Little fools

CRAP modified

“Are you sure that’s a good idea?” I asked. He’d just told me about the pre-build condo purchase – $60,000 down on a unit that’s a long 45-minute commuter train ride away from the city core, not scheduled to be completed until 2017.

“It’s a futures contract,” I explained, “rife with all the risk that entails, and you’ll never be able to rent it out for positive cash flow.” So, he said, I’ll just flip it then for a profit. And that’s when I told him the CRA would consider any profit (as unlikely as it may be) as business income, and pile it on top of his taxable salary. He was appalled.

“By the way,” I asked, “what do you do?”

“I’m a real estate lawyer.”

I checked. He is. Six years closing deals and advising people. Of course, knowing the law and being financially literate are not the same thing. You may learn about torts and tarts during law school, but not necessarily about managing cash. In fact, few people in this country ever receive formal training in handling the one thing that we all need – money.

That’s not to say financial literacy is ignored by the schools. It isn’t. They give it lip service, but in lots of places (Ontario, for example) money talk is blended into other subject areas, and is not a course on its own like, say, dissecting frogs. Here’s the official bumpf:

How is financial literacy taught in Ontario schools?
Financial literacy is part of the elementary and secondary curriculum in many different subjects such as mathematics, social studies, Canadian and World studies, business studies and many others. In some subjects, students may be learning specific skills such as understanding money, consumer awareness, personal finances, budgeting and money management that will help them develop financial literacy skills. In other subjects, financial literacy connections may be made as students learn about their place in the world, as a responsible and compassionate citizen or when they study different economic systems.

Through the curriculum, students are developing skills in critical thinking, decision-making and problem solving that can be applied to subjects at school and to real life situations. Resources have been developed for teachers to help them connect financial literacy topics across the curriculum to deepen students’ learning and make financial literacy more relevant.

Well, obviously, it ain’t working.

Randy reads this pathetic blog which, so far, has not incapacitated him enough to resign as a teacher. “I teach economics at a private school in Vancouver,” he tells me. “I have taught public school for over 30 years and private the past five. Very few schools public or private teach economics. A shame. I have enjoyed your blog for some time. I try to infuse economic concepts and real life examples to make it relevant (with a large dose humor and interactive material).”

Imagine. Combining economic and financial info with actual real-life information and humour. All that’s missing are colourful references to underwear. In any case, Randy has decided to reach out here for some assistance in schooling the urchins.

The question is how to turn out young adults who can actually analyze whether or not it makes sense to acquire a concrete box in return for assuming $400,000 in debt. Or how to say no to a mutual fund salesguy who will make more money every year from your RRSP than you do. Or knowing what a preferred share is, how a bond works, what ETF, HFT and EFT stand for and why mortgages are amortized. How do we change a system where kids come out of seven years of university dumb enough that [email protected] can talk them into a GIC? Why are girls taught to fear risk when they live longer and often run out of money? Why do people buy new cars yet lease water heaters? How can you earn enough to move out of your folks’ basement before you’re thirty?

Randy says he wants help in developing a curriculum “based upon 10 broad concepts/common sense economic ideas that every young Canadian should begin their life knowing.

“What truths would they center around?” he asks. “What financial situations would they center upon?”

And so, blog dogs, this is a rare opportunity (now that we’ve straightened out the realtors) to become Educators. What would you suggest Randy include as the 10 most worthy financial things to teach his doughy-eyed brood, lest they become the greater fools of tomorrow?


#1 HD on 05.26.14 at 5:41 pm

Living within your means in order to generate savings.

Simple but crucial/essential to anyone starting on path to wealth accumulation.



#2 Old Man on 05.26.14 at 5:42 pm

I took a course in Commercial Law at University many years ago and learned a bit about torts too. The study period came late at night on Bishop Street in an English Pub, as it was there that I reviewed my tarts.

#3 Carolyn on 05.26.14 at 5:49 pm

I would definitely teach kids about setting priorities in life. Match your life goals to your income.spending- where do you want to be in the future and how are you going to get there

#4 raisemyrent on 05.26.14 at 5:51 pm

The time value of money for the win!

#5 Son of Ponzi on 05.26.14 at 5:53 pm

Didn’t the Canucks just fire him?

#6 Ben on 05.26.14 at 6:00 pm

Garth – I read today for the first time about RRSP withdrawals for first time buyers. Boy that’s a bad policy. Who created it? What year?

To others posting about kids profligacy – the kids just grow up in a world where housing is insanely expensive – they didn’t create it. They are the only ones not culpable.

#7 Happy Renting on 05.26.14 at 6:00 pm

I think step 1 is to convince kids to give a damn about this. If you announce “free money!” people clamour for it, but they can’t be bothered to learn how to negotiate prices and save on costs, make their investments work for them, or assess value for money. If you can just teach young people to care, REALLY CARE, about this stuff, they’ll come to you with what they need to know. And then maybe they can avoid a life of financial slavery and relative poverty, because that’s the true cost of long-term ignorance and mismanagement.

#8 Biltong on 05.26.14 at 6:02 pm

Here are a few I would have appreciated knowing coming out of high school or even university in no particular order:

1. compound interest – how it works.
2. debt vs. equity – basic balance sheet stuff
3. basic income statement and cash flow knowledge
4. bank and broker service fees
5. benefits and pitfalls of credit cards
6. leverage
7. taxes – what you pay as a salaried worker vs as a small (or larger) business owner
8. RRSP/TFSA/RESP/CPP – how do they all work
9. investing basics – stocks and bonds, alternatives
10. Real estate!

#9 LH on 05.26.14 at 6:02 pm

Easy. Combine some ancient wisdom (Plato and Aristotle, and add some Torah and Mishnah for good measure) with some modern money sense (, and put it all on the test!

Only problem: if the educational system didn’t turn out so many suckahs (to use MMM’s term) then it would get harder for top 0.1% Smoking Men like me to make a pretty dime!


#10 Frustrated on 05.26.14 at 6:03 pm

Teach the kids to buy a house young, it can only go up in price. Just kidding. Life is about cycles, the opportunity will come one day to buy a house, just be patient

#11 Son of Ponzi on 05.26.14 at 6:09 pm

My advise:
Make sure they read every post of Garth’s blog.

#12 Alex T on 05.26.14 at 6:18 pm

1) Different meanings of “risk” – risk of losing money, risk of losing purchasing power, risk of losing opportunity, risk of reaching retirement without adequate savings. It’s depressing how often people talk of “risk” as meaning losing money without appreciating than this may well guarantee they fail to reach their goals, making it the riskiest path overall.

2) Understanding price charts. What is a moving average, a long term trend, normal price fluctuations (the fact that these even exist!), pullbacks, extremes, breakouts.

3) Supply vs Demand. Also why S vs D and “rational” models fail (bubbles, trends, manias, why most people buy at tops and sell at bottoms)

4) Simple ways to create a balanced portfolio and how to accommodate speculation or even gambling without being destructive

5) Understand the true costs of buying real estate vs renting (also buying new cars vs leasing vs used vs transit)

6) Debt, debt, debt. Mortgages, credit cards, teaser rates, pay-day loans. What is the true, total cost of a debt over the life of the loan?

7) Estate planning. What are some issues, where/how to get a will, how to transfer values to children or spouses. Kids may need this to manage their parents.

8) Different types of accounts – RRSP, RESP, TFSA, margin vs cash brokerage accounts, chequing, savings

9) Budgeting. Doesn’t need to be detailed, but understand different ways of setting and following a budget. Automatic withdrawl plans, recording purchases, etc

#13 Ralph Cramdown on 05.26.14 at 6:26 pm

Gotta teach the psychology along with the cash flow analysis. It makes things interesting, and understanding how your fellow human typically screws up (and how ruthless corporations take advantage of this) is at least as important as cash flow analysis.

Things like anchoring, loss aversion, sunk cost fallacies, laziness and acceptance of the status quo…

I just read a Charlie Munger speech called “The Psychology of Human Misjudgement” which was excellent. He’s Warren Buffett’s business partner, so this was all economics. Google it.

There’s also ‘Nudge’. Haven’t read it, but am familiar with the concepts. is another interesting, short read.

If you don’t understand this stuff, and think that most humans are rational economic actors, you’re going to go through life getting absolutely fleeced by people who, even if they can’t articulate it in fancy terms, know it not to be true. The car salesman AND the guy who sells you all the extras afterward, the lady at the bank who gives you a good deal on your first mortgage term but whose computer has a good guess of how much of a sucker you are when renewal time comes around, the guy who wrote the wine menu at your favourite restaurant, the checkout girl at Toys’R’Us who tries to sell you $7 insurance on a $40 pogo stick (no word of a lie, that one happened to me this weekend)…

#14 Ray Skunk on 05.26.14 at 6:30 pm

Financial literacy will never be taught in Ontario’s public schools.

The government (creators of curriculum) rely on fiscal ignorance and a “debt is cool” culture to get voted in time and time again. We can’t have kids understanding that nearly $300bn of debt is not cool, or that $1.1bn wasted gas plant money is actually a significant sum.

The union representing those who deliver the curriculum are vested in ensuring those leaving the school system need as much post-secondary education as possible, thus lining the pockets of dues-paying university professors with borrowed tuition payments.

The school boards rely on ignorance in order to inflate their expense accounts and pass off $143 pencil sharpener installations without a hitch.

