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Financial literacy starts at home and starts early!

November 2nd. 2012
There are many tales of celebrities and professional athletes with massive income levels that declare bankruptcy because they never learned how to live within their means. If you can impart this one piece of financial wisdom to your children perhaps their generation will not be adding to the record levels of consumer debt we are currently being warned about by the Bank of Canada.? The Bank continues to warn us as a group about the perils of excessive debt and the negative impact to all of us of a future increase in interest rates; which is inevitable given the historic low rates we have seen for the past 5 years.

Many of us have probably heard about the ?Wealthy Barber?, a financial planning book By David Chilton. He also has a new sequel the ?Wealthy Barber Returns?, both good reads. There are countless personal financial planning books on the market. A search of the Chapters website yields over 500 titles in their offering. Overwhelming, for sure, and so where do we start?

My recommendation is that you start with your children. RESP funding is a great way to start a savings program. The government will assist with grants to make this money grow faster. Involve your children in this process when they are at an age when they can begin to understand, around 11 or 12 depending upon the child. While there is much written and many programs for children to appreciate the connection between staying in school and ultimate earning power, there is very little education on the power of saving and living within your means?at any income level.

A client recently invited me to a seminar they put on as a customer appreciation event. They engaged the firm to speak to their clients and children about the importance of financial education for kids. The information was well presented and relevant to the kids. Saving isn?t as fun as spending for sure. But a reasonable 10% savings level will give most children a great start in life and assist them with their first home purchase, understanding the importance of retirement planning and generally help them to live a more relaxed, debt free, financially secure life; avoiding credit card evils, as the compounding interest works against you and using the power of savings to get the compounding interest working for you. ??Debt is stressful, and handcuffs you to a pay cheque to keep that treadmill going. Savings, and increased net worth, permits you to make a career change, start a business, buy a home, retire, and travel, without stress. We could all at times take a page from the Wealthy Barber, slow down, spend a little less, manage the tax burden, and appreciate what we have.




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