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Setting our children -- and us? -- on the path toward financial independence

- Last modified: August 21, 2013 at 9:56 AM

Back to school season is here, and it’s not just an important time for retailers.

It also is an opportunistic time for parents of children heading off to college and high school, because this is a wonderful chance to teach the critical skills of financial literacy and independence. (And yes, I realize that many of us aren’t financially independent ourselves.)

In the spring, Judi Simmons of Junior Achievement of Greater Reading and Lehigh Valley wrote an op-ed piece for Lehigh Valley Business on the importance of financial literacy. You can read that piece by clicking here.

And just this week, ACA International -- the Association of Credit and Collection Professionals -- released personal finance tips for young adults heading off to school and the military.

As a parent who expects always to be there for his children, I can assure you that the advice from the ACA has value. After all, any organization with the word “collection” in its title deserves our attention.

As Simmons wrote: “Financial literacy is good for everyone – including employers. Students who have acquired these skills are more likely to be prepared for financial setbacks and emergencies; to be self-supporting; to increase their standard of living through wise spending, saving and careful planning for the future; and to positively affect their local and national economies.”

The following are personal finance tips -- quoting directly from ACA International -- for young adults (and everyone else, it seems):

(1) Set and maintain a budget. Effective planning and budgeting is a cornerstone to positive financial health. Set goals, create a budget and keep track of what you spend. Good budgeting and spending habits last a lifetime.

(2) Start saving today. A sound savings plans may help ease financial stress. Even if you begin with a nominal amount, pay yourself first and put the money in a separate account so it can build over time. If your employer offers a 401k or retirement plan, take advantage of it. The sooner you start saving, the better.

(3) Take responsibility. Getting a loan, obtaining credit or using a credit card can be very helpful but it comes with an immense amount of personal responsibility to live up to your obligations in paying back a debt. On the other end of the credit is a creditor expecting repayment. Maintaining healthy debt levels and repayment practices provides significant positive or negative impact on your ability to get credit in the future.

(4) Understand credit and use it wisely. When used properly, credit can be helpful. If not, credit can become a difficult burden. From student loans to credit cards to auto loans: know the terms and conditions; shop for low interest rates; make payments on time; and understand the ramifications of making a late payment or missing a payment. Know the ins and outs of credit reporting and its impacts on building a good credit score, which is used to determine eligibility for future credit, including auto loans and home mortgages.

(5) Communicate. If you are in debt or need to miss a payment, don’t ignore the issue. Be proactive and contact the creditor or debt collector to discuss the situation and seek a mutually beneficial arrangement. If you are contacted by a creditor or debt collector, do not ignore them. Remember, they aren’t the enemy, and communication to discuss the account, verify its accuracy and work on a plan for resolution can be very helpful.

(6) Protect your personal and financial information. Be careful about giving out information including a credit card, bank account or Social Security number over the phone and online until certain of the authenticity of the other party. Monitor accounts and immediately report any suspicious or unauthorized purchases to your bank or credit card provider. Importantly, consumers should also monitor their credit report. If you believe your identity has been stolen, contact your local police department.

(7) Active military have special privileges. The Servicemembers Civil Relief Act allows active military and, in a few cases, nonservice members, to suspend or postpone certain civil obligations. A lender, creditor or insurer is prohibited by law from taking any adverse actions against military personnel because they exercised their rights under SCRA, which can only be exercised while engaged in active duty; including full-time training; annual training duty; and attendance at a service school while in active military service.

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