#15 labrador refugee on 05.26.14 at 6:31 pm

The difference between gross and net income. The difference between what we make and what we take home. In order to purchase $100 worth of goods , we have to make $150+ at work

#16 Hicksville Alberta on 05.26.14 at 6:32 pm

There are some great non mainstream media site, blogs and articles around that you can find quite easily that can be a great source of less vested interest information both of a current and historical nature that can be more than useful to your own education as well as your students.

One article i read and copied today is at

Whenever possible i mentor a few kids (mainly family) with various social and economic articles i keep and print off and over the years these have definitely helped the recipients.

I don’t do this very often as i ain’t a preacher as often the preacher thing wears out with the younger set.

#17 Mark on 05.26.14 at 6:35 pm

Interesting post. It seems that insiders to an industry have a habit of “eating their own cooking”, whether it be the Nortel employees who had contests to see who could buy the most stock on the ESPP, the Realtors who own a half dozen houses with giant mortgages and rent them out, or even this “real estate lawyer” who is looking to leverage into pre-construction condos.

Over the long term, this is why the rich don’t stay rich. They get too obsessed with their asset class of choice, and it becomes their downfall.

#18 Penny Mills on 05.26.14 at 6:35 pm

The political climate today reflects that people don’t understand the relationship of wages, ability to spend (which grows an economy) and taxes. If they did they wouldn’t fall for the Tea Party line of firing workers & taking their Pensions.

Defined Benefit Pensions mean people can buy goods & services. Without knowing the payout people are reluctant to spend.

Students need to be taught that good wages mean that people can put money into the economy. I get paid, I pay tax, I buy your product or service & pay tax. Your business pays taxes.

Inversely, austerity means fewer jobs, lower wages – less money to put into the economy. This leads to less tax revenue, as do tax cuts, and leads to government need to borrow – at interest from private banks, which Canada needn’t do. I remember well the major projects Canada could afford before 1974.

#19 Aggregator on 05.26.14 at 6:45 pm

Gotta keep the assembly lines running before the elections. Quick! Just make something up to keep workers busy.

Canada probing fatal crashes amid complaints over faulty GM switches

(Reuters) – Canada is probing two fatal crashes in General Motors Co vehicles which were subject to a recall to fix faulty switches and has received nine further complaints from drivers, the country's top transportation official told Reuters on Monday.

Transport Minister Lisa Raitt said she was sure the number of complaints potentially linking accidents to the switches would rise as people became aware of the recall.

The recall fiasco stinks to high heaven and could be the greatest fraud ever unveiled in the auto industry's history. I know mass looting when I see it. This is one of them.

#20 TnT on 05.26.14 at 6:45 pm

One thing I usually yap about is how much one has to earn pre TAX dollars to purchase items.

E.g. You need to earn $10 in salary to purchase $5 in goods.

#21 Luc on 05.26.14 at 6:47 pm

Financial math: Compound interest, amortization cost, simple interest, etc.
Taxation implications: dividends, capital gains, tax laws, etc.
Have them fill Income tax forms all of them.

#22 Son of Ponzi on 05.26.14 at 6:49 pm

Related to previous thread:
As I said before, China’s RE will crash taking Canda’s RE with it.
You can’t have one without the other.

#23 Meteghan on 05.26.14 at 6:50 pm

Simply; That in an efficient market there can be only one price; and that buying a publicly traded stock the NPV==0; and there are as many influences wishing the price up as down.

#24 Smoking Man on 05.26.14 at 6:50 pm

Talk about dangling a a jucey stake in front of a starving lion.

This is going to take time.. First a trip to the drug store for some Athletes foot ointment, and another jar off Tylenol, man did I do some damage this weekend.

#25 Jay on 05.26.14 at 6:50 pm

The first thing I’d teach a kid is how much they’re actually paying in interest on something. Amortize a purchase over 25 years and suddenly your great deal on a million dollar house is scarily expensive.

Next, how to figure out how much you should be paying for something before a scam artist tries to pile on the hidden fees. I bought a car recently, and it is only because I did the math earlier and knew full well how the much it should cost that I caught the dealership nearly doubling the cars price with useless add-ons.

Along the same lines, some lessons on the total cost of owning something. Taxes, insurance, fees, repairs, emergencies, the fact that these things exist, and they change the price of owning something as much as the price or interest rate.

Besides a lesson in the nitty gritty of interest rates, a practical lesson on the debt treadmill would be valuable. Show that the person who is barely making it who borrows money at interest will get behind despite looking way better at first.

Forget compound interest, the real moneys in compound contribution. A pittance you just let add up isn’t a pittance after a while.

Likewise, how much does that pack a day really cost you?

Being ready for an emergency, and why it’s way cheaper than reacting

How little is minimum wage when you’re paying bills?

How little is the average Canadian wage when you make the average Canadian decision?

The power and the danger of leverage: “you may have made double what you borrowed, but that guy is stuck paying for something worthless.

My 10

#26 Sparky on 05.26.14 at 6:54 pm

Live within your means, stay away from debt that will incapacitate you, start a savings plan and learn how to invest, keep an eye on your cash flow and net worth keeping a focus on both always being in the positive column, understand banks and other financial institutions are not your friend but learn how to use them to your advantage with advancing your net worth.

Also, never ever forget, you are responsible for your own finances, nobody else.

#27 gladiator on 05.26.14 at 6:58 pm

I cannot stress enough how important for people is to understand percentages.
Best example: if an investment fell by 50%, it needs 100% rebound to get to its original value. It’s one of economics’ cornerstones.

#28 crowdedelevatorfartz on 05.26.14 at 6:58 pm

Teach the kids
#1 Debt is the enemy.
#2 The power of compounding interest.
#3 Show them real life scenarios of credit card payments, car loans, lines of credit, telephone contracts, etc.

keep it simple, with examples that they can directly relate to

#29 Dean Mason on 05.26.14 at 6:59 pm

The average monthly condo fees in Toronto are around $450.

Most condo fees rise about 5.00% on average, 3% to 7% so using these numbers, a 25 year ownership of a condo or different condos during this period would mean a total of $264,654 in condo fees.

After 25 years, your $450 monthly condo fee will be $1,523.86.

It seems more like being condemned and not condo, condo, condo!

#30 Barrie Madu on 05.26.14 at 6:59 pm

Compound interest
Life expectancy
Years in retirement

#31 Shawn on 05.26.14 at 7:02 pm

Financial Literacy, a few ideas

1. It’s a lifelong process, try to learn a little every month.

2. To get rich hang out with richer people and learn from them.

3. Never ever read doomer web sites like zero hedge

4. The power of compound returns

5. In the beginning focus on saving 10% of earnings

6. Companies make money (usually) and stocks are part ownership of companies and therefore (duh) stocks make money (usually) and are not a casino.

7. The impact of taxes and tax deferral

6. Only YOU are responsible for your future

7. Get a job with a pension if you can.

8. Beware osf scams, stick to mainstream investing.

9. Pay your income taxes proudly, investments which claim to avoid income taxes are often scams.

10. What a fiduciary is and the fact that they are mythical. No one can be counted on to put your interests ahead of their own.

#32 mark on 05.26.14 at 7:02 pm

Maybe he should first explain impulse and peer pressure and when people let them take hold they inevitably end up broke.

Shame the stupid things first.

#33 hohoho on 05.26.14 at 7:07 pm

You can’t educate away greed and stupidity unfortunately …
if you want to save everyone’s finances, it’s cheaper and more efficient to boost CPP instead.

#34 rower on 05.26.14 at 7:08 pm

@ 21 Jay,

Excellent list!

Everyone needs to know how many hours they will have to work to pay for what they want, both in cash now and on credit later.

People need to be able to figure out the full cost of what they are financing.

Debt with no investments to back it=slavery.

#35 rower on 05.26.14 at 7:10 pm

Sorry, the numbers changed when I hit Submit. Strange, never had that happen before.

#25 Jay.

#36 pareto optimal on 05.26.14 at 7:11 pm

Spent my professional life teaching economics and mathematics in that order. The most useful financial/economic abstraction is the concept of marginalism. Understand it in depth, and the rational crowds out the emotional.

#37 Nemesis on 05.26.14 at 7:15 pm


“Cave! Hic Dragones.”

You must begin by slaying dragons…

Start with the two most dangerous fallacies of NeoClassical economics:

1. RationalActors

2. EfficientMarkets

You may find this useful:

[NoteToGT: I would have vastly preferred Jamie Lee Curtis’ SansLingerieScene… But providence suggested otherwise. What a fabulous visual aid for a different topic/class, though.]


#38 Moi on 05.26.14 at 7:24 pm


Buying a condominium. From the point where you find a condo, to when you move in, to when you own the condo.

Compound Interest – A Tool For Retirement

The State of the Average Pension (Boom or Bust)

Make ’em all watch Frontline, season 25, episode 5, “The Card Game.” It’s all about banks at their absolute worst, and is a real eye opener for credit card newbies.

#39 Kevin Unfortunately in Winnipeg on 05.26.14 at 7:24 pm

It’s generational. My parents knew nothing about finances and I had to learn on my own. In high school I took business but never learned anything about investing, mortgages, and debt.
It really is a shame kids are not shown how to invest early. Investing is 95% physiological and learning when young would have been so much easier.
Why wouldn’t a government want more wealthy people? I don’t get it.

#40 ILoveCharts on 05.26.14 at 7:24 pm

Here is one that is not obvious but I think it’s important in this country.
How to properly calculate the ROI of investing in your own education and health.

