CHAPTER 1
Introduction to Personal
Finance
This chapter introduces the topic of personal
nance, explores the evolution of credit and
consumerism in America, and highlights the
importance of both knowledge and behavior when
it comes to managing your money.
1 Personal Finance
and You
LEARNING OBJECTIVES
Describe what personal finance is.
Analyze personal finance as it relates to the normal American family.
MAIN IDEA
Learning how to manage your money now will help you avoid the financial
mistakes most people make—and that‘s how you win with money!
KEY TERMS
Personal Finance: all the financial decisions an individual or family must make
in order to earn, budget, save, spend, and give money over time
Consumer: a person or organization that uses a product or service
Debt: money owed to another person or company
Paycheck to Paycheck: an expression used to describe a person or household
whose monthly income is devoted to expenses and has little to no savings
Welcome to the course that has the power to change the trajectory of your future! In some
classes, you might wonder if you‘ll ever use what you‘re learning once you leave school. But
not in this class. Sure, we‘ll talk about some stuff that‘s a long way off—like buying a home
and investing for retirement. But you can start using a lot of what you‘re about to learn right
now—in your real life! Sounds great, right?
What Is Personal Finance?
Personal finance is just that—your personal finances and what you choose to do
with your money. It’s all the money decisions you make every day—like figuring out when and
where to save and spend your cash. When you make the right choices, you‘re managing your
money. But the wrong choices can lead to your money problems managing you.
Once you understand how earning, budgeting, saving, spending, and giving affect your
money, you’ll have all the tools you need to make the right choices. And that‘s what good
personal finance is all about. Being financially literate is having the knowledge and skills you
need as a consumer to be able to manage your money well.
WORDS OF WISDOM
You’ll either manage your money or the lack
of it will always manage you.
Just think about your current money situation. You might have an income from a part-time job,
or your parents may pay you for doing chores. What are you doing with your money? If you
just put it in your pocket and spend it without a plan, you‘ll probably end up running out of
money—fast. But if you make it a habit to plan and set goals for your money, it’ll last longer.
And you could end up actually paying cash for your own car or paying for college debt-free!
A Giant Debt Problem
Does the idea of buying a car or going to college without borrowing money shock you? Of
course it does! That‘s because almost everyone you know uses debt to pay for those things—
and more.
Here‘s the deal. On the surface, it looks like most people are doing really well with money.
They have nice houses, fancy cars, expensive jewelry, and all the latest technology. But they
can‘t really afford those things. They‘re using debt to pay for it all just to keep up the
appearance of success. That‘s what‘s known as ”keeping up with the Joneses,“ and it traps
people in a cycle of debt.
WORDS OF WISDOM
Debt doesn’t open doors. It closes them.
In America, 72% of people say they‘re burdened by consumer debt. The average borrower
has over $34,000 of debt—not including a mortgage!1 As the chart below shows, debt is
definitely a problem. But debt doesn’t have to be a problem for you!
Living Paycheck to Paycheck
All that debt leads to another big problem: living paycheck to paycheck. Almost 80% of
Americans use all of the money they get from one paycheck just to make it to the next.2
Because a big chunk of every paycheck goes to their monthly debt payments, they can‘t save
any money for emergencies or big purchases. So they go even deeper in debt to pay for those
things too. It’s a never-ending cycle that’s difficult for many people to break.
Did You Know?
85% of parents are interested in their kids taking a course on personal finance to learn
how to better handle money.4
Debt Isn’t the Only Problem
Let’s get real for a moment: Personal finance does involve some math. But personal finance is
mostly about behavior. Life and money habits like budgeting, investing, goal setting, giving,
establishing healthy boundaries in personal relationships, and furthering your skills and
education all impact your finances. How’s that possible? Because personal finance is only
20% head knowledge and 80% behavior.
This means knowing what to do with money isn‘t the real problem. It‘s actually making smart
money choices that‘s hard for most people.
In this course, we‘ll focus on both head knowledge and behavior. You‘ll learn the right way to
manage your money, and you‘ll learn how to build good money habits that you can use now
and in the future. Remember, for most American families, normal is being broke and living in
debt. You don’t have to be normal!
