Bringing Tools for Economic Survival to Younger Generations

By Charlotte Bumstead
Today’s youth can go from living at home, where the greatest expense is a monthly cellphone bill, to suddenly becoming first-time home owners and paying a mortgage. The generations growing up in current economic times are accustomed to a “live-and-learn” lifestyle. They are not given the education necessary to prepare them for surviving in today’s economy. We are living in a society where people tend to spend more than they can actually afford; even the wise and example-setting Zoomers are doing it.

The focus for change must go back to the youngest generations—the spenders of tomorrow. The most effective learning style is through real-life experience; teenagers and young adults learn to earn and manage money through part-time jobs after school and during summer employment. But it is important they are offered some guidance along the way. They look to parents, teachers and grandparents for direction.

Dan Braniff, founding CARP chair of the Georgian Bay Chapter, has been advocating for financial change throughout the pension crisis and capital market meltdown. “Financial literacy should not be left to chance, especially considering the complexity of our economic times,” Braniff says. “Finance should be mandatory [throughout the] primary to post-secondary curriculum.”

Financial task force member Mitch Murphy says learning financial literacy early—well before getting into the workforce—should stay with Canadians for life. In order to engage teenagers in understanding necessary finance tools, they must be able to relate. The young generations aren’t ready to start planning for retirement. They need to learn about cellphone contracts, debit and credit cards, saving for post-secondary education and how much living away from home will cost. Financial lessons must reach out to their level of interaction; such as including money-managing aspects in video and computer games. “Have students act parts in unscripted reality games,” suggests Braniff. “Set up lifelike market situations that reflect real goals, challenges and risks.”

Bringing financial literacy resources into the school system is one idea. But it does not take away from the value of parents discussing money matters with their children and/or grandchildren. According to Braniff, the most important lesson is, “To be self sufficient — not just in terms of creating and sustaining wealth but to develop an ability to protect against fraud, manipulation and deception in the marketplace.” This is the kind of situation you hate to learn by experience.

Hopefully, by bringing financial training to younger generations, we can slow trends like today’s rising household debt from recurring in the future. Canadian household debts have grown excessive due to unadvised consumer habits developed from easy borrowing. Further knowledge in this area would discourage consumers from the temptations of low interest rates misleading us to spend beyond our means.

Financial consultant Sue Laurin emphasizes the importance of parents teaching their kids to start early. “Teach them to save more, at least 20 to 30 per cent of what they make,” says Laurin. “Then when they retire, they’re already used to living on less than what they make. Children should learn that they don’t need to spend every penny they make and how to get the best for their dollar.”

Lack of financial training has had a significant effect on the boomer generation. Recent reports from the BMO Retirement Institute state that Canadian boomers aged 55 and over are not serious about planning for retirement. “If we educate young people, at least they will make an informed decision about whether they are ready for retirement or not,” Laurin says. “A lot of my clients—I educate them now, and they say, ‘I wish I knew that 20 years ago.’”

Uninformed money spending habits are a risk at a time when the economy is delivering more material wants than we can afford. “Mostly, I blame my generation for not passing on the experience of hard times,” says Braniff. “By protecting our offspring, we have made them vulnerable to reality.”