That $50/month for a gym membership starts to look pretty attractive when you look at the benefits and reduced costs later in life.

#41 lucyj on 05.26.14 at 7:24 pm

Now that is one challenge, trying to financially educate the student population. Many options come to mind but the students must define the difference between wants and needs and the costs associated with each. Then a balanced budget approach, with the novel concept of making more than you spend and ensuing consequences if you do not. Some time could also be used to analyze and discuss financial advertising, and let the students know who the real winners are. Not to be missed are basic household budgets as well as typical daily, monthly and yearly costs of living. Very interesting subject and a great article. Keep up the good work.

#42 Rainmaker on 05.26.14 at 7:25 pm

If you are going to go to the trouble and sacrifice of saving well and living within your means, be very careful where you invest your money. Invest conservatively and in quality companies with strong management and integrity – this is easier said than done. A balanced and diversified portfolio as recommended in this blog.

Don’t try to hit home runs, because you will likely strike out. If you must, limit higher risk investments to 5% of your portfolio.

This is from experience of living within ones means, sacrificing and saving well, but made a few investing mistakes looking for the big & quick hit. In effect, handed over well earned money to others who did not deserve it.

#43 Entrepreneur on 05.26.14 at 7:25 pm

For the youth I would suggest:

1. introduce banks, credit unions and account plus what each offer

2. set up an account in their names – savings, chequing, plans, etc…what does each mean and do.

3. set up a credit card, and again in their name, so that they feel the responsibilty. Monitor that credit card and pay it off with the why’s. Same with cell phones, cars, etc.

4. make an income to pay off the debt/credit and how to fill out income tax every year (the importance of keeping receipts for audits especially for small business)

5. learn about the interest on debt/credit and how their money is tied to paying off that interest. How that money should be on spending, making the economy move, plus why it is so important to carry some cash & to buy locally.

6. make a spread sheat (picture) of receipt of income, expenses, debt and date of each and set up a filing system for each

7. where to get the income; from a business, from the government, unions, or make your own business.

8. how to pay back the debt and it is so important to pay it off

9. when the price of goods are too high then time to make it yourself

10. how to apply your work so that community and the environment grow

We have to fall to the basics for mankind and earth to work together then, and only then, everything will fit into place so we can grow in unison.


6. make a spread sheet, the whole picture, of receipts of income, expenses & date.

7. income from

#44 Fleabitten Monkey on 05.26.14 at 7:25 pm

Gotta be time value of money.

#45 Joe2.0 on 05.26.14 at 7:27 pm

If they correctly educated people about finances then everyone (almost) wouldn’t be indebt up to their eyeballs for the best years of their lives.

Gee I wonder if it’s on purpose.

Checkout sometime how the education system in the States was revamped to dumb down the masses.

#46 YF on 05.26.14 at 7:27 pm

Here are a couple that haven’t been mentioned, yet are probably as important as any:

If the last 25 years are any indication, a lesson on asset bubbles and the influence of investor psychology on such.

The concept of risk aversion is basic teaching in beginning level finance courses at university.

#47 Smoking Man's Old Man on 05.26.14 at 7:28 pm

I believe living within your means is the most beneficial thing to teach. Pay for things with cash and avoid credit.

The biggest problem with this is people have to come to the realization that happiness does not come from outside of ourselves. Once you really understand that to the depths of your soul you will be released from the never ending consumerism that aims at making us feel inadequate and in a constant search for something to fill the void.

I’m one of the one percent that Garth talks about, but live very simply.My biggest expense is my monthly management fees for my investments. I rent an apartment, don’t own a vehicle,own a bicycle, exercise daily, meditate daily, read great books daily, cook all my own meals from scratch. I love the time I spend with myself feeling fulfilled and stress free and lacking nothing.

#48 Son of Ponzi on 05.26.14 at 7:29 pm

My advice will always be:
Travel the world while you’re still open to new ideas.
Make many mistakes and learn from them.

#49 Linda Pearson on 05.26.14 at 7:36 pm

I’ve read all the comments so far (have got to 30 of ’em) and no one has suggested beginning really early when the kids are five or 6 years old.

Give them a realistic allowance – nowadays maybe $3 a week – and tell them it must buy whatever candy or popsicle or dollar store item they want. Don’t tell them “no” when they want to make a purchase but do point out how little of their allowance will remain after the transaction.

Teach them how to save up for a $5 item; this has the added benefit of also teaching delayed satisfaction and the perils of impulse buying.

Don’t tie their allowance to chores either but insist that age-appropriate chores must be done and done right. They will still get their money but if chores are not done, mommy/daddy won’t take them to the store until they are finished properly.

As the kids age, include them in some of the business of running the family – paying bills, setting aside savings, and eventually, investing for the future.

In my opinion, it’s pointless beginning in secondary school or even junior high if all the kid’s needs and wants have been magically met out of thin air up until then.

#50 AlbertaGuy on 05.26.14 at 7:36 pm

6. E-TFS
7. M-ONEY M1,M2,M3
9. N-AV
10. T-AXES

#51 Setting the Reord Straight on 05.26.14 at 7:40 pm

RC said
“You are not entitled to a government guaranteed above-inflation return on your money.”

No but you should be entitled to not having the central bank set or manipulate interest rates.

#52 Accounting Deception on 05.26.14 at 7:44 pm

When an ETF says it has an expense ratio of 0.57% and when you read the financial statements it comes out to closer to 3% you know the greater fool could be you if you believe the fund industry standards or some blog dog telling you to buy them!

No main ETF has 3% fee. — Garth

#53 TS on 05.26.14 at 7:45 pm

How do the Feds actually find out that you sold a 2nd property?

There’s no SIN number attached to property sales. I have a vacant piece of land that I’m selling for a modest capital gain since I’ve had it for 15 years.

What are the chances that I can sneek this private sale through without anybody finding out?

#54 Setting the Reord Straight on 05.26.14 at 7:51 pm

Shawn said

“But in the end, who cares? Immigrants are allowed to come and that is as it should be.”

Why is that as it should be? It is not a self evident truth.

I have previously posted links to research outlining that for the United States, the group that benefits most from immigration are the immigrants themselves. There is almost no NET benefit to the host society. However immigration has increased the share of income accruing to capital and those who own it and decreased income relatively and absolutely to lower income wage earners.

I know Politically incorrect.

#55 calgaryPhantom on 05.26.14 at 7:51 pm

Very simple. There should be one lab, where students are given a scissor and some credit cards.

#56 Derek on 05.26.14 at 7:54 pm

1. Sensitivity Analysis

I learned this in Engineering Economics class at University. Whenever you budget anything, run the numbers at the current costs, then you do a sensitivity analysis on all the numbers. For instance you say what if interest rates go up 2%, what if fuel prices go up 5%, does the project still make sense.

#57 Setting the Reord Straight on 05.26.14 at 7:56 pm

“No inflation = no growth, few new jobs. — Garth”

Keynesian shibboleth

#58 Paul Hesse on 05.26.14 at 7:56 pm

1) the power of compound interest
2) the power of investing early (see number 1)
3) the importance of cash flow
4) how to read an income statement
5) how to read a balance sheet

#59 Mister Obvious on 05.26.14 at 7:58 pm

The dawgs are really coming through! Lots of great suggestions already. I have nothing much more to add but would heartily endorse a better study of percentages and compound interest for young students. I’m simply aghast at how few adults today really comprehend those fundamentals.

Here’s a small anecdote from when I was in grade six. (We’re talking early 1960’s here). One of our teachers brought in a handful of bank withdrawal and deposit slips. He thought it would be a good idea for his students to get some practice filling them out.

The exercise was universally hated. The kids were bored to tears and wanted nothing to do with it (myself included). It had no relevance to us whatsoever and was a capital example of the wrong way to go.

Perhaps a game of monopoly with some real stakes involved (at the time, maybe candy, bubble gum or rare baseball cards) would have better engaged us.

#60 Smoking Man on 05.26.14 at 8:01 pm

First off the guy should not be teaching the kids a thing when it comes to money.

His whole concept of a revue stream revolves around meetings, acronym mastery and budget begging.

Not the hunt, the kill, the meal….

First off, get someone like me in, have a class dedicated to lying.

Lying is wonderful skill in business not to mention when you get good at it, you can spot other fibbers from miles away.

Or teach honesty and they end up being suckers their entire life.

Talking about compound interest, saving, delaying instant gratification, ha , good luck….There not ready.
That’s for old pricks with money.

They need to get comfortable with risk.

On the radio this week they where interviewing grads, asked them about Benghazi, they had no idea where that was.
But play a song, they all knew who the artist was.. Mind blowing.

Get some cards, everyone’s lunch money, hand it over. The winner gets it’s it all after a game of poker. Teach bluffing. Comes in hand when negotiating a salary or a contract.

Reward aggressive behavior. Nurture it…show em how to be a lion hiding in a pink shirt disguise..

Punish suck ups if you really want to help these kids.

And if you want anymore help, you need pay me teacher!!!!

#61 espressobob on 05.26.14 at 8:05 pm

‘Home Ec’ was something some of us had shoved down our throats back in grade 9, way back when. We can be thankful! But what happened?

Why can’t our egghead educators rifle everyday economics into our youth? They need our help????