2 A History of
Credit and Debt
LEARNING OBJECTIVE
Understand the evolution of America’s dependence on credit.
MAIN IDEA
Using credit and being in debt have become accepted money behaviors. It
hasn‘t always been like that—and you don‘t have to live this way.
KEY TERMS
Credit: the granting of a loan and the creation of debt; any form of deferred
payment
Interest Rate: the percentage of principal charged by the lender for use of its
money
Loan Shark: person or entity that charges borrowers interest rates above an
established legal rate
Interest: the additional cost a lender charges for borrowing their money
How Did We Get Here?
What if we told you it wasn‘t long ago that using credit, or borrowing money to buy things, was
frowned upon in the United States? We‘re not kidding! It was even illegal in many cases.
Credit and debt are part of our culture. Today, 83% of American adults have at least one
credit card. That‘s because credit companies spend a lot of money to convince us that credit
is the normal
5
way to get what we want. Just like companies advertise their new line of
basketball shoes, credit card companies, banks, and other lenders promote credit to get us to
buy.
WORDS OF WISDOM
Debt is the biggest thief of your financial
future.
The result is the huge debt problem we talked about in Lesson 1. Instead of avoiding debt,
many Americans now believe debt is a necessary part of their financial lives! That kind of
culture shift doesn‘t happen overnight. So, how did we get here?
Credit As We Know It
Prior to 1920, the only way for banks to make money by loaning money was to charge sky-
high interest rates. But that was illegal, so most banks stayed out of the credit business.
Loan sharks were individuals and small organizations that offered credit—also with incredibly
highinterest—to people in desperate financial situations who had nowhere else to turn.
These shady, illegal operations were not socially acceptable. But today, we don‘t think twice
about carrying a credit card that charges 21% interest. What a difference a century makes!
After World War I, the country entered ”the Roaring Twenties,“ a decade-long economic boom.
Americans wanted the new, mass-produced products—like home appliances and cars—but
they didn’t always have the money. Because of the demand, credit laws were relaxed and
lending became profitable for banks. The average person could get credit without turning to
loan sharks, so buying on credit became more socially accepted—though not as much as it is
today. This was the beginning of what we now know as the credit industry.
Going Into Debt
When the stock market crashed in 1929, it launched the country into the Great Depression in
the 1930s. Millions of people were out of work, and many people lost everything. President
Franklin D. Roosevelt passed the New Deal, a program designed to promote economic
recovery and social reform and help working-class Americans get back on their feet.
World War II ultimately helped end the Great Depression by creating a lot of new jobs. As
Americans returned to work, the economy strengthened. Once again, people became
comfortable with the idea of borrowing money and going into debt.
The chart above shows how Americans have become comfortable with debt. In 1950, the
average debt per person was under $1,500 (adjusted for inflation).8 But now, it‘s over $34,000
in nonmortgage debt.9 Keep in mind that back in 1950, credit cards and student loans weren‘t
what they are now.
Credit cards (Mastercard, Visa, and American Express) weren‘t even introduced to the public
until the late 50s. Before that, in 1950, the average credit card debt was zero. Now, the
national average is $3,366 per person.10 When you narrow it down to people who actually
have credit cards, the average amount of debt rolls up to over $14,900 per family.11
Did You Know?
In 1924, General Motors launched the General Motors Acceptance Corporation (GMAC)
so consumers could finance a car purchase. By 1930, 3 out of 4 cars were bought with
car loans.12
Student Loans
In less than 50 years, our national student loan debt has gone from zero to a crisis level of
more than a trillion dollars. The turning point was in 1972 when the Student Loan Marketing
Association (SLMA, known as Sallie Mae) began offering government-funded federal loans to
college students. It was a huge change that made borrowing money to go to college easy—
practically automatic.
On the chart above, you can see that in 1950, student loans weren’t even a blip on the map.
In fact, the total debt figure was zero. But now, the national student loan debt has ballooned
to over $1.5 trillion!
