Next Gen Financial Literacy
This recently published article caught my eye. It outlines the plan for more emphasis on financial literacy in the Ontario high school curriculum. There are 28 high schools (700 students) involved in a pilot, with a re-designed course to be in place in fall 2018. Raising the level of financial literacy of the next generation is vital, as these teenagers will very soon be managing their own finances, inherited wealth, and equally important, for those who choose the wealth management profession, other people’s money. It’s hard to imagine anything more essential for schools to teach than this basic life skill.
With this announcement, I decided I should assess my early teen son on his financial savvy. When I asked him what he’d learned so far in school about managing money, I received a blank stare. Not unusual for a teenager. So, I followed with some leading questions: What about budgeting, compound interest, mortgages, amortization tables, annuities, mutual funds, stocks, bonds, ETF’s, taxes? Another blank stare, and denial that he understood any part of what I’d asked.
While I applaud the Ontario government’s efforts to elevate children’s literacy, this conversation was a startling reminder that we cannot outsource our parental role in financial education. As a finance professional, I had assumed that he would absorb my knowledge through good role-modelling and osmosis. But in today’s world, where money management is much more virtual than it was for our parents, teaching wise money management clearly requires a more intentional approach. The good news is that there are plenty of resources at our fingertips, including “A Parent’s Guide to Raising Money-Smart Kids” (CPA Canada) and dozens of others that a quick Google search will yield.
As I reflected on how to proceed, I dusted off and quickly re-read my copy of “The Wealthy Barber Returns”. Although published by David Chilton in 2011, I was impressed by the timelessness of his advice: Live within your means, save 10-15% of your pre-tax income, exercise caution taking on debt, take advantage of RRSP’s / TFSA’s / RESP’s, prepare a financial plan with a trusted financial advisor, keep costs down & take the long-term view. It seems to me that these basics are a very good place for a parent to start. And as the adage says, the best time to start was yesterday; the second best time is today.