#62 The top 10 for students and noobs on 05.26.14 at 8:07 pm

1. Don’t listen to a realtor

2. Don’t believe anything on cp24 hot properties show

3. Don’t watch hgtv

4. Don’t listen to your amateur friends and their real estate tips

5. Don’t believe any real estate investor seminar

6. Do believe that all prices return to their averages

7. Do believe that realtors care about commissions and not you

8. Don’t believe anything Brad Lamb says

9. Don’t follow the herd

10. Watch as many documentaries as you can find about the u.s. housing crash. Cause that is about to happen in Canada.

#63 Herb on 05.26.14 at 8:08 pm

#24 Smoking Man,

“… a trip to the drug store for some Athletes foot ointment …”

Didn’t I tell you to keep your foot out of your mouth?

#64 JO on 05.26.14 at 8:09 pm

1) Present Value and Compounding when borrowing and when investing
2) Taxes – ROR before and after tax
3) Costs of loans and costs of investments
4) rent vs homeownership
5) lease vs buying a car
6) Understanding our natural tendencies to do the wrong thing when investing and also spending
7) Cycles in Interest rates and asset prices
8) History of financial crisis – how the lead up almost always involves a huge buildup of credit/debt
9) Healthy skepticism of sales pitches
10) Nobody cares more about your money than you do so take responsibility

#65 Smoking Man on 05.26.14 at 8:09 pm

#54 Derek on 05.26.14 at 7:54 pm
1. Sensitivity Analysis

I learned this in Engineering Economics class at University. Whenever you budget anything, run the numbers at the current costs, then you do a sensitivity analysis on all the numbers. For instance you say what if interest rates go up 2%, what if fuel prices go up 5%, does the project still make sense.

The god damn schooled, we are talking about hormone ravaged teenagers. They don’t care. You got to trick them buy doing something bad, that teaches the same lesson.

Then you will have there attention.

#66 marquis de sale on 05.26.14 at 8:11 pm

Read the Wall Street Journal every day. Take the bus. Floss.

#67 Vangrrl on 05.26.14 at 8:11 pm

I’m with Smoking Man on this one- excellent points!
My dad was giving me charts explaining compound interest, automatic regular savings, etc in my teens (which I largely ignored for years), and I’d add as others here have info about taxes and how to work out percentages. Most of all- and I had it drilled into my head by my mum- stay out of debt! Hard to explain to the younger generation that have always known access to credit cards.
But to get back to Smoking Man’s point- teach kids that a simple life with low consumer habits and lots of exercise can make you much happier than trolling malls for junk you don’t need. As an adult they don’t need to depend on a money-sucking car, own a big house, keep up with the Joneses. That gets you nowhere but in most cases, debt and stressville.
Oh and get a (shelter/ rescue) dog, just because. The benefits to your mental and physical well being far outweigh the costs. Best investment ever. Along with ETFs.

#68 Smartalox on 05.26.14 at 8:14 pm

Not a Top 10, but some good lessons / axioms:

1) How to balance a budget. This is not difficult, it starts with being able to add and subtract. Get the kids to write down their spending for a week (or to work with their parents to determine the portion of household expenses attributed to them) for key line items such as food, shelter, utilities, transportation, savings, donations, etc., and have them sum those costs over a week, a month, or a year. Also, show how those costs are deducted from net income, and what’s left over.

2) Have them put this into practice using some form of simulation. Set their income below what it costs to cover all expenses at once, so that they learn not just how to make the numbers add up, but also how not to live from paycheque to paycheque. To enhance the simulation, consider adding in a cost associated with repaying a large purchase (a vehicle or trip) on a credit card. Or ask them to make decisions about how to spend their money (clothes vs. food?), and ask them to justify their choices.

3) Teach the kids that “Nothing that is good for you has to be marketed / advertised”. Conversely, almost everything that is marketed to you is intended to make money for someone else. Get the kids to collect examples of slick marketing pitches, (like some of the condo ads Garth profiled on this site) and break down the fine print of some of those ‘deals’ could work out for them.

4) Explain how marketing affects the costs of ALL products: such as how clothing items with ‘label’ can cost cost more than generic items, or how packaged foods cost more than fresh fruits and vegetables.

5) The Globe and mail has a series of articles profiling different careers and the salaries associated with them. This may be an eye-opener for students, particularly how the earning potential of some jobs stacks up against the budgets that they developed.

6) Examine events like the great depression, and its effects on normal, everyday people. Show how leveraged investing causes bubbles to form, and what happens when the bubble bursts. Show how booms and busts are cyclical, the Crash of 1989, The tech bubble of 2001, the housing bubble in the US, all share the same psychology.

Some words of caution though:
1) Do as much as possible to avoid putting the kids in situations where they compare themselves and their family incomes. It will be divisive, and with kids it can get ugly.

2) Expect that parents will complain and resist the lesson plan. People are probably more defensive about teaching kids about money than they are about teaching kids about sex.

#69 crowdedelevatorfartz on 05.26.14 at 8:21 pm

@#66 Marquis
However, you forgot “avoid flatulent people”

#70 will on 05.26.14 at 8:23 pm

present value
future value
compound interest
how mortgages work
what are stocks
what are bonds
what is a company
how to do basic research on a company
price vs value
dividends, interest, and capital gains

#71 TurnerNation on 05.26.14 at 8:23 pm

My fav undergrad course was Business Law – taught by a practicing lawyer. Gave me tools (ammo?) for life and never shy from such matters now. Lots of tort, some criminal, and some contractual.
Never wanted to become a lawyer because, well, you know, who wants to become one of ‘them’. :)
Interestingly several Unis offer a 1-year part-time LLM – designed for non-lawyers.

#72 SCIBADUBADEBUMBADO on 05.26.14 at 8:25 pm

Two books among others should be required reading in all schools:
1. The Richest Man in Babylon: George s. Clason. I found this book in my high school library when it was called “The Babylon Course in Financial Success.” this book is deeply inspiring to anyone who reads it.
2. Think and Grow Rich. By Napoleon Hill. There is a new comic style version of this book. I gave it to my kids for Christmas this year. They loved it.

#73 Julia on 05.26.14 at 8:26 pm

I think it’s best to start teaching kids early. My teens have allowances, jobs, bank cards and credit cards. They won’t be going to university and signing up for every card thrown at them because we’ve explained money, debt, interest, etc and have demystified credit cards. I’m not saying they’ll never mess up, but I think they’re less likely to mess up than kids who aren’t taught anything about finances.

#74 Maxamillion on 05.26.14 at 8:31 pm

Our education system needs to devote more time teaching Shakespeare so people can run around claiming:

“i hast nay no chinks but liveth in a nice house with a m’rtgage with mineth ugly jointress” Ya Baby Ya

#75 Bill Gable on 05.26.14 at 8:32 pm

1.DEBT is death.

2. Always HIRE an expert to manage your money. One that you have vetted and is fee based.

3.Save at least 10% of your GROSS, and invest it, with the guidance of your advisor.

4. Never trust a single word that comes out of a [email protected]’s mealy mouth.

5. Always be ready for anything, by having 6 months in ready cash, in case TSHTF (*and judging by what’s happening in Donetsk – I give it about a week).

6. Always get your tax done professionally. Their fee is deductible and a great accountant will be a fantastic ally as you age. *Don’t try and fudge on your Taxes either – the Government is strapped and so they are nickel and diming and going through the weeds.

7. Mortgage = french for Death Contract. * I have mentioned this before – but I think I should repeat it. I look up at our gorgeous Apartment building (where we RENT) and it’s half empty. The cheapest apartment of the 4 for sale = $1.25 million. Been on the market for at least 2 years. OUCH.

8. Read and learn something. Read, study, but don’t accept anything as pure fact. This is an era of flux.

9. You believe the Chinese will save us – OK – how’s this for a quote from Nicole Foss – “The government issued a batch of data overnight that shine yet another and clearer light on what is going wrong in the Chinese economy. The numbers are so ugly you wouldn’t want to feed them to your dog.”


10. If you buy a pre-build ANYTHING, you are committing financial hari-kari.

#76 Mister Obvious on 05.26.14 at 8:33 pm

My father was a smart guy. He avoided debt (hated it, actually) and lived well within his means.

When I was about seven and my sister was ten we wanted a dog. A black cocker spaniel to be specific. My dad said a cocker spaniel would cost $50 and if we saved up $25 he would add another $25 and we could get a dog.

Between my sister and I, with tiny allowances and doing odd jobs for neighbours we were lucky to get our hands on $3 a week so it as going to take some time.

Dad made it clear that anything less than $25 was not going to cut it. It had to be the full $25.

We took a little tin box, wrote ‘dog fund’ on it, and started to put our quarters and dimes in whenever we could. It took four months to amass $25 but dad was as good as his word and we got our dog.

In the summer of 1967 between grade 11 and 12, I worked in a lumber mill and saved enough money to buy a 1958 Chevy. However, it took all my money and I came up short for buying insurance.

My father loaned me the money, but it was just that… a loan. I had to pay it back and I certainly did. He wasn’t a man to let you off the hook easily.

So, was he a miserable old skinflint or a teacher of the highest order? You decide.

#77 William Bell on 05.26.14 at 8:34 pm

1. Kids need EQ Skills nowadays : Be capable to evaluate a transaction thoroughly. (ie.: Impulse buy? Peer Pressure? Truly a HOT deal?)

