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Veterans: Who Taught You Financial Literacy as a Student?

Hey Veterans: Do you think your financial life would be different today if had been taught the benefits of financial literacy as a kid? Have you become frustrated with the fact that schools teach us to be great worker bees, but teach almost nothing about financial freedom?

With home ownership, retirement, savings, and cash deposit accounts listed as things an adult needs to really understand, many people, including myself were left wildly unprepared for the real world once they left high school.

The United States is one of the countries with the highest number of citizens with checking accounts, yet many young people could not balance a checking account if their life depended on it.

With such a severe lack of financial education, one wonders how young people ever attain financial freedom in their lifetimes.

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What is financial literacy and why is it important?

In a country that is supposed to be among the wealthiest in the world, most people are struggling because they don’t understand the most basic financial concepts on a personal level.

Financial literacy training for young people is severely lacking and as such is the future financial security of the nation itself is at risk.

Even when I came out of college with a degree in Finance, it was amazing to me that it took another full year of struggling with my personal financial life for the light bulb to come on regarding financial management.

The definition of financial literacy is having a deep and unshakable understanding of the various topics topics related to managing money, personal finance (i.e. credit), how and why we save money, and what to invest that money into once it has grown to a decent size.

It involves understanding concepts such as compound interest, the rule of 72, and the time value of money.  These items are tools that in the hand of the skilled build great wealth, but in the hands of the uninitiated quickly bring about bankruptcy.

So how can we start to gain the benefits of financial literacy?

A good place to start is by reading the following list!  If you are interested in giving a young person you know a great financial headstart, then read on to find out what I wish I had learned as a high school student or even earlier.

1- Watch Out For Predatory Lenders and Credit Cards

I remember walking down the street my first few weeks on campus and seeing a kiosk with a person giving away 2 liters of Coca-Cola just for signing up for a Discover Card.

I thought wow! Free money and free Coke…What a sweet deal.  Little did I know that I should have made them give me so…much…more! I was woefully unprepared for that first card but it taught me a ton of life lessons.

Lenders love to hound young adults who are just beginning to live on their own and manage their financial lives. With credit cards from well known financial institutions starting at 23% for first-time applicants and ever increasing credit limits, it is no wonder that the average amount of credit card debt is $15 thousand dollars.

Furthermore, predatory lenders enjoy playing the no interest game to trap young people. Be smart with credit cards if you must have them.

Don’t use them for anything except what you can fully manage to pay back at the end of the month. Really, though, it is simply best not to use them at all except for strategic reasons.

2- Compound Interest – Learn The Rule of 72

Interest is the amount of money that is earned on an amount of money each period.  This is usually listed as a percentage.  For example, a person holding a $100 investment that earns 10% per month will have 110.00 dollars at the end of the month.

Compound interest is what occurs the next month.  First, the same $10.00 is earned next month, but something magical also happens.  The previous month’s earned $10 also earns 10% or 1 dollar bringing the total earnings to 100 + 10 +10 +1 = $121.

Now, this example may not seem like a big deal but if you could find a deal like this you would be advised to take it and run for the hills before they change their minds.


Because at the end of 10 years at this rate of return your $100 would have turned into $9,024,920.  That is the power of compound interest.  It is also the power that credit card companies use against the unsuspecting.

If you invest your money in the stock market, you may be able to obtain a rate of return that might be in the range of 10% per year, not per month.  However, this is still enough to double your money every 7 years.  How do I know this?  Through the rule of 72!

The rule of 72 states that if you take any interest rate as a whole number then divide 72 by that number, you get the number of years it will take for the investment (or debt in the case of credit cards) to double, without any other money being added to the pile.

This is the real reason why the “rich get richer and the poor get poorer”.  One is using compound interest in their favor.  The other is having it used against them through high-interest credit cards or predatory lending practices.

3- Start Investing in an IRA As Soon As Possible

The problem with earning money even in a passive way like investing is that the government is always taking part of the earnings, putting a drag on your money’s compounding rate.

However, tools such as IRA’s are government sponsored plans for that allow money to grow tax-free. These can be started at any age under 70 and a half years old.

You should start an IRA as soon as possible because guarding your investments against taxation is one of the best ways to ensure that the money will grow as quickly as possible.

Parents should seriously consider setting up IRA’s for their children once they begin earning money because the earlier you can get money compounding, the wealthier you will be at retirement.

For example, if a person has $10,000 in an IRA, at the age of 35, then decide to invest no more, their expected value at age 65 compounded at 8% per year would be $147,853.44.

However, if they had done this at the age of 25, with no additional savings, the expected value would be $319,204.49.  More than double with just an additional 10-year head start. Play with the numbers yourself at this calculator.

