Financial Literacy for All Life Stages

Making smart financial decisions is crucial at every stage of life, whether you're a high school student, a recent college graduate, a first-time homeowner or a midlife worker. Financial literacy is about understanding and applying basic principles to everyday decisions, like trimming your spending, saving to buy a home or building funds for your child's education or your retirement. Being financially literate is key to making informed decisions that lead to long-term financial stability.

These four basic money principles will help you establish a reliable and consistent money management plan throughout your life. These guiding principles will stay relevant from your teens all the way into your retirement.

Setting good financial habits early in life can help you manage debt responsibly and lay the groundwork for financial security later. If you've begun earning your own money through part-time jobs or allowances, start developing a habit of saving and learn to manage your spending wisely. Additionally, this is the time to begin understanding how financial systems like banks and credit work, which can help you maintain responsible financial behavior later in adulthood.

Although teens can't qualify for a credit card until they’re 18 since they cannot enter into legal contracts, you can be added as an authorized user on your parent's account to help build your credit history. If you're not yet eligible for a credit card, you can use a debit card instead, although this won't help you build credit. Below are some financial concepts you need to grasp at this stage of your life:

In your 20s to early 30s, you're likely transitioning into full financial independence. This period involves making critical financial decisions such as managing a steady income, investing wisely and planning for significant future goals like starting a family or even retirement planning.

During this stage, you may also need to buy health insurance to protect against unexpected medical expenses, especially if your parents' plan no longer covers you. Below are some financial concepts and steps you should take in your 20s to early 30s to strengthen your financial footing:

In your 30s and 40s, your financial focus often shifts toward career growth and family responsibilities. This stage may involve purchasing a home, planning for children's education and deciding whether one parent should stay home or continue working. Revisit your budget to accommodate these new expenses while also planning for the future. Consider the impact of career advancement opportunities, which can increase earnings but may also demand more time and energy.

In your 40s and 50s, you are likely in your peak earning years, but with greater income comes increased financial obligations. This period is critical for catching up on retirement savings, planning for your children's education and ensuring your home is in good shape for the long haul. Prioritizing these goals while managing your income will help secure your financial future so that it doesn't negatively impact your finances in retirement.

As you enter your 50s and early 60s, your focus should be finalizing your retirement plans. This is the time to make critical adjustments to your retirement savings strategy, ensuring your investment allocations match your risk tolerance as retirement nears.

Health care costs become a significant concern, so planning for potential expenses, including long-term care, is essential to protecting your savings. Optimizing your retirement income by developing a withdrawal strategy and considering post-retirement work options can help maintain financial stability throughout retirement.

In your 60s and beyond, the focus shifts to managing your retirement funds and ensuring financial stability throughout your retirement years. Carefully manage your savings as you transition from earning an income to living on a fixed budget. You'll need to balance your withdrawals to ensure your savings last while minimizing tax implications. Additionally, estate planning becomes increasingly important at this stage to ensure your financial legacy is secure and your wishes are respected.

Below are some valuable resources that can help you build and enhance your financial knowledge:

• Consumer Financial Protection Bureau (CFPB): Offers various resources focused on financial literacy, including tools and guides specifically for women, to help them take control of their financial lives.
• Federal Deposit Insurance Corporation (FDIC) - Money Smart: Offers financial education programs to help people improve their financial skills and create positive banking relationships.
• MyMoney.gov: The U.S. government's website dedicated to teaching all Americans the basics of financial education, covering topics such as saving, investing and managing debt.
• National Endowment for Financial Education (NEFE): Provides comprehensive financial education programs that empower individuals to make informed financial decisions, focusing on women's financial needs.
• National Financial Educators Council (NFEC): Offers resources that promote financial literacy and include specific tools to help women plan for their financial futures, focusing on education and retirement planning.
• Women's Institute for a Secure Retirement (WISER): Offers resources and workshops to help women achieve long-term financial security through informed decision-making.