2. Be capable to evaluate “Need” vs “Want” vs “Award”

3. Knowing the true difference of risk tolerance vs straight-out gambling

4. Why investing early matters: Fundamental of mathematics (compounding interest) + market statistics + market behaviors/history

5. Importance of financial independence: Working with: passive income, capital gains, earned income, etc

6. Taxes: Sheltering techniques, compliance and regulations, silent-perks, corp vs individual vs self-proprietorship, RRSP, TFSA, RESP, CPP

7. Debt management: Good debt vs bad debt; amortization, interest rates, repayment planning

8. Investments & How-To’s: EFT, Bonds, Stocks (put/call/short/options/buy-and-pray), REIT, Dividends, DRIP, Currencies

9. Know how to analysis the news, world events, relationship between countries and markets

10. Understand the importance and capability of being charitable, supporting communities, “give back”, help the others.

#78 Vamanos Pest on 05.26.14 at 8:35 pm

#8 Biltong
I’d also have something on the fundamentals of risk: identify, quantify, and manage. (As it CANNOT be avoided)

#79 will on 05.26.14 at 8:38 pm

A few more:

tax efficiency
how to do percentages
barring street walking and selling dope, IT REALLY DOESN’T MATTER what you do for a living

#80 SCIBADUBADEBUMBADO on 05.26.14 at 8:38 pm

Kids should be taught what poison credit really is.

From the banks point of view they would resist this with all the marketing muscle they could afford.

For example say you owe $10,000.00 on a credit card at 20%. You owe 166.66 in interest every month.

Suppose you pay double that on your card. say $333.33.

From the banks point of view they are really making 100% interest or a 100% profit on the money in play.

They know you will spend the extra $166.00 during the month and max out your card anyway.

To them the original $10,000 investment is simply a bondage cost/asset that comes back to them if you ever , ever get out of bondage.(unlikely)

Meanwhile the money in play keeps making them a tidy 100% per month in interest.

#81 Tulip Collector on 05.26.14 at 8:41 pm

Another thing that should be added to the 10:

History of bubbles and speculative manias: start with with the old Tulip craze, 1929, Japan 1990, dot com, US/ Spanish/ Irish real estate, etc.

#82 TurnerNation on 05.26.14 at 8:41 pm

Bore them to tears with the old saws:

– Don’t buy a pig in a poke
– Tortise and the Hare
– Save for a rainy day
– Make hay while the sun shines
– A dollar saved is a dollar earned
– A food and his money…
– Early to bed early to rise makes…
– Buy War Bonds
– Penny wise, pound foolish. (What’s a penny?)
– I don’t give a tuppence

(This curricula is old man approved)

#83 Chopper on 05.26.14 at 8:44 pm

1) All about Mortgages
3) ROI
4) Compound Interest
5) Simple Interest
6) Balance Sheet
7) How to Budget
8) Taxes
9) Good debt vs Bad debt
10) Fiscal responsibility

#84 Smoking Man on 05.26.14 at 8:44 pm

Randy Get all the staff at your school together and read this.

I can see the “Oh my’s” Please film they’re it and post it on you tube.

Then pull a George Costanza and do the opposite if you care about your students.

Bring back the strap, anyone caught with a yellow highlighter , you know what to do

Hate mail more than welcome, like the blog says.

You can’t bend what I can’t offend..

#85 Herb on 05.26.14 at 8:44 pm

My brain revolted and my gorge rose when I read the “official bumpf.” That magisterial mess of meaningless prose surely must rate as one of the greatest accomplishments ever produced under the auspices of OISE, the “Ontario Institute for Studies in Education”.

Never mind what “financial literacy” might be, what it might entail, what must be taught to achieve it, how it is to be taught, and how the results are to be measured and verified. Naw, all we need is a wide sweep across all teaching subjects, where there no doubt will be, or “may” be, broad exposure to this undefined “financial literacy”, spreading it by osmosis and meeting any teaching requirement.

We are not paying teachers who have to deal with this crap enough, and the “specialists” who develop it way too much!

#86 Chopper on 05.26.14 at 8:44 pm

And make them read this Blog everyday.

#87 devore on 05.26.14 at 8:45 pm

Basic financial concepts are great, of course, and should be the foundation of any financial literacy program. Some basic accounting should be thrown is as well.

But equally important are the “soft” skills. Namely, psychology, and common investor pitfalls. If you go through your life believing things work like an Econ 101 supply/demand chart, you’re in for a lot of disappointment.

People do not make rational decisions. People do not have equal access information. People have different values and goals. People are loss averse. People are risk averse. People cannot estimate risk accurately. People buy high, sell low. People overvalue sunk costs. People get emotionally attached to investments. People don’t want to lose face or admit fault. People are proud and vain. People can’t grasp very large and very small numbers. People can’t conceptualize compounding and non-linear growth.

Oh, and so much more. Most importantly, people have difficulty recognizing these faults and biases in themselves, so it is important to “tag team” important investment decisions, such as with a trained adviser.

#88 SCIBADUBADEBUMBADO on 05.26.14 at 8:45 pm

I used to know a Taxi Cab owner who owned over 20 taxis.
He rented them to financially illiterate drivers who invariably got behind in their rent.
This was perfect because they could not change taxi owners unless they paid off the old debt. These men were never pressured to pay any amount unless it got over $2000.00.
So for a mere $2000.00 The taxi owner got indentured slaves who had to drive poorer standard cars if they were given to them.
Drivers who were sharp and paid rent on time were the worst customers to him because they always shopped around for a better rent rate or a nicer car to drive.

#89 Buy When They Cry, Sell When They Yell on 05.26.14 at 8:47 pm

1. Cash flow management – Your in-comes must be higher than you out-goes.
2. Debt – Use debt only for appreciating assets. If you must use debt for other purposes eliminate it as quickly as possible.
3. Saving – Put away a portion of your take-home income EVERY time you receive some.
4. Protection – Insure your most valuable assets, your ability to earn an income is your most valuable asset when you’re young.
5. Investing – If you can’t do it pay someone to do it for you. Learn how to much to pay.
6. Optimizing – Tax efficiency, asset distribution, etc.
7. Freedom – Ultimate goal of all other lessons, passive income > expenses.

#90 Smoking Man on 05.26.14 at 8:48 pm

#76 Mister Obvious on 05.26.14 at 8:33 pmMy father was a smart guy. He avoided debt (hated it, actually) and lived well within his means.

You know how rich people think.

We need to Expand our means every day, And enjoy life more..

#91 SCIBADUBADEBUMBADO on 05.26.14 at 8:53 pm

Gold is the currency of Kings
Cash is the currency of merchants
Credit is the currency of Slaves

#92 waiting on 05.26.14 at 8:54 pm

my 2 cents worth:
I hope the aforesaid economics teacher is starting with kindergarten students. According to experts (yeah, I know …) anyway, they say a child’s basic money attitudes are set by age 7. Maybe not all their understanding, but the basic attitudes.
I remember 3 things my parents did that stuck in my mind. 1). my dad had me drop off the utility bill payment every month for him because it was on my way to my high school. For a 15 year old, it made me realize the costs of maintaining a home. 2.) When I got my first part-time job at 16, I was showed how to do my own taxes – easy at that age because they were simple. 3.) I was spending every penny of aforementioned part-time job until my mother made a deal with me to take me with her on a trip if I was able to save up the spending money and she would cover airfare and accommodation. It taught me to save for the big things by not wasting my money on “stuff”.
My big 3 for the economic students would be 1.) Compound interest 2.) figure out a car loan 3.) figure out a student loan. – anything practical.

#93 Ali on 05.26.14 at 8:57 pm

1. Currency exchange hedging strategies
2. Stock option pricing
3. Bitcoin
4. Monetary policy tools
5. Cascading derivative futures
6. Futures-backed swaps
7. Property index notes
8. Total return swaps
9. Marxism
10. Communism

#94 Nemesis on 05.26.14 at 9:04 pm

#CurricularAddendum. #PracticalShibbolethsForPersnicketyPedagogues. #RayCharles. #JonathanSwift. #ThereAreNoneSoBlind…

Never forget, Randy… PoliticalEconomies, properly devised, should serve Mankind. Not ViceVersa.

[NoteToMr.Obvious: I’ll take Door#2.]

#95 Smoking Man on 05.26.14 at 9:09 pm

OK garth you brommed the link on here, fine… I plajurized it so what.. Dennis and I are buddies..
But a wize instinctive move on your part… Your smarter than average bear.

Please send it to randy… To be a fly on the wall..

#96 Joe2.0 on 05.26.14 at 9:12 pm

If you want to teach your kids the value of money make it fun.

Do a movie night theme that starts with the kids writing out the amount on your checks due monthly, hydro, gas, sports, trips, toys, phones ….

After that pay them their allowance and discuss how expensive it is to live, from there fire up the popcorn and plug in a flick.

They teach our kids to be consumers not conservers .

#97 jc on 05.26.14 at 9:26 pm

Lots of great ideas so far. My suggestions:

1) time value of money
2) basic accounting statements
3) supply and demand
4) market failures
5) fiat currency and money supply
6) balance of trade and comparative advantage
7) taxation
8) household budgeting
9) compound interest
10) insurance

Anyone under 20 who has even a casual knowledge of these concepts will be much better prepared for the rest of their (financial) life than most.

I wish I’d had this education when I was young, if not from school, then from the old man.

#98 Eric on 05.26.14 at 9:27 pm

Part of the problem is that people are becoming conditioned to have no impulse control. They see a car they like – they run out and buy it. The salespeople jigger the numbers to reduce the monthly to make it seem affordable, the cost being more payments. Similar story for housing. And don’t get me started about all sorts of other things that people just “must” have..

