The Role of Financial Literacy in Shaping the Future of Canada
Born and raised in Vancouver, I am a first-hand witness to the exponential growth in real estate development, home prices and population growth in the lower mainland. Over the last several decades, the growth and transformation of Vancouver into a world-class city has created many financial challenges for future generations.
At the forefront of many discussions and dominating most news headlines is the affordable housing crisis. The expensive cost of housing in Vancouver affects almost everyone, such as Baby boomers, Generation X, Xennials, Millennials, and Gen Next. To purchase either a home, condo or townhouse at current record prices, buyers would need to consider financial implications of incurring massive debt when most Canadians are already at dangerously high debt-to-income levels. With the addition of rising interest rates into the equation, there could be severe challenges ahead for current and future generations to own property, rent, or simply live in Vancouver.
Now more than ever, it is important that we educate ourselves and make wise financial decisions that will help position us to afford the high cost of living in Vancouver today, and in the future.
Financial Literacy
Throughout my journey, both during schooling and in my professional career, I’ve always been interested in financial literacy. After earning my Chartered Professional Accountant's (CPA) designation in 2010, I realized the value of giving back and sharing my knowledge. In early 2016, I joined CPA Canada’s Financial Literacy Program. Volunteering and helping better our communities by making financial education accessible to children, new immigrants, small businesses and future generations, more Canadians can start to make smart, informed financial decisions earlier in their journey.
2018 marks the eighth year of financial literacy awareness in Canada. Although the calendar has 12 pages, November is the only month designated for financial literacy. Financial literacy should not be limited to a single month as learning about the best way to handle money is an invaluable lifelong skill that will pay dividends for the rest of our lives.
Making smart financial decisions should be a common theme in our classrooms and homes and discussed with our children regularly. The CPA Financial Literacy Program in Canada is leading the way to help young people understand finance. The importance of financial literacy today is more meaningful and impactful than ever. Educating children at an early age through awareness helps to develop a financial mindset during their formative years. Financial responsibility is a skill that needs to be learned early, not when first entering the workforce.
Needs versus wants
The CPA financial literacy initiative and its volunteers help bring the real world to the classroom. Through the use of relevant course material presented in the simplest form, I have found my audience to be attentive, engaged and eager to learn.
The key focus of my talks discusses things children want versus what they need. The difference between a need and a want are defined to provide a foundation to help understand how each rank in importance in order to make wise decisions:
Need: something you have to have
Want: something you would like to have
This topic naturally leads to exercises where children are required to consider prioritizing spending choices between necessities and ‘nice-to-haves’ so that they can make better choices. Furthermore, I introduce budgets and examples on how to prepare a budget so that students can track their needs and wants.
See more information on different types of budget calculators.
Final thoughts
Children, like adults, need to have a plan on how they are going to reach their financial goals. CPA Canada’s Financial Literacy Program’s primary objective is to help Canadians gain the skills, understanding, and confidence to make wise financial decisions, based on their individual circumstances. Children, small business owners and new immigrants who acquire financial knowledge earlier along in their journey will better position themselves, the economy, and the country for a better future.
