Part 2 of a 2 part article

Last month, John Vento outlined the first five of ten personal finance topics he believes a comprehensive financial education curriculum should include. This month, we present lessons five through ten.

Is America failing finance? It appears many of us are...and very few others are anywhere near the Honor Roll. A 2013 survey conducted by the National Foundation for Credit Counseling found that 40 percent of Americans would give themselves a grade of C, D, or F when rating their personal finance knowledge. The same survey found that 39 percent of adults in the United States report that they have no savings.

"Part of the reason the 2008 financial crisis had such a widespread reach is that many Americans simply didn't have the financial literacy to protect themselves in such a crisis," says Vento, president of his New York City-based Certified Public Accounting firm, John J. Vento, CPA, P.C., and author of Financial Independence (Getting to Point X): An Advisor's Guide to Comprehensive Wealth Management, Vento fears that a lack of knowledge persists, and worse yet, that it is being passed down to the next generation.

"Many young people look to their parents for guidance on money issues," he notes. "Unfortunately, many parents lack a strong understanding of financial matters, and as a result, they miss opportunities for saving, lending, and basic financial services. We need to break this cycle-and one way to do so is to make financial literacy an educational focus in high schools, colleges, and universities."

"I truly believe the most dangerous threat to our nation and its citizens is a lack of financial literacy," says Vento. "Americans still struggle to make wise financial decisions because these concepts are not a focus in our education system. So when we reach adulthood, it's either sink or swim-and too often we make bad financial decisions and suffer the consequences later in life.

Unfortunately, in today's schools the topic of financial literacy is largely ignored. Throughout our lives, we will encounter many questions and problems relating to money, but every one of them will fall, in some way, under one or more of the following financial literacy lessons."

Lesson 6: Protect your property with insurance.

Protecting your property by implementing the proper risk management strategies is critical to achieving and maintaining your financial independence. The type and extent of insurance you need will change throughout your lifetime, as will the types of assets and the extent of wealth you have accumulated. The three major personal property risk management issues include homeowner's insurance, automobile insurance, and umbrella liability insurance.

Lesson 7: Pay for college. Many people, parents especially, worry about covering the ever-growing expense of getting a college education. Of course, it's possible to get academic or athletic scholarships or grants. But most young people will need additional funds either from their parents' savings or through student loans.

"With the skyrocketing cost of college, it's important that you start planning early," says Vento. "Parents and rising college students should take advantage of college savings programs such as Internal Revenue Code Section 529 plans, Coverdell Education Savings Accounts, savings bonds, financial aid (such as federal grants, loans, and scholarships), as well as education tax deductions and credits. Understanding how scholarships, government grants, and student loans can help is essential."

Lesson 8: Plan for retirement.

"The longer you wait to start saving for retirement, the harder it will

be to accumulate the amount you need to be financially independent," says Vento. "Remember, one of the most valuable investment assets you have is time; the more years you save the greater your chance of financial success. By far the easiest way to do this is by contributing to your employer's retirement plan, or if that is not available, to an individual retirement account (IRA). Implement a retirement saving strategy that allocates a specific dollar amount or percentage-I recommend at least 10 percent-of your salary every pay period. Therefore, you are paying yourself first, as though saving for retirement is your number one required expense. In fact, saving for retirement is not an expense because it adds to your investable assets, but treating it as such is of utmost importance to your success."

Lesson 9: Manage your investments.

The rewards of proper investing can be very generous when investors adopt an investment discipline that allows them to purchase quality investments and then allows those investments to take their course. This may have been best said by Warren Buffett, the primary shareholder, chairman, and CEO of Berkshire Hathaway who is also considered by many to be the most successful investor of the 20th century.

"It is critically important that you select an investment model that you are willing to stay with, even in the worst of markets," notes Vento.

"The appropriate investment plan for you should be the one that provides you with the highest potential rate of return in the long run that is within your risk tolerance."

Lesson 10: Preserve your estate.

If you do not take the necessary steps to preserve your estate, unintended beneficiaries may take a significant amount of your estate instead. These unintended beneficiaries include the federal and state governments, the state administrator, attorneys, and perhaps even relatives you have not spoken to in decades. The money you may spend today on a qualified estate attorney may save your estate significant dollars in both estate taxes and administrative costs down the road.

"Estate planning, which I should stress is not just for the wealthy, can give you peace of mind by assuring your family's financial security will continue even after your death," says Vento. "It can significantly reduce estate taxes, administrative costs, and assure that your loved ones will be taken care of. It allows you to dispose of your assets as you see fit, with consideration given to your heirs' individual needs."

"It is critically important that people of all ages understand these 10 lessons and work within them productively-that they become financially literate," he concludes. "But if we help younger generations avoid the bad habits that have crept into the way so many Americans manage their finances today, we really have a great opportunity to set them up for a brighter future. And when they are more prosperous, the economy as a whole will be more prosperous."

Everyone should be planning financially for retirement, regardless of how old or young they are. Especially given that people coming into retirement are facing concerns that retirees did not face 20 or 30 years ago, including living longer and supporting themselves throughout turbulent financial times.

"You should consult with your property liability insurance agent or broker to fully evaluate your needs so that you can determine proper coverage to meet those needs," asserts Vento. "It is critically important to remember you should always secure your new insurance coverage before you drop your old policy. You never want to leave yourself unprotected without proper coverage in between policies. Obtaining the proper homeowner's, auto, boat, and personal umbrella liability coverage can provide you with the peace of mind of knowing you and your property will be protected. Being unprepared for the unexpected can rob you and your family of your pursuit of financial independence."

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