13 That‘s absolutely insane!
Today’s Reality
So, what’s the takeaway? Americans are drowning in debt because they’ve made debt a
“normal” way of life. That much is clear just from looking at the stats and the history of credit
and debt in America. The highest debt level is among 45–54-year-olds, with the 35–44 age
bracket coming in close second.
Did You Know?
For their daily purchases:15
54% 14%
of Americans prefer to use debit cards. of Americans prefer to use cash.
Studies show that young Americans—those under age 36—are carrying over $26,000 in
debt!14 And how are they racking up all that debt? Mostly from student loans. But like we
talked about in Lesson 1, Americans also have a problem with buying way too much stuff.
Credit and debt have made all that possible. That’s why it’s the norm today.
But there’s good news! You don’t have to continue this cycle and feel like you‘re drowning in
debt. All of this can end with your generation!
WORDS OF WISDOM
Stop and examine your past, your present,
and your intentions and values for the future.
It‘s time to realize that just because debt has become an American norm, that doesn‘t mean it
has to become your reality. You can make the choice to avoid the trap of using credit to buy
things!
3 It's Time for
a Change
LEARNING OBJECTIVES
Describe how avoiding debt can give you financial peace and a sense of hope
for the future.
Recognize that personal finance is mostly a series of behavioral decisions.
MAIN IDEA
You‘re responsible for how you handle your money. You need to have a plan,
spend less than you make, and stay out of debt.
You’re in Charge
Over the past 100 years, Americans have gone from believing debt was socially unacceptable
to relying on debt to pay for everything from a new home to a new pair of jeans. But you can
change the game.
If you make up your mind to stay away from debt and then follow through by making decisions
that keep you from going into debt, you’ll have hope for your financial future.
WORDS OF WISDOM
Your decisions from today forward will affect
not only your life, but your legacy.
This is really all it takes to avoid the cycle of debt that so many people are trapped in.
Remember, personal finance is 20% head knowledge and 80% behavior.
You’re in charge of your money, your attitude, and your behavior—that’s why it’s
called personal finance. It‘s your money and your decisions. With a few basic money
principles to guide you as you budget, spend, save, and give, you can do this. Take control of
your money!
To give anything less than your best is to sacrifice the gift.
— Steve Prefontaine, Olympic long-distance runner
Lifetime Money Principles
First, make sure to always have a budget. A budget is just a written game plan for your money
(that‘s what Chapter 2 is all about). Next, stay out of debt. We’ve given you plenty of reasons
why. But it boils down to the fact that when you don’t have debt payments, you’ll actually have
money to save, spend, and give.
Did You Know?
44% of Americans report they have less than $1,000 in savings.16
Here’s another principle: Live on less than you make. That will keep you out of debt and help
you save money. Sure, it seems like common sense, but all the stats on debt show it’s a hard
principle to follow. Then, you’ll want to save and invest money for your future. Finally, without
any debt, you can be outrageously generous!
Simple, easy to understand, and easy to put into practice, right? They‘re the kind of principles
that can make a huge difference in your future—the kind of principles Dave Ramsey wishes
he’d learned about when he was in high school.
The reporter’s question hung in the air for a minute while I searched for an answer:
”How did you bounce back from bankruptcy?“ Bounce back? Honestly, there was
no bounce. Just a splat! I had made a complete mess of things while chasing the
American Dream.
Of course, things were great at first. At 26, I had more than $4 million in real estate.
I was driving a nice car and making an awesome salary. I was buying my wife
jewelry and taking cool vacations. We were having a blast!
But it was all built on debt. I had borrowed money up to my eyeballs. And when one
bank demanded I pay back all the money (because it was theirs to begin with), the
others quickly followed. Before I knew it, my American Dream had become a total
nightmare. We lost everything. I was so devastated—I could hardly
breathe. Scared doesn’t begin to cover it. But crushed comes close.
Before I knew it, my American Dream had become a total
nightmare.
I worked really hard to avoid losing it all, but it wasn’t enough. Finally, with a baby,
a toddler, and a marriage hanging on by a thread, we signed the bankruptcy
papers. I’ll never forget that day: Thursday, September 22, 1988.
You know the definition of insanity, right? Doing the same thing over and over and
expecting different results. Well, that day I stopped the insanity. I had tried it my
way and ended up crushed! It was time to change.
