November is Financial Literacy Month. You may hear about events and program launches designed to increase the financial capabilities of Canadians. But really, why focus just one month on enhancing financial literacy? Being able to manage your money is a skill everyone needs every day – whether you are young, old or in between.
Typically, people learn the most about money when a big life change happens. It’s usually those big events that turn into teachable moments as people are forced by the situation to learn about their options, choices and decisions to be made.
For those of us with young adult children – university students or those just starting out in their careers – the pandemic has been an incredible teachable moment when it comes to finances, with unexpected impacts to both sides of the balance sheet. Money in and money out. For example, students have had to move to online learning, which in most cases has resulted in modest savings. On the other hand, many have unexpectedly lost their jobs or had their income reduced. Others have moved home – or stayed home instead of going off to university or college. And, of course, many adults with young children have assumed the role of caretaker while working from home versus depending on daycare.
We believe financial literacy month should be every month, but why not take the opportunity this official “Financial Literacy Month” to discuss with your adult children some key financial lessons learned through this pandemic. There are surely many takeaways that will help them better prepare for future disruptions to their financial lives and potentially reduce financial anxiety going forward.
Here are three questions to discuss:
- Do you have a budget? Those who do have a budget have likely seen lots of changes. Income may have decreased. Or, working from home may have actually saved them money in a number of ways: daycare costs, transportation, eating out, clothing. Living through this experience of spending less should be a lesson to all Canadians about needs as opposed to wants and how to better control spending.
- Do you have an emergency fund or emergency savings? This pandemic has certainly hit home how important it is to have some money put away for a rainy day. Any savings your children have should be channeled into an emergency fund if they haven’t got one.
- Do you have the appropriate investments to help you meet your goals? Many people second guessed their risk tolerance levels when the markets crashed in March. Young people who are just starting to experience investing may shy away from the markets due to the volatility. But, as typically happens in market crashes, there was a rebound. Young investors are in a great position now to take advantage of market growth over the long term.
Bottom line, now is a great time to talk to your children about money. Introduce them to your advisor, who can walk them through the ins and outs of money management and investing. While money can’t buy happiness, being in control of your finances can certainly lead to less stress and less anxiety about money.
Learn more about how you and your family can get the most out of Financial Literacy Month by contacting one of our Investment Advisors today.
iA Securities is a trademark and business name under which Industrial Alliance Securities Inc. operates. Industrial Alliance Securities Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.