My wife watches those housing porn shows – a lot of them set in Canada. It blows my mind the number of first-time buyers who have this long list of must-haves. They want the granite, the stainless steel, and everything else that goes along with it. They see a slightly older but clean and functional house, and they turn up their noses and complain that it is “dated” and “needs to be gutted” – just because they don’t like the looks. Evidently none of these people ever heard of a starter-house. Or the people who have don’t appear on these programs.

#99 lala on 05.26.14 at 9:27 pm

How to you describe half bottle of wine:

1. Half empty
2. Half full

#100 Son of Ponzi on 05.26.14 at 9:27 pm

Ecconomics 101 should be mandatory in Kindergarten.

#101 Pearls of Wisdom on 05.26.14 at 9:29 pm

Here are some salient tips which have worked for me. My hope is that all kids today would get this message:
1. Exploit their talents to make as much money as possible.
2. Be self-employed and write everything off.
3. Teach them to save 50% of their gross income. Do whatever it takes to achieve this, be shrewd. Shop at Sally Ann; garage sales; have room mates, etc. Life will be fun and interesting
4. Don’t believe everything you hear or read.
5. Rent. Do not buy.
6. Don’t watch television.
7. Get out in nature. Lots.
8. Keep this up for 15-20 years and they will be retiring young and living free and easy while their friends will be debt-slaves, happy and sane.

#102 Pearls of Wisdom on 05.26.14 at 9:30 pm

Oops. They will be happy and sane. Their debt-slave friends will not.

#103 Smoking Man on 05.26.14 at 9:31 pm

Two words the annoy the shit out of me.

“I Think ” used before expresing an Idea.

I Think we should focus on

It’s such a cop out.

I perfer words like..” This is what we are going to do to fix the problem . ”

It’s the difference between winners and losers.

Listen for it in campaign speeches.

#104 Dwilly on 05.26.14 at 9:33 pm

You must be prepared to spend less than you earn.

#105 takla on 05.26.14 at 9:35 pm

Realize the banks and debt are not your friends

Learn the art of frugality

Pay yourself first when the eagle craps

make sure all your debts are up to date

I believe all men/ladies get at least 3 great oportunities in their lives,reconize them and snatch them when they come along

Always have some PM’s just in case the shit hits the fan

#106 Brian on 05.26.14 at 9:35 pm

Teach them the rule of 72

#107 b on 05.26.14 at 9:41 pm

Since I simply love Warren Buffet’s sayings, here are two of them:

On Spending: “If you buy things you do not need, soon you will have to sell things you need.”

On Savings: “Do not save what is left after spending, spend what is left after saving.”

#108 Nemesis on 05.26.14 at 9:42 pm

#GrandFinale. #There’sAlwaysJustOneMore. #ShinolaVs…

#109 Hawk on 05.26.14 at 9:42 pm

No: 11 – Watch out for THE ENEMY WITHIN.

“A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. A murderer is less to fear.”

NEVER take advice from a friend or relative whose affection is unproven.

#110 Hawk on 05.26.14 at 9:46 pm

And number 12:

“Timeos danaos at dona ferentes”…..(I fear the Greeks, especially when they give me gifts)

So scrutinize the motivation of those that layout baubles and trinkets in order to lure you in to the swamp. A possible example might just be [email protected]

#111 Bobby on 05.26.14 at 9:48 pm

The best thing you can give your children is your time. What you do with that time will undoubtedly have an impact on your children as they grow and mature.
My kids had debit cards at 12 and credit cards at 15 and learned to use both responsibly. Many friends. Said I was crazy but I asked how. Do you expect them to learn. Bills are paid at the end of every month and I have taught them to understand and appreciate value. Credit is a very powerful tool if used wisely. Sadly, the people that should be teaching their children, the parents, haven’t got a clue about money.

#112 Smoking Man on 05.26.14 at 9:49 pm

#105 takla on 05.26.14 at 9:35 pmI believe all men/ladies get at least 3 great oportunities in their lives,reconize them and snatch them when they come along

Always have some PM’s just in case the shit hits the fan

3 in a life time… Try 3 a week..

If I wasn’t such a drunk and lazy bastard.. I would capitalize on them all.

One big bet a month, 1 out of 3 pay off…

#113 Dual Citizen In Canada on 05.26.14 at 9:50 pm

If your kid is a boy, get him a financial advisor for his 16th birthday. If your kid is a girl, tell her to go look for a boy that just got a financial advisor for his 16th birthday. Sweet 16th, either way.

#114 Smoking Man on 05.26.14 at 9:52 pm

#109 Hawk on 05.26.14 at 9:42 pm“A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. A murderer is less to fear.”

NEVER take advice from a friend or relative whose affection is unproven.

So what you’re saying if the don’t swallow, don’t trust them….

God damn,, you’re right… Hawk I’m a fan now..

#115 Son of Ponzi on 05.26.14 at 9:53 pm

Teach them the golden rule.
He who has the gold, rules.

#116 Sparky55 on 05.26.14 at 10:06 pm

1) It’s not all about the monthly payment

Looking at financing details can yield some pretty scary numbers over time.

A good example is an $99 bi-weekly payment for 8 years, for a 4 wheeler deal they had/have around here, which totals $20.5k. Apparently they were selling like crazy.
MSRP was $11 or $12k, and being MSRP, has some haggle room.

2) Time value of money
– Compounded growth
– Compounded losses (lost opportunities from money spent, also money not invested)
– Inflation

3) Debt, debt, and debt, because it seems to be severely misunderstood.
This is especially evident as people are bragging about the staggering amounts of debt they have.
Also, note the good (eg money generating) vs bad debt.

#117 lala on 05.26.14 at 10:07 pm

Canada/US is good to make loot but the life is too fast and suck. Teach your kids to make money here and to spend them somewhere else where they can enjoy the life, somewhere in Mediterranean for example. Damn I miss OUZO.

#118 WhiteKat on 05.26.14 at 10:08 pm

Many of you have excellent suggestions regarding what to teach our Canadian children in order to have successful financial lives in Canada. I have three to add:

1. Don’t become a ‘US person’ unless you actually plan to live in the US.

2. Don’t marry a ‘US person’ unless you actually plan to live in the US.

3. If you already ARE a ‘US person’ (ex. US birthplace, green card, parent a US citizen), renounce US citizenship ASAP, unless you plan to live in the US.

When I was a young person, it was considered ‘lucky’ to have US citizenship, living outside USA, as this opened up doors in the greatest, country on earth, in ‘the Land of the Free.’ IRS never hassled such lucky people, and few realized that according to USA law they were also US taxpayers , no matter how tenuous their US connection. Times have changed – a lot.

#119 Spiltbongwater on 05.26.14 at 10:08 pm

How to you describe half bottle of wine:
1. Half empty
2. Half full
#99 lala on 05.26.14 at 9:27 pm

The bottle is too big.

#120 Sugar Shane on 05.26.14 at 10:09 pm

The borrower is slave to the lender

#121 brainsail on 05.26.14 at 10:18 pm

The end result of getting a good education is that you learned how to learn, a process that doesn’t end until the day you die.

#122 Mr Buyer on 05.26.14 at 10:18 pm

Harvest the first 5 to 15% of gains and get ready for the next opportunity. Let the speculators and big boys top the market. Make acquiring money a hobby. Life and death situations should be avoided as they are often overrated. Even the craziest daredevils I knew in other arenas would not pull the trigger on a situation that had less than a solid 75% chance of success. Risk with little money is very different from risk with a larger cushion. Start early.

#123 EIT on 05.26.14 at 10:19 pm

#1 Diversification

#124 Bob Rice on 05.26.14 at 10:19 pm

I can assure you all that financial literacy is NOT taught in our schools… and most teachers idea of investing is a GIC at best….

#125 ILoveCharts on 05.26.14 at 10:21 pm

WhiteKat: Can you please elaborate on: “Don’t marry a ‘US person’ unless you actually plan to live in the US.”?

#126 EIT on 05.26.14 at 10:22 pm

@ #99 lala

The bottle is twice as big as it needs to be

#127 OttawaMike on 05.26.14 at 10:23 pm

#19 Aggregator on 05.26.14 at 6:45 pm
GM Recall:

Notice how the US Gov sold their shares immediately prior to the scandal?
Cnd govts are still holding some but offloaded $1.1 billion in shares back in 2013.

#128 Mr Buyer on 05.26.14 at 10:24 pm

Understand that human desire and beliefs are durable goods that can be banked upon. The desire to profit will perish slightly before the desire for water and anybody will be able to see the situation coming long in advance.

#129 Son of Ponzi on 05.26.14 at 10:31 pm

#93 Ali on 05.26.14 at 8:57 pm
1. Currency exchange hedging strategies
2. Stock option pricing
3. Bitcoin
4. Monetary policy tools
5. Cascading derivative futures
6. Futures-backed swaps
7. Property index notes
8. Total return swaps
9. Marxism
10. Communism
You forgot ETF’s.
And also a primer in High Frequency Trading should be beneficial.

#130 espressobob on 05.26.14 at 10:32 pm

# 115 Son of Ponzi

Gold is not legal tender!

