring!

So what can a teenager or young adult do if mom and dad can’t teach you about financial management? Well, there are a ton of options you just have to look around to find the best one for you. It’s always easiest to start with people you know, so ask your family and friends if they know how to manage their finances, and if so, ask them to share their insights with you. But remember, it’s important to remember not to stop there; you need to continue your education journey!

Next, ask your parents, friends, and family if they can recommend any professionals that you can talk to. It doesn’t matter whether it is a banker, an accountant, a financial planner, or even just one of their friends who is really knowledgeable in the subject of financial management. Most bankers, accountants, and financial planners will be happy to sit down with a young person who is looking for knowledge and have a short talk about how to start managing your finances – and in most cases there is no charge for doing this!

Don’t forget that there is a world of knowledge out there in both traditional and new media. Pick up a book, start reading a blog, listen to a podcast, or find a newspaper or magazine which talks about financial management – your goal should be to read as much as possible until you have a good understanding of what you need to know (it’s all about how comfortable you are with the topic). Learn the basics, and once you have those figured out, start looking at the more advanced topics like investing.

Finally, the best way to really learn is to start doing. Start incorporating some of the information you’ve picked up, by starting to track your expenses, create a budget, and set and meet financial goals. It’s also a great idea to share your information with others – one of the best ways to really gain an understanding of a topic is to teach it to someone else.

What are your suggestions/ideas on how to learn about financial management?

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as soon as you missed a payment on your condo loan, you credit went south. Even though you are continuing to meet your other obligations, a delinquent mortgage payment results in a substantial hit on your credit score. Miss one or two more and you move into serious default territory. However, as you said, at 83, what do you need good credit for, anyway? Depending on your contracts with your credit-card companies, the rates you pay could be ratcheted up if your credit score falls

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How do you reward someone for learning a new subject?  Usually it’s the satisfaction of knowing you learned something new, or in the case of financial management, it’s the knowledge of knowing that you have a strong foundation to keep you financially healthy for years to come.  But not everyone thinks this way, and sometimes there are new ideas out there.

I was recently reading about how Citibank is offering a new card called the Citi Forward Credit Card, which rewards cardholders for paying your bill on time and staying within your credit limit.  The card is being marketed towards teenagers and Gen Y’ers and offers benefits such as:

100 points for paying on time and staying within your credit limit each month, 5 points for each $1 spent in “responsible” categories such as books, movies, music, and restaurants, 1 point per $1 for all other purchases, and 5,000 bonus points for signing up for paperless statements.

Citi decided to pursue this new credit card offering after conducting a survey and finding out that:

76% of [survey respondents] said they would rather learn by being rewarded for the right things they do, rather than learning from their mistakes.

Interesting concept, but is it really teaching you sound financial management, or is it giving you a false sense of learning?  The rewards program doesn’t advocate paying off your credit card bill in full, and there are hefty interest fees (29.9%).  It’s a good start, but I’d like to see something which teaches you how to set financial goals and create budgets to meet those goals!

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What financial advice would you give in the current economy?  Would you tell people to save their money?  Would you tell people that today is a buyers market?  Maybe you’d tell people that they should do nothing and see what happens, otherwise known as the deer caught in headlights syndrome.  Would you give the same advice to a teenager or young adult?

I was recently asked this question, and you know what my response was?  My advice for the current economy is the same advice I’d give in a good economy – understanding the basic principles of financial management and implementing them is good no matter what is going on in the economy.  It doesn’t matter if the economy is doing well, it doesn’t matter if the economy is doing poor, it doesn’t matter if the economy is flat, what matters is that you understand how to track your spendings, how to set financial goals, how to meet them, and how to think about the future.

Are you stuck where to start?  Well, let me break it down for you.

1. If you don’t know how much money you make each week, month, or year, figure it out – you need to know how much money you make to make a budget
2. Know where your money goes – track your expenses, and see where you are spending your money.  Once you start tracking things, you’ll be amazed to see where your money is going – did you know a Starbucks a day costs you over $500 each year?
3. Understand this basic formula: Income – Expenses = Savings.  Whatever money you don’t spend throughout your daily life will be your savings, and these savings are what let you plan for the future.
4. Create financial goals – figure out what you want to buy in the short term (maybe it`s an xbox, a new TV, or some new clothes) and long term (do you want a new car, a condo, a house, a vacation around the world), because our next step is to figure out how to meet these goals.
5. Create a budget and stick with it – now that you know where your money is going, and you`ve figured out what your financial goals are, create a budget to meet these goals and stick to it.
6. Start thinking about the future – do you know at what age you want to retire? Do you know what the future holds? If you`re like me, chances are you don`t, but that doesn`t mean it`s too early to start thinking about the future.  If you start saving even $100 each month for your retirement, and you make use of compound interest, you`ll be amazed how much you can save by the time you want to retire, and who knows, maybe you`ll even be able to retire early.
7. Share your knowledge with others – financial management isn`t a topic that is often found at the dinner table, but that doesn`t mean it doesn`t belong there.  Start a conversation about managing your money with your parents, with your sisters, with your brothers, with your cousins or even with your friends.  Share what you know, and who knows, maybe your family and friends will share some new information with you!

