As a mortgage broker in Hamilton for all these years we have gotten a good feel as to what is happening in the financial industry. With mortgage rates and interest rates falling since the eighties, money has become cheap. And with easy money my clients and the country have been spending. At Robert Floris’s office we take the approach of not only fixing their spending now but permanently. We educate our clients on financing. Our number one question is why they do not teach these financial concepts in grade school or high school. We have decided to investigate why this problem is occurring.
Before we look into the present let’s review our past. Canadians were once one of the best savers in the world. No more. Our attitudes have changed over the last forty years. Our parents were more frugal and usually had the mindset of not buying unless they had cash. Our parents saved more than they spent. They saved for the future and retired comfortably. Our parents did not believe in credit. They had an eye on the present and the future.
Society has certainly changed over the years. Our debt levels as a country have exploded. As a nation we owe collectively 1.6 trillion dollars worth of debt. Put another way we owe $1.65 in debt for every dollar of disposable income. As well most Canadians have not saved for their retirement. The day of reckoning will come.
Our latest generation of parents has also done a generally poor job in teaching our kids financial concepts and along with current educational system has brought along a generation that severely lacks financial literacy. Our grade school and high school kids should have continuous and mandatory personal financing courses. As of today most kids have never been taught economics or any form of personal finance even during these tough times. Finding work is difficult and many Canadian kids are moving back home with high debts and student loans.
Currently Ontario does not have a personal financing course. What lessons can our kids learn?
• The power of compounding
• Regular investing
• Having an emergency account
• Spending less than you earn
• Understanding budgets
• Managing a credit card
• Setting financial goals
• Appreciating home ownership and mortgages.
As of today kids are not learning any of these valuable lessons as well as the appreciation to the science of money. This cannot be a good thing for our future and maybe a harbinger of inept entrepreneurial spirit going forward.
Here are some strong suggestions for advancing our kids financial education:
• Introduce financial concepts early and continue to reinforce until grade 12.
• Introduce personal financial management questions in standardized tests.
• Continuous examples and opportunities to the kids taught by teaches who are certified in financial education training.
• Include parents to discuss money concepts with their kids and further educate parents and kids to have financial goals.
Without a concentrated effort by schools, parents and kids to work and conceive a better plan our economy and our future will not be rosy.