So, I went on a quest to find out how money really works. I wanted to know how to
control my finances—and make sure I was the last Ramsey to ever mess up with
money! I read everything I could get my hands on. I interviewed wealthy people
who didn’t use debt but actually made money and kept it. Eventually, my journey
led me to a really uncomfortable place: my mirror.
The bad news was that the guy looking back at me had been the problem in the
past. But the good news was that he would be the solution moving forward. I could
change. I could learn to grow my character, control my behavior, and make smart
decisions. And if I did, I would win with money.
You can make the same choices for the person you see in your mirror. I wished I’d
known this information in high school. It will help you avoid a life of money
nightmares and set you on the path to your American Dream. So get ready!
Live Like No One Else
If you live by these basic money principles now, you can live and give like no one else later.
That means if you make smart financial decisions today, you’ll have the money you need in
the future to do all the things you want—without any debt.
There will be times when it’s tough to live out these principles. While you’re making sacrifices
to live the lifestyle you can afford, your friends, even your family members, may live like they
have no money problems at all. Don’t let that get to you. Their lives may seem perfect on the
outside: the perfect family, in the perfect house, in the perfect neighborhood, driving the
perfect cars, and wearing the perfect clothes. But that “perfect” family is usually drowning in
debt.
Today, there are three kinds of people: the haves, the have-nots, and the have-
not-paid-for-what-they-haves.
— Earl Wilson, American columnist
Start Right
Over half of teens and young adults associate money with stress and worry.17 So chances
are, you‘re already stressed out about finances. But learning how to manage money the right
way can put an end to all that and help you avoid future financial mistakes.
Ultimately, this course isn‘t about anyone telling you what to do with your money. It‘s about
you learning how to tell your money what it can do for you.
With the right knowledge, behavior, and the money principles we just covered, you really can
make good choices with your money, stop stressing about it, and build a future filled with
financial peace and confidence. That‘s what we call winning with money!
LESSON
The Road to
4 Financial Success
LEARNING OBJECTIVES
Understand the basics of building a financial plan.
Identify assets and liabilities to be able to calculate a person‘s net worth.
Develop short-, medium-, and long-term financial goals.
MAIN IDEA
If you want to win with money, you need to know how much money you have to
work with, where you want to get to, and then create a plan to get there.
KEY TERMS
Financial Plan: a plan of action that allows a person to meet not only their
immediate needs but also their long-term goals
Net Worth: the amount by which the value of a person’s assets exceeds or falls
behind the value of their liabilities
Asset: anything that is owned by an individual, including money in the bank or
investments
Liability: financial debts or obligations
Positive Net Worth: the dollar value of a person’s assets is greater than the
dollar value of their liabilities
Negative Net Worth: the dollar value of a person’s liabilities is larger than the
value of their assets
Net Income: what a person earns after payroll taxes and other deductions are
taken out; often referred to as take-home pay
Expense: the cost of goods or services; money paid out
Building a Financial Plan
Now that you‘ve learned some solid money principles, it‘s time to create your financial plan.
Everyone—no matter how old they are or how much money they have—needs a clear picture
of their personal finances so they can reach their money goals. To do that, you need to know
where you stand financially, how much income you have to work with, what goals you want to
set, and how you’ll reach those goals. Your financial plan will guide your money decisions.
Net Worth
When it comes to money, your personal net worth will show you where you are financially. It‘s
a starting point for your financial plan. Here’s how to determine your net worth:
Calculate your assets. This is the total value of everything you own such as a car, house,
jewelry, and money in savings and investments.
Calculate your liabilities. This is the total of all your debt, such as balances on credit
cards, student loans, personal loans, car loans, and home mortgages.
To calculate your net worth, simply subtract what you owe (liabilities) from what you own
(assets). If the value of your assets is greater than your liabilities, you’ll have a positive net
worth! If the amount of your liabilities is larger than the value of your assets, you’ll have
a negative net worth. You may not own much right now, but you‘re probably not in debt
either. Keep it that way and build your net worth without debt!
