12 "Must-Know" Principles for Financial Literacy for Youth

1. Map your financial future. Take time to list your financial goals,
along with a realistic plan for achieving them. You can go places you
want to go without a roadmap. But seldom on the first try!


2. Don't expect something for nothing. Be leery of advertisements,
sales people or other sources of financial offers promising anything
free. Like non-financial opportunities, if it sounds too good to be
true, it probably is.


3. High returns equal high risks. Recognize that no one will pay you
high interest rates on a sure thing. In most cases, the higher the
interest rate offered to you, the investor, the higher the risk of
losing some, or all, of the money you invest. Diversification of
assets is the best protection against risk.


4. Know your take-home pay. Before committing to significant
expenditures, estimate how much income is likely to be available for
you. Net income, after all mandatory deductions, is more important to
estimate than gross income before deductions.


5. Compare interest rates. Obtain rate information from multiple
financial services firms to get the best value for your money.


6. Pay yourself first. Before paying bills and other financial
obligations, set aside an affordable amount each month in accounts
designated for long-range goals and unexpected emergencies.


7. Money doubles by the "Rule of 72". To determine how long it will
take your money to double, divide the interest rate into 72. For
example, an account earning 6% interest will double in twelve years
(72 divided by 6 equals 12).


8. Your credit past is your credit future. Be aware that credit
bureaus maintain credit reports, which record borrowers' histories of
repaying loans. Negative information in credit reports can affect your
ability to borrow at a later point.


9. Start saving young. Recognize that your total savings are
determined both by the interest you earn on those savings and the time
period over which you save. The sooner you start saving, the more
funds you'll be able to amass over time.


10. Stay insured. Purchase insurance to avoid being wiped out by a
financial loss, such as an illness or accident. An insurance plan
should be part of every personal financial plan.


11. Budget your money. Create an annual budget to identify expected
income and expenses, including savings. This will serve as a guide to
help you live within your income.


12. Don't borrow what you can't repay. Be a responsible borrower who
repays as promised, showing you are worthy of getting credit in the
future. Before you borrow, compare your total payment obligations with
income that you will have available to make these payments.