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SPOTLIGHT

Phases and Stages

As human beings mature, we develop increasingly sophisticated ways of understanding our world. Our brains develop. We learn from our experiences. Sometimes the forward motion is a gradual evolution in understanding, like a child seeing that 3 x 2 is just another way to express 3 + 3. Other times, there may be a bigger leap forward, more akin to the movement from basic mathematics to algebra. This idea of moving through phases and stages can certainly apply to money matters. Think of the typical money questions a 1st-grader has ("Why are nickels bigger than dimes if dimes are worth more?"), compared to the concerns of older children. Further, many young adults find that in moving from high school to college, their understanding of money needs to improve and mature very quickly!

In an interview, Emma Watson, the then-20-year-old actress who played Hermione Granger in the Harry Potter movies, discussed how little she understood money when she first became a movie star at age nine. For years, she had no idea about her finances, just a regular allowance that her father doled out. Then, when she was 17, she says that her father sat her down for the "money conversation." Realizing the responsibility of managing the millions she had made as a child star, Watson decided to take a personal finance class, to give her peace of mind that she would manage her money well.

Having millions to manage is likely to be a "problem" you don't have just yet, but Watson's approach may still be worth considering. Going from living in your parents' house to managing your own money is a major change. Learning as much as you can about financial matters—whether that knowledge comes from books, classes, or financial literacy websites—might make sense for you.