HERE'S SOME SOBERING NEWS from a recent article in The Globe and Mail: 46 per cent of Canadians are within $200 of financial insolvency at each month-end. Blame it on higher interest rates, but also on less than desirable financial literacy.
In October of last year, a survey by debt consolidation firm BDO Canada revealed that approximately 3 in 10 Canadians do not have enough money to buy the things they need. They still buy them in the end but get deeper into debt. Among those who carry debt, the average non-mortgage debt hovers around $20,000.
According to the survey, women and millennials are most impacted. Half of the surveyed millennials feel they do not know enough about buying a home, dealing with unexpected costs and ultimately living a financially-savvy life. One third of people between the ages of 30 to 50 have no retirement funds; they are most likely to have debt and six out of ten reported a credit card balance.
Age is just a number, that is true in a philosophical way, but real life can turn rough and ugly when unexpected costs arise, which they do. It’s been said by many already: Canadians are drowning in debt. Moreover, many children grow up with a skewed idea about what’s financially feasible and what’s not.
All that can be changed though. There is enough information about the basics of finances. Blogs, debt-counselling firms, books – one really does not need to look far. If learning about finances sounds as appealing as eating cardboard, imagine the reward: peace of mind and dignity. It has become more socially acceptable to have debt, or so we are told – which is a scary thing. The truth is, debt carries stress, shame and stigma.
Imagine replacing that with knowledge (and better sleep, too).
At the opposite end runs the illusion of being able to buy a lot. Now we can have weekly payments for the smallest of objects, which may seem helpful. The lure of the ‘almost affordable’ becomes the siren call that drowns the common-sense mantra our parents and grandparents stood by: live within your means. Do not buy on debt, but rather save until you have enough to buy, at which point you might decide not to, which stunts the growth of yet another beast. Yes, impulse buying is a beast whose strength gets reinforced with each debt-causing purchase.
The biggest trouble of all is that our children learn from us and our spending habits; many of them learn early on that there is no difference between wants and needs; the ‘almost affordable’ merchandise becomes reality with purchases made possible by payment plans. Thus, children learn to love to shop with few or no further thoughts about affordability.
It’s called temptation for a reason. There is so much stuff out there, and young ones are particularly vulnerable to wanting what others have. As children grow and become teenagers, so grow their wants, and the corporations behind the wanted goods know how to make them pricey enough they make a profit, but not too high to scare off young customers.
Now imagine that financial education would be an integral part of the curriculum and thus part of everyone’s upbringing. Starting with the simplest concepts: saving as much as possible even when that is so little it barely counts (it does); learning about bank fees and loans; understanding budgeting and why one needs to be on top of it; understanding how credit cards can entrap but they can also be helpful if used right; how lines of credits and mortgages can be handled safely.
Most kids dislike math; it is so abstract, they say. Well, financial how-to is all applied math: additions and subtractions, percentages and ratios. Throw in statistics for good measure – all found in our immediate surroundings and everyday life. The price of life is about to get higher due to many factors, climate change included. Why not change things for the better where we can and while we can?
Imagine that the next generation will not be one of shoppers and spenders but savvy consumers; able to assess what is affordable and growing wiser with each choice. Yes, people would shop less and they’ll go for better, less disposable products, which might just take us back to well-made stuff. I am willing to say that will render healthier, happier people, more able to enjoy life’s simple joys. Less waste, too.
Indisputably, knowledge is power. In this case, the power to say no to unneeded expenses and the power to decide to live within one’s means no matter how the others around you live and spend.
Editor's Note: This opinion piece reflects the views of its author, and does not necessarily represent the views of CFJC Today or the Jim Pattison Broadcast Group.