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In chapter 5, I talk about the future cost of life – it’s important to understand how much things will cost, and you need to start planning for big purchases as early as possible.

I just saw this post where Stephanie had a project for school that required her to “walk through the steps of buying and financing a house” – a great exercise to help you start thinking about the future cost of life.  Through this exercise, Stephanie started to look at how much her student loans will cost her, and has come to the conclusion that it’s going to be expensive, something which she didn’t realize until she looked into how she was going to finance her life post-graduation.

I wanted to put myself on the standard repayment plan right off the bat, and tackle this debt head-on. I wanted to consolidate my loans into one low rate while rates are dropping. But it looks like just to be able to make the minimums, I’ll have to stay on the graduated repayment plan (where the bills start small and get bigger every year) – with payments of $319 (at first).

Trust me, I’m really disappointed by this. I don’t know why I didn’t run the numbers until now, other than the fact that it’s easier to run them now that I’m done taking out new loans. It’s startling to be this close to repayment and suddenly realize that I will have trouble paying the bills.

My employment is uncertain. I’m going to do the best I can with job applications and internship applications over the next few weeks… but I’ve come to realize that I’ll have to do a lot more than that. I can’t afford anything outside of Ramen to eat and car maintenance, since I’ll be needing that to get to a job. I’ll have to start Compacting again.

I’d thought I was out of the woods, but I’m really, really not. Somewhere deep inside my brain, my current Self is kicking my 17-year-old Self in the pants for getting us into this mess!

Student loans and debt are a necessary part of life, and this post isn’t meant to scare you off of getting an education – it’s a good thing, and well worth the investment.  Rather, this post is meant to show you how important it is to think about the future cost of life, and create budgets to meet your future financial goals – if you plan to own a house after graduation, you have to start saving for it now, if you plan to pay-off your student loans as soon as possible, you need to make a game plan to achieve it, if you want to go travel the world, you better start saving today.

Regardless of what you want to do in the future, you need to start thinking about what you want, set those goals, and create budgets that will allow you to meet your goals, but don’t forget that while you are making those budgets, you still need to enjoy life (just ask Elie).

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Below are my first five rules on savings from Following The Goods: Financial Management for the Young and Ambitious.

Start saving money early — the best way to start saving is to start early. If you haven’t started early, start now! If you put away $10 dollars a week when you are 15 years old, and invest that money in a low-risk investment, by the time you turn 35 you’ll have earned almost $40,000. The sooner you save, the more you can save. It’s never too late to start saving. Don’t think about what you should have done, or about opportunities you may have lost out on, think about the future, and start saving now to make your dreams come true.

Create financial goals and meet them — it’s hard to accomplish anything in life without a goal, and savings are no different. Constantly set financial goals and do what’s necessary to meet them.

Pay yourself first — as we discussed at the beginning of this chapter, if you don’t pay yourself first, you’ll have problems paying yourself at all. Even if you can pay yourself $10 a month, make sure you pay yourself before you pay your bills, then take the money and invest it wisely.

Use automatic banking — If you are finding it hard to put savings away each month, set up an automatic savings plan where you automatically transfer money out of your account into a special savings account each month. Additionally, by using automatic transactions, you can make sure your bills are paid on time and that you pay yourself first.

Budget, budget, budget — to achieve any goal in life, you need a plan. By creating and adhering to a budget, you’ll make sure to meet all your financial goals. Just like anything in life, your financial goals and budgets can (and probably will) change, so make sure you are able to track your budget and update it when necessary

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Canada’s unbiased, non-profit source for information and tools that help consumers make better decisions when investing and managing their money.

This is an amazing site with a ton of information on everything from Investing Basics to Saving for Retirement to GIC’s and Savings Bonds to this great video which describes how credit works!

Oh, and for those of you who are teachers, there is a Teachers’ Corner with helpful resources to incorporate money management into your classroom.

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