The top 10 things our children should know about money

Many of my clients have adult children graduating from university and starting a new career. For many it’s the first time they have had to manage finances and plan for the longer term. Now is the time to establish good habits and attitudes that will last a lifetime. Here is my list of the top 10 things I advise young adults to do if they want to build a healthy and successful relationship with money:

  1. Write down your values and goals. You may draw some blanks at first, but these should be your guiding principles. Then work hard to make them happen.
  2. Earn all you can, save all you can and give what you can.
  3. Avoid credit cards until you have a full time job to pay off balances in full each month.
  4. Pay off student loans, credit cards and any other debt on which the interest is not tax deductible.
  5. Contribute to an RRSP early and often. You can’t beat the value of tax deferred compounding.
  6. If you’ve maxed out RRSPs, contribute to a TFSA and invest what you can. If you save and invest your money, you can’t spend it.
  7. If you need a car, buy a used one. It’s a depreciating asset that won’t help you build wealth.
  8. In everything you buy, buy quality, not brand.
  9. Don’t buy a house or condo until you can really afford it.
  10. Be ambitious and courageous; there is no such thing as failure; it’s just experience.


2 Responses to “The top 10 things our children should know about money”

  1. Susan Rubin on May 17th, 2012 at 8:51 am #

    Excellent information. Our children should learn these lessons long before they graduate from school. Children who learn the value of a dollar will always do better than those who learn it later in life, or not at all.

    Thanks for the advice.

  2. Ken on June 9th, 2012 at 3:31 pm #

    A comment on point #3. As a long time believer in the prudent use of credit cards (other people’s money in effect), I would only partially agree with you.

    Credit cards, particularly cash back cards, are free money if used wisely. “Wisely” is the keyword here, and that is what younger people need to learn rather than avoidance. Cards should be viewed as cash. That is, don’t use them unless you already have the money. Rather, use them purposefully to float the money for time when it is to your advantage.

    With that in mind, my daughter (now 21 and in university) has been encouraged to have and learn to use a card for a number of years. The key here is the cardinal and absolute rule -> always pay off the balance at month end and NEVER pay interest, ever. I have never paid interest on a card in over 5 decades (literally).

    I firmly believe that this habit must be taught early and the attitude ingrained well before any later (more serious) use of a card. It must also be demonstrated through consistent example. That should greatly lower the probability of problems down the road.

    Lastly, many now use debit cards in place of cash. This may seem more prudent to some but is it is very bad practice. Debit cards are not only in most cases much more expensive to use, but the danger of loss through fraud and such is exponentially higher that with a credit card.

    Thanks for a good article.

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