4- Balancing the cost of college against expected job opportunity pay (or ROI)

Of course, you go to college expecting to get a high paying job, but you should carefully examine the future prospects for the job market before you embark on your degree.

If the money you are expecting to earn after school is going to be significantly less than what you spent on the schooling, then you may want to re-think the chosen career path.

However, a key variable is how happy you will expect to be in your chosen field.  If you know without a doubt what makes you happiest, then money earned will be irrelevant. The key is to live way below your earnings, whatever they may be.

Also, don’t be afraid to work and learn at the same time.  There are plenty of IT professionals that are now foregoing 4 year colleges and are turning to micro-learning vehicles such as Certification Training. This allows them to advance at their own pace with no risk to their future earning potential.

5- Reducing college cost by taking as many AP courses as possible

Let’s face it.  A college education is becoming ridiculously expensive.  But smart high schoolers know that Advanced Placement courses can cut down on time spent in college and save you money as you wouldn’t have to pay for taking those courses in college.

Taking as many AP courses as possible in high school and passing the AP exam allows you to very cheaply offset the costs of a normal college education.

6- Reducing college cost by taking prerequisites at junior colleges in summer

Junior colleges are significantly cheaper than the conventional universities and as such, taking some of your pre-requisite courses will help save money and also cut down on your college hours.

It is also a wise choice financially as it will show you whether college is for you or not.  Be sure to check with the top three universities you would like to attend to ensure that the courses you want to take would qualify as transferable.

7- Saving the MAX in a 401(k) as soon as I got my first job

In youth, you have very few obligations. But the moment you have the opportunity, you must get into a 401k and immediately save the maximum amount possible in your 401k.  One big caveat: The 401 k must not be solely invested in the stock of the company that you are working for.

If you can’t diversify your portfolio then that is a huge risk.  In that case, you should probably only save enough to get any matching amount that the company would give you.  That’s free money!

If you can’t diversify your portfolio then that is a huge risk.  In that case, you should probably only save enough to get any matching amount that the company would give you.  That’s free money!

8- Learn to save a little bit of any money received

When you are young and you get some money, there is usually no real need for discipline. Most kids have no concept of budgeting or needing their money last because bills are coming due.

We get it, we were young once too but it is important to learn good spending habits early. Some parents like to teach their kids to use the 25% formula.

Save 25% of whatever money you get and go wild with the rest.  Goals are important in teaching teens about money as they respond better to ideas when they can see how it will be to their benefit.

9-Understand financial jargon

This credit offer seems legit! Image: Pixabay

Financial education for kids is profoundly important. If they do not know what financial jargon means then they could be left vulnerable when it comes to predatory lenders.

Why not have your teen spend a little time on Investopedia or even make learning the terms a game with a small prize.

If a teen goes into the adult world with blinders on, they may end up making some poor choices regarding credit or investments that are not really investments but gambling.

10- Play the game Cash Flow 101 from Rich Dad (and other money games for kids)

You are never too young to learn to be a great money manager.  Robert Kiyosaki has a great game called Cash Flow For Kids that can really help parents teach financial discipline.

There is absolutely nothing wrong with teaching 4-year-old’s practical money skills. The internet is full of money games or you could even use your child as a banker in the next monopoly game. Why not check out for some educational fun.

11- Good money books for kids

The children’s book market is a billion dollar industry with books on potty training to the welcoming of a new sibling there is a book on everything.

Picture books on money are also in abundance and are a very good tool to help young ones understand the concepts of saving, spending and the notion that money doesn’t grow on trees.

Bunny Money” by Rosemary Wells is a good book to start with as it teaches basic money math and other little tricks to help your child understand the concept of money.

12- Learning ways to earn money as a kid (particularly sales and self-promotion)

Let’s face it, the majority of wealth is generated by people who are employers, not employees.  This is where learning an entrepreneurial spirit early in life comes in handy.

There are many ways for your child to earn money, such as by recycling cans, door-to-door candy sales, starting a lawn mowing business, opening a lemonade stand or even negotiating a garage sale with their stuff-hoarding parents.

Making sales and getting customers to buy is not only a great social exercise, but it also teaches grit in the face of rejection. This is a great way to boost their confidence and to help out with the added items your child may want to purchase.

Learning the value of a hard day’s work will help them to appreciate their hard-earned nickels.  Just don’t forget to save a portion!

13- Read

Launched in 1997, provides tools to help parents, as well as educators, to teach personal finance lessons for high schoolers on how to manage money wisely and develop good financial habits.  In today’s hyper-consumerism environment, these are lessons that desperately need to be learned.

Furthermore, the website offers financial literacy activities for high school students and teaches everything from best saving practices to how to protect themselves from predatory lenders.