WORDS OF WISDOM
Net worth is what you own minus what you
owe.
Your Income
Once you have your starting point with your net worth, you need to know how much money
you can put toward your goals. You’ll need to:
Calculate your net income. That’s the money you bring home after taxes are taken out.
This includes all sources of income and ways you get money.
Calculate your expenses. This is what you spend money on each month, such as your
bills and any debt payments.
The income you have left after paying your expenses determines how quickly you‘ll reach your
money goals. The more money you have, the faster your progress. But if you don‘t have
enough money to cover your expenses, you’ll need to increase your income or cut your
spending.
Setting Solid Financial Goals
Now you‘re ready to start setting money goals. A lot of people have good intentions about their
money, but they rarely follow through. That‘s why you need crystal-clear, actionable goals that
are:
Specific: Don’t say, I’m going to save for a car. Have an amount in mind. Say, I’m going
to save $4,000 for a car.
Measurable: Break your big goal into smaller chunks (daily, weekly, or monthly). If you
want to save $4,000 for a car, plan to save $500 a month for eight months or $250 a
month for 16 months.
Time-Sensitive: If your goal has no deadline, you’ll get discouraged or distracted. Plan to
accomplish your goals by a specific date.
Yours: These must be your goals, not someone else’s. You can get input about your
goals from people you trust, but ultimately, you need to choose goals you‘re passionate
about.
Written: You need to write down your goals, including all the steps it’ll take for you to
reach them. A written goal provides clarity and serves as a powerful reminder to keep you
on track. A written goal keeps you accountable.
Double-check your money goals with these three questions:
1. Are these your personal goals?
2. Who will hold you accountable?
3. What specific steps are needed for you to achieve your money goals?
Developing a Money Plan
So, why are we talking about creating a financial plan before you‘ve even learned money
basics like budgeting and saving? Great question! Like the money principles we talked about
in Lesson 3, your financial plan is a big-picture framework for all of the money skills you‘re
going to learn in this course.
Did You Know?
The top three financial concerns of teens:18
47% 45% 43%
Paying for college Not being able to live Paying taxes
on their own
Without that framework, there isn’t much of a point to budgeting, is there? It‘s just another skill
to learn—and potentially forget. But when you have a solid money philosophy pointing you in
the right direction, those money skills become a real game changer now and in your future!
In the next lesson, we‘re going to take this framework to the next level, and you‘ll learn about
a simple, proven action plan you can start following right now. We call it The Five
Foundations.
WORDS OF WISDOM
A financial plan is your map to get from where
you are to where you want to be with your
money.
Is all of this starting to come together for you? With solid money principles, a financial plan
with money goals, and proven money practices for your personal finances, you can win with
money!
LESSON
Financial
5 Literacy
LEARNING OBJECTIVES
Explain how The Five Foundations provide an action plan for your personal
finances.
Describe what it means to be financially literate.
MAIN IDEA
The Five Foundations provide a simple action plan that’ll help you win with
money.
KEY TERM
Financial Literacy: the knowledge and skill base necessary for people to be
informed consumers and manage their finances effectively
The Five Foundations
Dave Ramsey has taught millions of people how to manage their money for more than 30
years. The Five Foundations are based on his teachings—with a few changes to make them
useful for high school students.
Like the money principles we covered, The Five Foundations probably don‘t sound like most
of the financial advice you’ve heard before. That‘s okay. You already know that normal in
America is broke—and you don‘t want to be normal. To make the most progress, it‘s important
to follow these in order:
Get Started Now
If you don’t already have $500 saved for an emergency fund, that‘s The First Foundation.
Start saving part of your income or come up with a way to earn some extra money—yep, get a
job! Throw all your extra money toward your goal to get $500 in the bank and knock this step
out as fast as you can. Why? Because emergencies are going to happen, so you need to be
prepared.
WORDS OF WISDOM
The caliber of your future is determined by
the choices you make today.
After putting $500 in the bank, it’s time for The Second Foundation: Get out and stay out of
debt. Don’t have any debt? Great! Make the decision that debt will never be a part of your
money plan. That‘s one of the most important money principles you can live by. If you do have
debt—maybe a car loan or money you owe a friend or family member—don‘t let it hang over
you any longer. Pay it off!
