Aidan D'Souza, 23, is pictured with his mother during his Seneca College convocation in a 2019 handout photo. D'Souza says he credits his mother for the financially secure position he's in today, but acknowledges that not all Canadians have parental figures who are financially literate or know how to best guide their children to make wise financial decisions. THE CANADIAN PRESS/HO-Aidan D'Souza, *MANDATORY CREDIT*
For as long as he remembers, Aidan D’Souza says his mother has helped him ensure that he’s making smart money decisions.
At roughly 10 years old, D’Souza said his mother advised him not to spend all his money on candy and frivolous gadgets.
When he started working part-time jobs, D’Souza’s mother recommended that he save some of his hard-earned money for his long-term goals and an emergency fund.
Today, the 23-year-old said his mother still guides him financially. She helped him set up mutual funds and taught him about compound interest, which accelerates the growth of one’s savings and investments over time.
“My mom has always helped me make sure my money was going to the right places,” said D’Souza, who resides in Toronto.
“She always wanted to make sure that I was set for life.”
While D’Souza credits his mother for the financially secure position he’s in, he acknowledged that not all Canadians have parental figures who are financially literate or know how to best guide their children to make wise financial decisions.
In any case, experts say it’s never too late to learn financial literacy. And on the flip side, they say it’s never too early to begin teaching your children financial literacy.
“Just don’t be afraid of (money). I think a lot of times people are afraid of it,” said Anna Smith, head of marketing at CapIntel, a business-to-business financial technology company.
“Financial illiteracy is when people don’t talk about it and don’t learn about it.”
Growing up, Smith said her parents didn’t teach her much about money, which made her feel uncomfortable and insecure when she started to manage her own. As a young adult, she said she got multiple credit cards, maxed them out and got into “really bad debt.”
It was only when she started doing research on how to climb out of debt that Smith said she really learned the importance of financial literacy.
“I was so scared of it and to face it head on before,” she said.
Now, Smith said she’s doing her best to instil financial literacy and confidence in her daughter at a young age in order to set her up for financial success, which she strongly advises other parents to do as well.
She noted that telling your children about your financial mistakes is as important as telling them about your financial successes.
“Money isn’t really talked about in the sense of how to grow money and savings and investing and interest, and so I believe that it’s super important for parents to teach their kids in order (for them) to be confident with finances,” said Smith.
With her two-year-old daughter, Smith goes grocery shopping with cash to show her how much they’re physically spending in a single grocery run. This, she said, can be a good first step to getting children familiarized with money and spending power.
Smith also opened up a savings account for her daughter and takes her to the bank to deposit money whenever she receives monetary gifts to introduce her young one to the world of banking, she added.
“Especially from (the age) of one to four, they say you imprint a child and they look at what you’re doing and they kind of mimic that for the rest of their lives, and so I just think that it’s super important just to show them, whether they understand the concept or not,” said Smith.
Books are another way that Smith recommends people to introduce their children – or themselves – to personal finance. For example, she has a copy of “The Richest Man in Babylon” by George S. Clason, which she plans to pass down to her daughter once she’s able to read and understand its concepts.
At BlueShore Financial, financial adviser Nico Wong said they offer a program for young children, whereby they give them a piggy bank with three sections – one for spending, one for saving and one for sharing, the latter being for money they can donate to charitable causes.
The concept is one that Wong suggests parents adopt at home, by purchasing a piggy bank or jar from their local dollar store, to create a similar system for their children when it comes to saving, spending and sharing so that they can learn the basics of money management.
As for adults who were taught little to no financial literacy growing up, Wong said they would benefit greatly from speaking to financial advisers or bankers and stressed that “any time is a great time” to seek financial advice.
If they have children, he said they can then take home that same advice and knowledge and share it with them.
The internet has a wide array of resources like educational videos and articles, too, but Wong said people should make sure the information they’re consuming online comes from a reliable source or someone who is certified to offer financial advice.
“These days where there’s so much information, many different sources and things, I personally would stick to trusted sources – bigger and bigger institutions, professional advice, and so forth,” he said.
“I always say avoid the things that are too good to be true.”
No matter what age you are, Wong said becoming financially literate will set you up for success.
“It’s never too early, never too late.”
This report by The Canadian Press was first published May 9, 2023.