#131 Bottoms_Up on 05.26.14 at 10:32 pm

#1 the cost of higher education vs. (realistic) future earning power
#2 the costs of owning (and maintaining) a home
#3 the costs of buying a new car
#4 the costs of having children
#5 the costs of getting divorced
#6 the cost of saving for children education
#7 the cost of weddings
#8 the cost of having a pet
#9 opportunity cost of your choices
#10 the costs of not reading the fine print (i.e. bank travel insurance policies)

#132 Son of Ponzi on 05.26.14 at 10:33 pm

How about some history lessons about the Tower of London.
Teaches them what happens to people who borrow too much.

#133 Slim Pickens on 05.26.14 at 10:36 pm

The CSC Securities course is a good one to take in high school or college.

#134 Chaddywack on 05.26.14 at 10:39 pm

Teach them that if you buy a house for $700,000 and sell it for $750,000 you did NOT just “make $50,000.”

#135 to_be_frank on 05.26.14 at 10:43 pm

Literacy in basic math is key, for without that you can’t go far in teaching financial literacy. A key mathematical concept to understand is the exponential function. This applies to many things in nature in addition to compound interest. It also explains why things move in cycles, when exponential growth meets limits of resources or supply. This can help to illustrate the cyclical nature of markets. Finally, people need to be educated about history as it pertains to finance and economics, because that helps to build perspective about what is happening today.

#136 Hawk on 05.26.14 at 10:57 pm

#114 Smoking Man on 05.26.14 at 9:52 pm

LOL :-)

#137 Vamanos Pest on 05.26.14 at 10:58 pm

…and currency and the fundamentals of monetary policy

#138 Retired Boomer - WI on 05.26.14 at 11:01 pm

Interesting Challenge tonight.

Times, and circumstances HAVE changed. I did not see in the column what ages he teaches, so let’s assume ‘early’
high school.

1. Do NOT automatically assume any education beyond high school will be worth the cost of obtaining.
(Trade school vs. higher education – what’s the purpose here?)

2. Understand the various types of “FRAUD” that is seen in the typical free markets, especially in ‘regulated’ institutions. (See Bill Black’s history with OTS in the U.S.)

3. The rule of 78’s (used in determining borrowing costs), the rule of 72 (used for calculating savings rates returns).

4. Effects of Compound interest, as well as the impact of compound savings streams. Time IS your friend if you act now, time is your enemy if you do nothing.

5. The effects of ‘costs’ over time, especially on one’s saving vehicle over a savings lifetime.
(Impact of “FEES” over say a 40 year saving history, or how to lose up to 2/3 of your “savings”)

6. Definitions of RISK in today’s world.

7. The realization that YOU are responsible for your own choices, and decisions- including your decision regarding this course’s materials – internalize the idea, or piss them away – at your peril only – not mine!


These ideas are prejudiced by a lifetime of experiences, and expressed a retired 62 year old geezers in the U.S.
International Translation NOT always understood

#139 Bob dog on 05.26.14 at 11:05 pm

The American dream on YouTube is all you need to learn.

#140 Kenny on 05.26.14 at 11:07 pm

A large liability for anyone, male or female when you have more assets than your partner is being in a cohabiting or married relationship.

If the relationship dissolves through no fault of your own you could loose a lot of accumulated wealth and be subject to paying a lot of money for your ex spouses tastes.

The divorce laws in Canada make many well off people think twice.

Pick your partner well. And get a fair prenup with proper legal representation for your partner to make it fair.

If he or she has an issue with a prenup maybe it is just all about the money.

This should be taught in schools. In shop classes and home economics! I have seen to many hard working coworkers made miserable by a leech of an ex partner that Canada’s laws determined deserved more money from they were ever worth!

#141 Folded card on 05.26.14 at 11:21 pm

Use the folded card problem to start the compounding lesson. If you take a 1mm piece of card, if you could theoretically fold it 100 times (or double 1mm a hundred times) how high would it be?? Get them to try and estimate.

The answer is wider than the observable universe. It would be 133.9 billion light years across. The universe is about 93 billion light years across in comparison.

#142 Ontario's Left Coast on 05.26.14 at 11:22 pm

Forget about the schools teaching financial literacy, it’s not their job. Get off your butts, parents, and do yours. I drop knowledge on my kids (10, 13 and 15) every day and teach by example. They laugh it off but I know they’re listening. Live within your means, save because nobody’s going to do it for you, pay your CC balance in full every month, winners own assets and lowers own debt, get a good education (sorry Smokey) and follow your passion. And on it goes… It’s easy,unless you’re an idiot…

#143 TheCatFoodLady on 05.26.14 at 11:26 pm

Too many good ideas here to add more – Randy can cherry pick those that will provide a solid grounding in fundamentals for the age group he’s teaching.

My only advice is to use examples relevant to the kids – whatever their age. If they want their own smart phone for example, a ton of lessons can be built around the acquisition of one. Buying at once, on credit & there, various forms of credit can be explained. The hidden cost of add ons – total price versus monthly carrying costs. Each student can pick their own ‘desired object or experience’ & over the length of the course, a ton of lessons can be applied.

And Randy – thank you for caring about your students’ financial futures. Too few teachers go beyond the OISE & equivalent fuzzification & they certainly aren’t personally qualified to teach anything about fiscal literacy.

#144 Obviously on 05.26.14 at 11:28 pm

Compound interest.. Period. It will either work for, or against you.. Pick one

#145 Nancy Drew on 05.26.14 at 11:33 pm

If your kid is a boy, get him a financial advisor for his 16th birthday. If your kid is a girl, tell her to go look for a boy that just got a financial advisor for his 16th birthday. Sweet 16th, either way.

What a dumb ass comment.

How about get the girl a financial advisor at 13 because she is mature enough to understand.

#146 dan on 05.26.14 at 11:34 pm

Maybe to import some teachers who are capable to teach math and think math is not negotiable skill…
Because you know teachers in this country teach everything. I was teaching way back at high school and a college and I was instructed that I can learn a lot from my students in high school and in college they told me they prefer socratian method when on student question I am supposed to answer with a question. But benefits are good and pensions are fat and this days teachers kids inherit they employment (like is common in police). Also try to tell the truth how Canuck kids are doing on some international competitions…

#147 Christopher Lackey on 05.26.14 at 11:43 pm

3 rules i’ve learned to live by

-there is no return that does not involve risk. However, the greatest
risk does not always equal the greatest return

-learn to embrace what is unpopular. By the time your hearing about the great returns on something the smart money is usually on its way out. Conversely, media noise about how terrible something is usually indicates opportunity.

-beware of gurus, pundits, and prognosticators. You can find extreme bulls and bears and everything in between to fill any narrative you care to believe. The only person you can trust is yourself. Learn as much as you can but even then you, like everyone else, can never be right 100 percent of the time.

#148 Msj on 05.26.14 at 11:43 pm

Some good ones here but I would add: hate the price and not the asset.

Don’t be a permabull or a permabear on any asset.

#149 Freedom First on 05.26.14 at 11:46 pm

Guys, make sure you learn all about the dangers of the gold diggers and how they work. And be very careful with both the torts and the tarts too.

Gals, make sure you learn all about the dangers of the free loaders.

Guys and Gals, avoid becoming a victim to being insanely house horny and being Financially screwed out of both your RE virginity and Financial Balance at the same time. Always keep your focus on staying financially diversified, liquid, and balanced. And personally, I think no debt works well 100% of the time.

Lastly, learn who are the unethical pushers of debt and financial distortions to the financially illiterate consumers of RE, cars, vacations, and anything else they will try to sell you. It is just as important to know the dangers of being financially incompetent and its ensuing bankruptcy, as it is to become financially literate and enjoy a financial peace of mind and stability which is really the most valuable financial asset of all. Freedom First.

#150 Sydneysider on 05.27.14 at 12:01 am

If your pupils know how to play Monopoly, you can set a research exercise based on comparing rent vs buy (with mortgage) strategies based on real numbers(including interest, tax, insurance, maintenance etc.).

Let the students research some areas in BC or Canada via RE sites and decide for themselves. There are rent vs buy web calculators available too, like this one:

Good thing about teaching at a private school is that kids will get on with the work.

#151 John in Mtl on 05.27.14 at 12:01 am

1 – The exponential function!! Albert Bartlett’s video is really eye-opening:

2 – The pitfalls of Marketing; no, your call is NOT really important to us.

3 – Watch and learn from Michael Hudson’s blog and videos.

4 – Don’t work for someone else, be your own boss!

5 – The government and the banks don’t ever have your best interests at heart!

6 – For real financial entertainment, watch Max Keiser on RT, you’ll get it :)

#152 John in Mtl on 05.27.14 at 12:11 am

I forgot to add a most important quote to my previous post:

“The greatest shortcoming of the human race is our inability to understand the exponential function.” – Albert Bartlett.

#153 Tony on 05.27.14 at 12:12 am

Teach economics 101 the barter system. The more people you know the more to barter with to avoid paying unnecessary taxes.

#154 TCE on 05.27.14 at 12:24 am

Teach them the value of having an independent financial advisor. Best financial move I ever made. We hire professionals for so many things, why not have a pro manage your money?