14- Use Mint once on your own

New college grads should consider using Mint on their own as soon as possible and explore the wealth of financial knowledge they put at our fingertips. The website is broken up into sections for all ages and even has a section for recent graduates in order to guide them through their post-college years.

It has helpful tips on how best to manage any new debt they have and learn how to manage their money.  Of course, it also offers budgeting tips and saving ideas. Check out the option tailor-made for new grads at

15- How to make money with money

There is an old saying that goes “you have to spend money to make money”. Now if you want to learn ways to increase your wealth, then you need to put it to work.

You can do this through putting your money in investments such as stocks or bonds, mutual funds, starting your own business or perhaps real estate.

If you have a pretty large nest egg already, you might consider buying a franchise as these tend to have systems in place that help ensure that you’ll make money. With your growing wealth, you can provide jobs, boost the economy, and give back to those in need.

16- Learn about stock index funds and why it beats most money managers yearly

A stock index fund is a low cost, mostly unmanaged investment fund. “Indexing” is a passive form of fund management that generally outperforms most actively managed mutual funds over long periods of time.

Money managed funds are beaten by index funds due to the fact that managed mutual funds are typically more aggressive in their attempts to beat the market.

Index funds, on the other hand, mimic the market.

Managed funds pose a greater risk while giving the investor no greater expected return on the investment. Basically, if you are using an index fund, you will very likely beat most money managers over the long term.

17- What frugality really means

To be frugal is to be thrifty or a wise shopper. Frugal people are not cheap or tight-fisted, they are simply economical in everything they do. A great example of this is couponers or bulk shoppers.

There are coupon shoppers who have whole files of supermarket layouts and arrange their coupons so that they have a cheap and effective shop.


There are even ways to get money back from the store and walk out with free groceries.

Frugality is something to be encouraged, especially when it comes to young adults just starting out.

More important than finding great deals, is embracing a Minimalist way of living.  Only buying what you absolutely need and letting go of the idea of “keeping up with the Joneses”, is a sure-fire path to peace and wealth.

18- How to balance a checkbook

Now as previously mentioned, there are some people who cannot balance a checkbook to save themselves, but the process is really very simple and only requires basic math skills, or even better, Quicken.

Balancing a checkbook means you’ve recorded all additions (deposits) made to your account and subtractions (withdrawals).

Most checkbooks will have pages for you to record the transactions made. You simply make sure you do not write checks for more than the amount of money that is in your checking account.

It is important to remember that a person who you pay with a check may not cash it for several weeks.  So you must keep a record of uncashed checks as well as leave sufficient funds in the account to cover the unpaid portion.

What’s even better is that in today’s environment you really don’t need to bother with checks these days. However, even if you do not use checks, you should check your bank balance daily to make sure you know what your money is doing.

Another good idea is to always pay everything you can from your bank account online.

Chase Bank is great because they immediately withdraw and hold any amounts you pay online, even if the business you are paying hasn’t received the funds yet. This is awesome because you have much less of a chance of overdrawing your account with this feature.

19- Why budgets matter

Budgets are important educational tools for those new to the wonderful world of financial independence. Many Americans do not stick to or even have budgets.

Budgeting is important because it helps expose what your silent but deadly spending habits are and helps you overcome them with simple math.  It can often be really illuminating to see your true spending habits versus what you planned to do.

Many people have commented that they do not know where their money goes and still do not keep track of their spending.  This is like trying to drive to New York from L.A. with no map.

Budgets are important tools to help you with your financial goals. If you stick to a budget then you are more likely to have a healthier financial life.

20- What good debt is

Now, this is a concept that may confuse you. For years we have been told that debt is a bad thing, but that is not strictly true.

Good debt is simply debt that allows you to purchase something that pays the debt back for you. Examples of good debt are real estate

Examples of good debt are real estate loans, or loans for businesses that need to grow in order to meet heavy demand for their products. You can have debt and still be smart about it. Just make sure it is a debt that will pay itself back in the long run.

21- Why A Big House Is a Bad Investment

Have you ever heard someone use the phrase “We just need a bigger house”? Well, there are some interesting home usage statistics that show that what this person is really saying is that “I need more space for my junk”.

From a purely cash-flow based analysis buying bigger houses are a bad investment.  Why?  They do not pay the owner cash on a monthly basis to help pay the debt.

This fact came home to roost in the 2008 real estate crash. This is not to say that one should not buy a home.  However, we should rather buy the least amount of home possible so that we retain our financial freedom.


Clearly, financial education is a vastly under-appreciated field for teaching children how to become responsible adults with money. Many, including myself, wish they had learned about some of these concepts at an early age.

If we want the youth as well as those grown-ups who continue to struggle to have the drive to plan for the future then it is important to focus on financial literacy. This ensures that they will be independent and make great decisions because they will have the practical money skills necessary for a sound financial future.