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Savings 101


Financial Literacy 101



Financial literacy is important for kids and young adults, and adults of all ages. We can all improve our financial stability by refreshing our financial knowledge. Here are some tips:

Financial Literacy for Kids

There are different ways children learn about the value of money, follow these guidelines to put youngsters on the right track. 

Birth to age 8  Assign basic household chores. Even 4 year olds can make his or her bed and pick up playthings. Have a list of "little jobs" that small hands can do to earn a dime or quarter. Provide a piggy bank for savings and little sheets for easy record keeping. Don't buy toys on demand; help them to look forward to birthdays and holidays for special items instead.  Help children learn the difference between needs, wants and wishes; this will prepare them for making good spending decisions in the future. 
Ages 8 and Older  Allow your child to begin making more decisions on their own, encourage comparison shopping for instance.  Give a specific allowance and stick to it - or none at all. That's right! Some parents have found the best way to educate children to value money is to have them earn it for doing extra work.  Don't pay youngsters for doing regular chores, if you do, there may come a time when she or he might refuse you because money isn't needed.  Communicate with children your values regarding money and how to save it, make it grow, and most importantly how to spend it wisely. 
For more tips on teaching financial literacy to your children, see OCP's article Financial Literacy 101
Basic Tips for all ages  When giving children an allowance or income, give the money in denominations that encourages saving. For example if the amount is $5, give out five $1 bills and encourage at least one be set aside in savings. 
Take the kids with you when you open their savings accounts. Beginning a savings habit early is one of the keys to savings success. 
Show children how to evaluate ads on TV, radio, internet, and in print.  Are there alternative products available that will do a better job, perhaps for less cost?  Remind them that if something sounds too good to be true, it usually is.  

College & Young Adults

Learning to manage on your own can be an arduous task, but if you go slowly and play it smart, you can avoid money troubles that plague many college students and young adults.  
Join a credit union. Don’t just sign up to a random bank giving away t-shirts or frisbees at registration. Track down a credit union in town, or do some research into online banks.
Be careful with credit.


  • Don’t get a   credit card unless you absolutely need one. Think twice before signing up just to score some cool gear or a one-time discount. Look at the annual percentage rate, annual fee, grace period, and penalty fees. Start with a $1,000-limit card that offers points or other rewards and pay your balance monthly. Focus on developing good money skills with cash. Also, keep track of your credit score and your  credit report at least once a year.
  • Borrow as little as possible.  If you do borrow money, make sure you fully understand the cost and other terms of the loan BEFORE signing on the dotted line; borrow just enough to pay for your legitimate college costs.
Steer clear of unnecessary fees. Avoid paying extra ATM fees by researching your bank's ATM availability near you. Also, overdraft fees range from $35 to $50, consider getting overdraft protection to avoid those charges. In addition, avoid parking fines, late fees for library books or videos and CDs rentals, for example.
Protect yourself from fraud. Don’t give out your social security number or your credit card information except to known and trusted sources. Young adults are more likely to fall victim to fraud and identity theft by people they know. Living in a dorm, or other shared living space where strangers might easily access your space, might heighten the need for caution.
Save money on campus.
  • Pay less for textbooks. Don't buy new books at the campus bookstore. Campus prices are usually higher than at online retailers. Buy used books. Consider renting textbooks at your school's bookstore or book lending sites. Read the rental terms carefully to prevent avoidable fees.
  • Live without a car. Cars are expensive. They require gas, maintenance, insurance, registration, and parking. Stick close to campus and learn to use mass transit. Find a friend who has a car.
  • Take advantage of campus activities. Don't spend extra money on food if you have a cafeteria. Take advantage of any student discounts at businesses you frequent. Get the most from your student ID!
  • Capitalize on coupons. Daily deal sites like Groupon and Living Social offer deals on dining out and other services that can help you maintain your budget. Also, if you have unused gift cards you don't want or need, trade them for cash on sites where you can trade them. Be sure to check the terms and conditions to avoid unnecessary fees.

All Ages of Adults

Read the fine print. If a deal sounds too good to be true, it usually is. Ignore the pressure from salespeople who want you to sign without reading.

