Parents owe it to their kids to talk about finances
Earlier this year, Ontario changed its Grade 9 math curriculum to add a dedicated financial literacy component. Other provincial school systems have also added courses or are introducing programs.
But Natalie Jamison, wealth advisor and associate director, wealth management at Scotia Wealth Management, says we shouldn’t rely solely on teachers to impart these crucial skills.
“A lot of parents think it should solely be the responsibility of the education system and that they absolve themselves of that responsibility,” she says.
Jamison disagrees and offers the example of learning to swim to explain why. “Whose responsibility is it to teach your kid to swim? It isn’t the schools ... [parents have] to put [kids] in a swim class at a community centre. You can’t put that onus on the school.”
Likewise, she says, when it comes to understanding how credit cards work, how to save or how to develop other financial skills, parents can’t afford to send their kids out into the world unprepared.
School systems don’t always hit the mark
The PISA study, which compares the financial skills of 15-year-olds worldwide, shows teens who talked with their parents about finances — even just once a week — scored 33 points higher on the test than those who didn’t.
Researchers also found students with higher levels of financial literacy often demonstrate confidence in keeping track of their account balances and planning for future spending — two factors PISA identified as key to “building a financially secure future.”
While Canada’s schools are adding financial literacy to their curriculums, Mark Yamada, president & CEO of PUR Investing in Toronto, says educators may send the wrong message when they try to make those lessons fun.
For example, when teaching students about stocks and investing, teachers often turn it into a game in which the group that picks the most profitable stocks wins a prize.
“It actually teaches kids to gamble, because the winners of those contests are the ones who take risks all the time,” says Yamada. “And that has nothing to do with investing.”
He says he’d prefer high school students be taught how to defer gratification and to learn the satisfaction of working toward longer-term financial goals.
“It’s the resilience, the ability to adapt to change, those are the things not being taught out there,” Yamada says. “And if I worry about the next generation at all, it’s that they’re not getting the skill sets to deal with the next 25-to-50 years.”
Having hard talks today will save kids trouble later
Both Yamada and Jamison also express concern that a post-secondary education has become a requirement for young people to secure long-term financial success.
“Today, it’s a ticket to play. And it’s not a guarantee of anything,” says Yamada.
Plus, it comes with a hefty price tag. Statistics Canada data shows 64% of students who graduated with debt in 2015 still carried outstanding debt three years later.
Jamison notes she’s talked openly about school costs with her two young daughters. She and her husband are both university educated and she imagines her children will pursue degrees as well.
“But,” she says, “[I ask them]: is the education at a university in Halifax that much better than the education at a university in Toronto?”
She says no and that, for many young adults who are comparing universities, their hometown schools may have one undeniable advantage: “If [you] can live at home and not have to spend $20,000 a year to live on campus, that could mean the difference between graduating with debt or debt-free.”
Jamison says parents need to help their kids understand that graduating with $80,000 to $120,000 of debt will hamper their financial security for years — even decades — to come.
Financial literacy should be a collective effort
Returning to the swimming analogy, Jamison says financial literacy conversations will give young adults the needed skills to go from treading water to diving into the deep end.
“If you don’t have financial literacy, you’re going to end up drowning in debt,” she says.
While she agrees that school systems share some responsibility for preparing students to do more than simply participate in society, parents also need to step up.
“If you don’t lead by example, if you don’t have those conversations with your children,” she says, “they just won’t have the skill sets required to be successful.”