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Right now, all eyes are focused on trying to solve the immediate problems facing our economy. But a viable long-term solution depends not just on fixing today's issues. We also have to give people the tools they need to succeed financially.

In particular, kids who get early experience with money are most likely to become responsible adults. With the right education, the next generation of investors can avoid many of the financial mistakes their parents and grandparents have made.

The value of early education
I still remember my first bank account. I was five years old, and my mom and I went down to the local savings and loan with a roll of quarters I had saved up from unspent lunch money over the course of a few months.

We went in, all the bankers smiled at us, and we went to the new accounts desk. A short time later, after we'd gotten through all the paperwork, I had a savings account with $10 in it and a passbook with my balance printed in it.

Over the years, I kept putting money in that account. Eventually I learned about other products the bank offered. I took some of my savings and bought a CD. I got one of the first-generation ATM cards my bank offered, and later, when I entered college, a credit card.

But it's the savings account that I remember most, because it helped shape my financial behavior for the rest of my life.

Creating a strong foundation
The experience of having a bank account, however modest it was, helped instill some basic facts about money. With a savings account, I never had to worry about overdrafts -- if the money wasn't there, I couldn't spend it.

It wasn't until I got to college that I realized how rare my experience had been. Here are some of the surprising things I saw in my first months at school:

  • Quite a few students didn't bother opening a bank account at all, instead paying sizable fees to check-cashing establishments to get cash for their paychecks.
  • While I thought of credit cards merely as a convenient way to pile up expenses into a single lump payment, others didn't have a clue that they were actually spending money when they charged things.
  • Those who did get bank accounts often had to pay monthly fees because of their low minimum balances. They had trouble keeping track of money in their checking accounts, leading to expensive overdraft and returned-check fees that cascaded into huge problems.

Twenty years later, it's even more difficult for young people without a good financial education. Kids in high school get credit card offers. College grads can expect five- or even six-digit student loan balances as they enter an iffy workforce. Payday lenders such as First Cash Financial (Nasdaq: FCFS  ) and Advance America (NYSE: AEA  ) don't just cash checks -- they also give advance loans, which can be useful tools, but costly if you come to depend on them. And by some estimates, as many as 30 million people don't have bank accounts, thus having to make do with inferior alternatives.

Give everyone a chance to succeed
The road to solving the problem starts with education. KeyBank (NYSE: KEY  ) and US Bancorp (NYSE: USB  ) have started programs to offer check-cashing services at low rates to adults without bank accounts -- with the hope that some will eventually open accounts.

But we think the key lies in helping kids get an early start with finances. This year, the Motley Fool's annual Foolanthropy campaign is working with to fund specific school projects designed to encourage financial literacy. When you give to the organization -- whose corporate sponsors include Bank of America (NYSE: BAC  ) , Yahoo! (Nasdaq: YHOO  ) , and JPMorgan Chase (NYSE: JPM  ) -- you help teachers buy the supplies and materials they need to teach these critical lessons to kids.

Even in a tough economy, it's not too late to help the next generation avoid the pitfalls that so many people make with their money. All it takes is one lesson to get kids started on the right foot toward financial knowledge.


To learn more about Foolanthropy:

Fool contributor Dan Caplinger misses his mom but knows she'd be proud of him. He doesn't own shares of the companies mentioned in this article. US Bancorp, JPMorgan Chase, and Bank of America are Motley Fool Income Investor picks. First Cash Financial Services is a Motley Fool Hidden Gems Pay Dirt recommendation. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy supports you.

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Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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