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Financial Friday #133: Money Smarts Taught Early Last a Lifetime!

Friday, October 28, 2022   /   by Mario Daniel Sconza

Financial Friday #133: Money Smarts Taught Early Last a Lifetime!

Money Smarts Learned Early Last a Lifetime


 


It sounds so cliched to say, “make savings a habit” and it really is only half the picture — your teenagers should be saving and INVESTING a portion of their income regardless of how insignificant it may seem. Developing a saving mindset early in life will pay back huge over the course of a lifetime.


 


Investing will never happen without saving, so kids must learn how and why they need to save and carefully evaluate their spending (needs vs wants) decisions. Your kids also need to understand a little about the markets and the effect of compound returns on growing their investments as well as the relationship between risk and return.


 


As parents, we do our best, but there are lots of life lessons we need to teach, and personal finance doesn’t always top the list. We may also not be the best equipped to do the job since around half of adult Canadians live paycheque-to-paycheque! Case in point, many well-meaning parents set their kids up with a bank account, but they should actually open two accounts, one for spending and another for saving (just like adults should be doing!).


 


Credit is another potential disaster for your kids. Poor spending choices combined with easy access to credit cards with excessive spending limits (and high-interest rates compounded daily!) can derail a future before it even gets started. Failing to understand the impact and obligations of a student loan can lead to a nasty surprise when it comes time to repay that money or get a car loan or mortgage down the road. Many parents are quite literally paying the price for their kid’s financial mistakes, and it can continue long after they are no longer children!


 


One final lesson that our seemingly-computer savvy youth often fail (or simply take for granted) is safeguarding their financial information. Passwords and PIN numbers need to be closely guarded and changed regularly. Young adults also need to be able to detect the proliferation of increasingly sophisticated telephone and online scams.


 


Resources:


 


A guide to the best Canadian ETFs for 2022


If you caught our webinar last week (recording here) on getting started in stocks you would have learned all about ETFs and how they are the best option for


 


What exactly is the Bank of Canada interest rate?


3.75% is the short answer, but if you want to know who the Bank of Canada is, why they are raising interest rates, when rates may change next, and how a rate change affects the various kinds of debts you may have, this is an extremely informative 5-minute read.


 


Housing downturn, stock market slump hammers Canadians' net worth


Net worth is a great metric to keep you focused and motivated on achieving your financial goals, but the second quarter of 2022 showed a $900 billion drop in our collective net worth (the fastest decline ever) and that will soon be hitting home as discretionary spending dives and Canadians focus on paying for "groceries, gas and debt."


 


Mortgage, debt, investing: Where should you put extra cash?


Extra cash is in short supply for a lot of us these days, but if you do have any leftover should you pay down the mortgage? attack your credit card debt? or hit the stock market? Some good analysis in this one using the "priority pyramid" approach.


 


Young adults more engaged in their finances than parents think


If this week's feature article piqued your interest, you definitely need to read this one! Apparently, 71% of parents believe their children rely on them for financial advice when the kids are saying it is more like 45%! Some great advice here for anyone who is trying to teach their kids about money.


 
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Mario Daniel Sconza
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Toronto, ON M2N6K8
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Information is provided exclusively for consumers’ personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Data is deemed reliable, but is not guaranteed accurate by the MLS®. Copyright 2022 Last Updated December 2, 2022
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