Make Good Financial Decisions

In a parallel life here at Kiplinger, I write a column called "Money-Smart Kids" for Kiplinger.com. Recently, I laid out a four-step path to mastering plastic that starts with -- surprise -- cold, hard cash. This has been a favorite theme of mine. I'm convinced that the best way to teach children about money is to think like a kid. And even for kids in high school or college, plastic of any kind isn't as real as money they can see and feel -- especially when they see their empty piggy bank or feel their lightened wallet after they have made a purchase.

As a champion of cash, I've taken a lot of flak over the years from people who tout the coming of a cashless society. But thanks to the Great Recession, the bursting of the credit bubble and the renewed interest in thrift, cash is back, for adults as well as for kids. Senior editor Anne Kates Smith reports that a grad student at MIT even designed a wallet that keeps you in touch with your money -- and the pain of spending it -- by buzzing whenever your bank processes a transaction. The wife of one of my colleagues routinely operates on a pay-as-you-go basis. Cashing her paycheck helps keep her from spending because it hurts to break those $50 bills.

Good decisions. Of course, everyone has his or her own style of managing money, and April -- officially designated National Financial Literacy Month -- is a good time to take stock. Financial literacy is often associated with kids and how much they know (or don't know) about money. In this issue, we'll introduce you to two money-smart young people, one who is paying his way through college with no debt and another who has paid off his student loans and accumulated $25,000 in savings at the age of 26.

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But financial literacy isn't just for kids. As one of our readers puts it in an online comment, "the best way [to prosper] is to get the word out about how to make good financial decisions."

Here at Kiplinger we specialize in getting the word out by answering the questions most on our readers' minds. For example, many investors are uncertain about how to choose a financial adviser who works in a client's best interest. The SEC just released a study on the issue, but we beat the regulators to the punch with a thoughtful analysis of the proposed "fiduciary standard" (see Whose Advice Can You Trust?), plus advice on choosing an adviser.

With interest rates so low, many of you want to learn how to earn more income. The short answer: dividend-paying stocks. We can't seem to write enough about the d-word, so check out our dividend-a-month calendar.

Kim Lankford, who writes our popular Ask Kim column, says Roth IRAs are top of mind for readers of all ages. People who earn too much to contribute to a Roth IRA are asking whether they can contribute to a traditional IRA and convert it to a Roth. The short answer is yes. Younger readers want to know whether they can contribute to a Roth as well as to a 401(k) -- yes again.

Meanwhile, many of you are also wondering whether you can still use money in your flexible spending accounts at work to pay for over-the-counter drugs. The short answer: yes, if you have a doctor's prescription. See Kim's story for 29 more ways to save money on your health care. It's all part of our continuing effort to get the word out on how to make good financial decisions across the board.