Last Friday afternoon, I met with a couple of bankers and the executive assistant of a financial professional who lives in New York, NY. The financial professional hails from Columbia, MO and is funding a financial literacy program for elementary school children in our town. He was referred to us by the executive of a different bank, who used to be the Director of Economic Development for the State of Missouri. When in that position, he and I came up with a plan to write a Top Ten Teen Financial Tips, to be delivered to high school students by members of the Missouri Chamber of Commerce. We wrote the program but it was never implemented due to our Governor putting his political capital behind Missouri becoming the third state in the nation to require a course in personal finance for high school students[i].
As luck would have it, I mentioned this at our meeting. Those present thought that this might be a good idea to use for third-graders. We could call it the “Top Ten Third-Grade Financial Tips”, I guess. I made the point that it would have to be different but that it might work. Then, one of the women present told me that she is a reader of this “Tip”. She asked me to take a stab at “Top Ten Third-Grade Financial Tips” for this week’s Financial Tip. So, since you asked……
Tip #1: Believe You Can – Each American has dreams that they are free to pursue. To achieve your dreams, however, requires you to set goals. Accept those things you cannot change and then work to change those you can. Begin with a goal you have for today, and then work toward it. Think about other goals you have in sports, scouting, church, family, relationships, or whatever. You can reach them, if you devote yourself to your goals. America remains the wealthiest country in the world and, by making good choices; you will achieve your measure of financial success. Today is the day to make choices in support of your dreams for tomorrow.
Tip #2: Discipline is Power – Learn to save some money and save it in a bank, a credit union, or other investment. Watch it grow, while you learn how to interact with the bankers and other financial professionals. Do not be afraid of people in ties. Learn the power of compound interest, while you are young and continue to use it through life. Simple, good decisions at a young age will make you a financial success.
Tip #3: Budget Your Money – If you receive an allowance, save a portion of it before you spend it. Make yourself learn to live on less than your income, in this case your allowance. If you don’t have enough money, look for ways you can earn money. Ask your parents for a job, other than your usual home tasks. Help your older neighbors (like me) when they are shoveling snow. We just might find something to help you reach your goal.
Tip #4: Debt Can be Bad – Try not to borrow money to purchase anything that does not have a chance to go up in value. Too much debt can take away your freedom and make you a slave to the credit company. Too much debt can make the whole economy sick. Can you think of things you have purchased or your parents have purchased that you really don’t use anymore. I bet you can. (Don’t you wish you had that money now?)
Tip #5: Greater Income Means Higher Education – It is clear that those with higher education earn greater incomes. This means that you need to work hard at school and do the best you can, all the time. Make good choices and act like you want to make more money by making good investments in yourself. Set goals for your grades today. Make a deal with your parents that you will surprise them with the best grades you’ve ever had. Make it a game to do better in school than your parents did when they were in school. Then, do this every day and the rest will take care of itself. (If one of your parents did really well in school, pick a different parent to compete with!)
Tip #6: Take Care of Your Health – If you are not sick, you can go to school, go to work, go to scouts, go to church, or go out and play. If you are sick, you are sick. Eat good nutritious meals, when you can. Try not to eat too many sweets or drink too many sodas. Eat more vegetables and fruits. Make yourself take one bite of everything – especially if you have never eaten that food. You never know, you might like it.
Exercise daily. Play and have fun. Practice sports. Walk the dog. Walk the cat. (You should try this one.) Swim with your fish. Whatever it takes for you to enjoy being active is a good thing. We all need exercise.
Staying healthy makes you more productive. Those that are more productive, make greater incomes. Greater incomes help us be financially successful. So, you really are what you eat and how you act!
Tip #7: Set Up an Emergency Fund – Have some cash around so, if you need it, you’ve got it. Ask your parents if they have an emergency fund. If they do not, tell them that you think it would be a good idea to start one, just in case the car needs repaired, the refrigerator needs replaced, or you have a health problem. “Be prepared” is not just for Boy Scouts.
Tip #8: Review Your Risk Program – While you are too young to worry about the financial risks of life or to buy insurance, talk with your parents about their insurances. If they own your home, they have homeowner’s insurance. If they drive, they have automobile insurance. If they get sick, they have health insurance – or do they? Ask them what would happen if someone got real sick in your family and needed to go to the hospital. What would they do? Insurance is not about talking lizards or clumsy, goofy ducks. Insurance is about protecting you from losing your dreams due to a terrible financial loss.
Tip #9: Diversify Your Talents – Don’t gamble your money. Make investments in yourself and with your money, by making many different investments. This lowers your risk of missing out on something you’d like to do – like win! Think about what would happen if you were “made to be a swimmer” but you never learned how to swim? The same is true for investments. We need to invest in different investments because some will be better than others and, unlike our skills in sports, the one that is best today may not be best tomorrow. So, when you are young and growing up, don’t just play basketball because you “know” you are going to play in the NBA. Play football. Swim. Do gymnastics. Dance. Run. Play baseball. Sing in the choir. Play dodge ball. Climb trees. Just play. Do lots of different activities and find the one that brings you the most joy or the one that fits your skills. Diversity will enrich your life, just like diversification protects your investments.
Tip #10: Have a Balance Life – Yes, work hard in school and at your hobbies, jobs, and other activities. Yet, take some time to look at the clouds and imagine what might be on the other side. Chase fireflies, then let them go. Go fishing. Get dirty. Let yourself dream. Be thankful for what you do have and promise yourself that you will work hard to change the things you can. Smile, laugh, and allow yourself to love for, as the famous band from your parents’ and grandparents’ era, The Beatles, sang, “Money can’t buy you love”.
Salus populi suprema lex esto.
– Motto of the State of Missouri
[i] The good news is that our Office for Financial Success has just received funding for teams of our MU students to deliver this program in 50 Missouri high schools!