You should have an emergency fund because unexpected things are going to
happen.
People have known this for centuries and used to say, “In the house of the wise
are stores of choice food and oil, but a foolish man devours all he has” (Proverbs
21:20 NIV).
In other words, having some money saved up can turn a crisis into an
inconvenience.
— Dave Ramsey
The Third Foundation is to save up and pay cash for your car. Yes! You heard that right—pay
cash for a car. No loans and no leases. Ever. Remember, you‘re not going into debt for
anything.
Saving money for college is The Fourth Foundation. We‘re not talking about saving up extra
spending money. We‘re talking about paying for your entire college education with cash. There
are plenty of ways to graduate debt-free. You just have to be willing to work hard to reach that
goal.
Here's a Tip:
Don‘t freak out when you read The Fourth Foundation. Chapter 7 is all about how to go to
college and graduate debt-free.
Finally, you‘ll be ready for The Fifth Foundation: Build wealth and give. The Fifth Foundation is
the ultimate financial goal, and it’s where you’re headed!
The Path Forward
You‘ll see The Five Foundations a lot in this course. Following them will save you from
learning some big money lessons the hard (and expensive) way. These money principles will
act as your guardrails to keep you on course with your financial action plan.
Remember: Your financial future will be determined by your choices. The Five Foundations
aren‘t always easy to live by, but they‘ll set you up to win with money if you choose to follow
them.
SOMETIMES, in our fast-paced world, we to help those in need come naturally when
can become so focused on ourselves that we feel connected with others. When you
we forget we’re a part of a larger local, think about it, being a member of a
national, and global community. What does it community comes with both privileges and
mean to be a member of a community? More responsibilities. Find ways to get involved in
than just having a shared locality (region, your community: Volunteer at a charity you
nation, or planet), community refers to a really care about, become a mentor and
feeling of fellowship with others, which friend to a kid in need, or regularly visit with
comes from sharing common interests, a person in a nursing home. Be generous
challenges, and goals. Empathy and a desire with your time.
Down the Road
When you‘re out of school, working full time, and no longer depend financially on your
parents, you’ll begin a different action plan for your money called the 7 Baby Steps. They‘re
similar to The Five Foundations, with a few differences to help adults win with money.
For example, with the 7 Baby Steps, instead of a $500 emergency fund, you’ll save $1,000
and then work up to saving 3–6 months of your living expenses. That‘s super important as an
adult because there are so many unknowns that can impact your finances. The COVID-19
pandemic caused a lot of American workers to lose their jobs in 2020. That‘s just one reason
why having an emergency fund is such an important part of your financial plan.
Like The Five Foundations, the 7 Baby Steps provide a clear path to get you where you want
to be financially. They‘ll serve as a guide for the rest of your life—a guide that‘s worked for
millions of people. The best part? Since you‘re starting with The Five Foundations, you’ll
already be ahead of the game when you move into the 7 Baby Steps as an adult.
Money is a guarantee that we may have what we want in the future. Though we
need nothing at the moment, it insures the possibility of satisfying a new desire
when it arises.
— Aristotle, Greek philosopher
Financial Literacy
All of this talk about money principles, goals, and Foundations may feel like a lot right now.
The idea of saving a $500 emergency fund may seem impossible—and what does it even
mean to build wealth for the future?
Well, that‘s why you‘re in this financial literacy course—to learn, understand, and apply the
skills, words, and concepts that will help you make wise decisions with your money. No one is
born with this financial knowledge—everyone has to learn it.
WORDS OF WISDOM
The problem isn’t that we don’t know what to
do—it’s that we choose not to do it.
We‘ll cover it all, from big-picture personal finance concepts to the language of finances. That
way, you can talk with financial professionals about your money and know when they‘re trying
to make a deal that‘s good for their finances, not yours. And you‘ll learn the skills you need to
reach your money goals, starting with your $500 emergency fund all the way to a million-dollar
retirement.
6 Money Personalities
and Relationships
LEARNING OBJECTIVES
Understand that your money personality will impact how you handle money.