Talk about money with your partner.  If you are tying the knot or have been together for several years, it is important to get on the same page financially.
Pay your bills on time.  If you pay your bills as they arrive, you won’t have to worry about forgetting them. Set up text and email alerts for your bank accounts and credit cards to help keep tabs on your spending and to avoid missing payment dates. 

First pay the highest interest rate bills first.  Make efforts to pay off your credit card debt so that you simply owe what you've charged over the course of each month, and try to use credit sparingly. 

Pay principal first.  If you pay more than what is immediately due on a loan, make sure it goes to the principal only; this will reduce the amount of interest that will build up going forward. If you write a check, write "pay to principal" in the subject line, and if paying online make sure you get to choose how the payment is allocated.  

Pay off student loans last.  Federal student loans offer much more flexibility than other forms of debt, and they usually don’t carry high interest rates especially when consolidated.  Also, you can usually deduct the interest you pay on student loans, as long as your income is less than the current IRS limits.   

Stick to a budget. At the start of the month, estimate how much money you’ll receive and decide where it needs to go. When you go out, decide ahead of time how much you can afford to spend, leave the rest behind.

Track your spending. Use a notebook, Quicken, phone apps, or your bank's website budgeting tools to help keep your budget on track.

Set limits. Don’t buy on impulse. Watch OCP's Lunch and Learn webinar on  Your Money and Influences

Develop a habit of saving. It will enable you to purchase a home and plan ahead.

Save for Retirement.  Sign up for a 401(k) at your first opportunity; company-sponsored retirement plans are a great choice since you get to put in pretax dollars.  If your employer offers no such plan, divert some of your paycheck into an IRA.  Setting up automatic contributions to either one of these retirement options at a young age will help build wealth.  

Investing really is important. In the beginning, invest in mutual funds and stocks; take advantage of reduced pricing on your company's stock, but don't limit yourself to only your company, instead, diversify your investments to include stocks from large, midsize and small companies. After you have accumulated some wealth, it may be time to hire someone, you will have to pay for the service, so get referrals and check out qualifications and credentials of a prospective financial adviser or broker. 

You probably want to own a home. Owning a home can be less stressful and more affordable than renting.  Start saving for a down payment on a mortgage.  Buying a house gives you the chance to build home equity, as well as cash in on tax advantages. But, be careful of buying more house than you need.  Keep your housing expenses to less than one-third of your take home income.

Be prepared for an emergency. In addition to an emergency fund, you should consider having insurance, a will and an emergency preparedness plan.

Keep an emergency fund.  It's wise to save any amount of money for an emergency fund every month.  The easiest way to do this is to automatically divert a portion of your earnings into a savings account in addition to the amount you're contributing to a 401(k) plan or IRA. Put the money in a high-interest savings account, a certificate of deposit or a money market account. 

Have insurance.  Insure your life, health, auto, and home as soon as possible. If you rent, get renter's insurance to protect the contents of your place from events like burglary or fire. Disability insurance protects your greatest asset, the ability to earn an income, by providing a steady income if you ever become unable to work for an extended period of time due to illness or injury.  

Yes, you need a will. Create a will so that your loved ones and assets will be financially safe.  Make certain to update your will occasionally or when a major life event happens.  

Emergency Plan.  Leaving your home due to a disaster can be stressful, but knowing that your financial documents are up-to-date, in one place, and portable can make a big difference.  Here are some tips for financial readiness in case of emergency:


  • Document your possessions.  Make a list of your possessions and document them with photos or a video. Keep one copy of your inventory at home in a lockable, fireproof file box; keep another in a safe deposit box or another secure location.
  • Keep documents in one place.  Put all important documents in a lockable, fireproof file box. Keep the file box in a secure, accessible location in your home so you can “grab it and go” if the need arises. Keep electronic copies at a different location.
  • Choose an out-of-area contact.   Ask an out-of-town friend or relative to be the point of contact for your family and make sure everyone in your family has the contact’s information. 
  • Update your emergency information regularly.  Review the contents of your household inventory, your fireproof box, and the information for your out-of-town contact at least once a year.

Protect yourself from fraud. Don’t give out your social security number or your credit card information except to known and trusted sources.

Never stop learning. Invest at least 3 percent of your income back into yourself. Invest in learning new skills, a new language, or take vocational or online courses.