Recognize how to talk about and handle money as a single adult and in
marriage.
MAIN IDEA
Whether you‘re a saver or a spender, you need to learn how to manage your
money and how to talk about it with others.
Your Money Personality
Money and relationships go hand in hand, which means the way you handle your money
affects everyone around you. Whether you save, overspend, give, or borrow from friends,
people notice. We‘re not kidding when we say all your relationships will be influenced by how
you handle money. No pressure, right?
Did You Know?
54% of teens said their parents were always worried about money.19
While you probably still depend on the adults in your life, you’re developing your own money
personality. You may have a lighthearted view of money. Or thinking about money may make
you feel stressed or anxious. You could be naturally good at saving or carefree about
spending.
We’re all wired differently, but generally, people identify with one of two main money
personalities: saver or spender. If security and structure are important to you, you’re more
likely to be a saver. If you tend to be spontaneous, you’re more likely to be a spender.
There are positives and negatives for both money personalities. On the positive side, savers
generally take fewer risks with their money and are more likely to have a plan to save money
for their retirement. But one negative is that savers can be so strict with their money that they
never spend any of it.
WORDS OF WISDOM
Everyone has to work on their money skills.
Spenders don‘t have that problem. They love to spend money on new experiences and enjoy
the things they buy, which is a positive. However, they generally don’t think about the future or
save money for retirement, and that‘s a big negative. Also, if they‘re not careful, they can
overspend easily.
Knowing your money personality—saver or spender—can help you create a financial plan that
plays up your strengths and helps balance your weaknesses.
Talking About Money
When you talk to others about money—especially family members—it’s important to consider
their money personality and values too.
Talking about money with your parents can be really uncomfortable. Here are some guidelines
to help you communicate better:
Pick the right time and place. Starting a conversation about money with your mom or
dad two minutes before they need to leave for work is not ideal. Leave plenty of time for
both of you to have a relaxed and complete conversation.
Be honest. When it comes to money and relationships, honesty is the key. Share your
thoughts and listen to theirs. Ask questions if you don’t understand.
Seek counsel. One of the best ways to avoid costly mistakes is to get advice from an
adult you trust. They might not always give you the answer you want to hear, but they‘ll
always have your best interests at heart.
Share your goals. Share your money goals with an adult you trust and ask them to hold
you accountable and encourage you along the way.
Did You Know?
39% of teens said their parents rarely (less than once a month) or never discussed
financial topics with them.20
Managing Money
It won’t be long before you’re managing your own budget and paying your own bills. Balancing
your financial obligations with your money goals can be challenging. But with the right
approach, you can totally do this!
AS A SINGLE ADULT
Young singles who are in college or just starting a career tend to pour all of their time and
energy into school or work. It’s easy to let your busy life distract you from managing your bank
account or creating and sticking to a monthly budget. Even when you’re busy, managing your
money must remain a priority.
Beware of impulse buying—you know, buying something as soon as you see it. It usually
happens when you’re stressed or when the I-owe-it-to-myself syndrome kicks in. With no
one’s opinion or input to worry about, single adults can rationalize almost any expense. It’s up
to you to stay financially disciplined!
Develop an accountability relationship with someone you trust and can talk to about major
purchases and your budget. Accountability friends must love you enough to be brutally honest
and promise to do so for your own good.
WORDS OF WISDOM
When you understand how you‘re wired, it
affects your money and relationships.
AS A MARRIED COUPLE
If you think managing money is difficult on your own, it’s even more complicated when you get
married. And when you start adding kids to the mix, it can get crazy! A sad reality is that
money fights between husbands and wives are a leading cause of divorce in America.21 The
best time to discuss your money values and goals is before you get married to make sure
you’re both on the same page.
Did You Know?
94% of couples with great marriages discuss their money goals and dreams together.22
So, who should be in charge of the financial decision-making in a marriage? That’s not a trick
question. Both spouses need to decide how they’re going to manage their money—together.
Although one person might have a natural gift for budgeting, the decision-making has to be
done together. Teamwork makes the dream work—especially with family finances and money
goals! Consistency and communication help too.