#155 Cici on 05.27.14 at 12:24 am

I say teach them all the basic, and the some:

1. Danger of debt vs. leverage
2. Basic banking stuff: cover it all, and how it works, including GICs, mutual funds, ETFs, and registered plans (RRSP, RESP, TFSA).
3. How to build a budget
4. How to buy a used and new vehicle, and how to lease a vehicle (i.e., the dangers, pitfulls and advantages of each, and how to make the best select).
4. Compound interest and how it works
5. How to shop wisely: Give them a grocery budget and make them come up with a healthy, nutritious and balanced one-month meal plan. Could do the same exercise with a set budget to decorate their first apartment (they’d have to buy a set list of basic furniture items and submit photos of all items found in sale flyers or on Kijiji etc.); extra points would be obtained for any leftover savings that could be directed towards savings and investments.
6. Teach them about different types of life insurance.
7. Teach them the basics of stocks (preferred and regular), bonds and the bond market, banks and how they make money off of interest and loans
8. Teach them the basics about real-estate financials: rule of 90, how much money should go towards downpayment, how much debt to take on relative to income, how to deal with agents…

Basically, everything that Garth has covered already on this blog, but with projects and exercises that are fun and challenging.

That’s it, sorry I’m tired….zzzzzzzzzzs for me.

#156 Nemesis on 05.27.14 at 12:25 am

#BreakfastZen. #”GetOnUp”. #MoFunkInTheTrunk. #NeverBringYourRemingtonToPracticum! #OrWhyJamesBrownStuckToMusic.

#157 Son of Ponzi on 05.27.14 at 12:28 am

There are only 2 subjects that pupils need to study:
Philosophy and history .
Philosophy teaches them to think.
And History teaches them not to repeat.

#158 Tony on 05.27.14 at 12:30 am

Re: #76 Mister Obvious on 05.26.14 at 8:33 pm

Car insurance wasn’t mandatory in 1967 which reminds me no one mentioned how the purchaser of any type of insurance always loses in the long run. Never purchase insurance if you don’t have to. It’s like a casino where the house always wins and you always lose.

#159 TimV on 05.27.14 at 12:31 am

Just how to use a spreadsheet to do financial planning. Everything else — time value of money, various retirement strategies, etc, falls out of that. In addition, the general skill being excercised here (ie, how to logically sort-out a mess a variables and lay them out in a way that can be analysed) is a useful skill that should transfer to other areas of academics.

After graduation, few people will sit down with pencil and paper and do any sort of calculations, but many people will, thanks to Google, have access to simple spreadsheets.

#160 Sasquatch on 05.27.14 at 12:40 am

1. What is money (currency)-made, comes from, and how it is actually debt.
2. Understanding debt. loans, credit cards, PCL’s, mortgages, and leasing (auto).
3. market fundamentals. What is the stock market, how does it work, and explain different areas of it.
4. Financial vehicles. REIT’s, bank preferred shares, bonds, GIC’s, mutual funds etc.
5. Retirement vehicles and strategies. Government pensions, business/union pensions, RSP’s, TSFA’s. teach the mechanics of them as well as pros and cons as well as legalities of them.
6. taxes. Hows and whys. Go into income tax, property tax, GST, PST, as well as taxes on gas, booze, smokes, and gambling.
7. EI. what is it and how does it work for various situations.
8. Banks. What is their role and what are their goals. explain that they do a service, but ultimately exist to serve themselves over individual customers.
9. Companies and corporations. What is the difference between privet and publicly traded companies. what are their ultimate goals and mentality.
10. Personal finances. Hourly vs. salary, net and gross income, metrics of saving (cover the difference before and after the great depression until today), buying a house (rule of 90), percentage that should be spent on principle housing, etc.

How is that for a basic financial literacy course that every person should be taught.

#161 DonDWest on 05.27.14 at 12:49 am

1. Debt is great as long as you convince or manipulate someone else to pay it for you.

2. Get a credit card, use it for groceries, collect the rewards, and make sure to pay off the entire balance the next day.

3. Use a PLC as a checking account to avoid bank fees.

4. Take anything offered for free (or close to free), it can only move in one direction afterwards, and that direction is up. Exploit people’s generosity.

5. Follow the money and get close to the money.

6. Don’t invest in “education” or “training”, it’s often a scam. Some of the richest people in the world are those who offer seminars “teaching” you how to be rich. They’re rich conning suckers like you. When it comes to education, accept the fact you’re on your own. Nobody is going to teach you how to be rich because the rich don’t want more competitors.

7. Observe, look, listen, and ask questions of those in power. Stay in close contact, but never follow and never take their advice. They lie.

8. Learn the art of a good blackmail – it’s the only leverage the poor have over the rich. Find some dirt that will threaten the reputation of a rich person and ask for a high price to keep it concealed. Then reveal it once someone offers you a higher price to reveal it.

9. Get multiple streams of income.

10. Don’t waste time with people who say “I don’t have enough time. . .”

#162 Jon B on 05.27.14 at 12:52 am

Hey Randy, I contacted my local high school a few months ago offering to mentor senior students in business, entrepreneurship, personal finances and general economics. The school’s VP replied saying we’ve never had such an offer. He didn’t know what to say to me. I never heard back. I also live in the vancouver area.

#163 Dr. Ulysses (useless for short) on 05.27.14 at 1:11 am

Many classrooms have computers or the students have laptops in them. If this is the case for you I’d suggest walking them through setting up the pratice accounts many online brokerages have. Then guide them through the research to pick investments and trade. At the end of a semester they should be starting to get an idea and it will spark an interest in at least some.

Like others have said budgeting, interest and how compounding it can work for you or for a lender. Teach them about TFSAs and at least an introduction to taxes.

General budgeting, simple spreadsheet/paper bookkeeping like credit-debit-balance.

Oh and also that if you buy a qp and then divide it up and sell it to your friends you get yours free or at least that’s what some kids told me.

Run away from any moron that calls himself smoking man.

#164 joblo on 05.27.14 at 1:11 am

Batman ears & Camel toes, that’s it!

#165 winterpeg on 05.27.14 at 1:17 am

“Consumer Math” is supposedly a course in the curriculum now. I don’t remember anything like that when I went to school; just algebra, and crap like that. Wish I had had more practical math. Basically, though, a lot of the values you learn about $$$ start in the home. How well your folks manage money will likely be passed onto you unless the school system can intervene.

Since a lot of learning is done on line these days, perhaps “get smarter about” could be a good resource.
Check out the Mutual fund fee calculator. What an eye-opener.

#166 Lobster Man on 05.27.14 at 1:27 am

Teach them the meaning the of word “usury”, and teach them to learn how “usury laws” evolved, and get changed over the centuries. If you live in the US, have you ever wondered why your credit card bills always get mailed from South Dakota, Nevada or Delaware?

#167 Entrepreneur on 05.27.14 at 1:34 am

Just one more at #11 (my dad taught me)…

Before signing papers take them to a lawyer for the pros and cons (does not cost that much). The fine print and the wording are killers.

#168 souvereigninternational on 05.27.14 at 1:57 am

Start by answering the question:

What is money?


What is Value?

enjoy the ride!

#169 Turtle on 05.27.14 at 2:02 am

My financial advice “for starters”:

1. If you are a boy – marry a girl that will live with you all your life and will have kids with you. This is the only way you can save anything … (two paychecks, one shelter, one fridge, one family).

2. If you are a girl (or gay) – … I got nothing.

#170 MEANWHILE IN FRANCE on 05.27.14 at 2:18 am

There’s some actually good and common sense advise in the comments sections! Impressed.

I’d like to add one suggestion.

Travel first, work later. Delay a career by two years to see the world while your standards are lower (hotels, public transport).

Learn to separate needs from wants by watching people in countries that are less well off, yet are more content with what they do have.

#171 John on 05.27.14 at 2:20 am

Here’s one:
How to read a company’s balance sheet.
Great idea Garth, put together a basic curriculum and have it available to all teachers, better yet, Randy should compile all this good advise and make it available to his colleagues as distinct learning outcomes.

#172 R. Kaputnik on 05.27.14 at 4:49 am

Kids should learn early that ” truth ” in advertising is very vague.
Why do some realtors do what they do?….$$$$.
Why do retailers sell the sugar laced crap that they ALL do? Because there is profit to be made.
Buyer beware.

#173 nubbers on 05.27.14 at 5:09 am

How I wish that Randy had been my teacher.

Anyway, this is what I am trying to pass on to my own children:

1. Being able to judge an important transaction without thinking emotionally. There is no point in knowing all the wise stuff above unless you can actually act on it. Unfortunately, I have no idea how to do this, I am still working on it myself.

2. Read the book ‘How to lie with statistics’. It is a short, easy read and an excellent primer in coping with the lies (…err statistics, sorry) that the rather lax media allow to be published.

3. (Very slightly off topic, but I would say relevant) Read ‘Start with No’ by Jim Camp. No so well written and a rather more advanced read, but very good on the psychology of negotiation.

4. Understanding (and working with) the motivation of salesmen and agents. See also points 1, 2 and 3.

5. Develop a sense of scepticism and a contrarian attitude.

#174 Cow Man on 05.27.14 at 6:06 am

Sir Garth:
When students are “taught” by adults who are guaranteed pensions after 30 years of service that are inflation indexed to 70% of their highest five years income, no wonder they know nothing about saving for the future. There is a disconnect between the classroom and real life, because of the “wealth” of the teachers.

#175 Carroll Quigley on 05.27.14 at 6:37 am

Good Morning boys and girls!

The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations. Each central bank…sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.

Any questions?

#176 Advice in Kitchener on 05.27.14 at 6:45 am

Interesting reading, do any of you actually follow your own advice? Kids learn by example, I bet a majority of you have a house, mortgage, two cars, credit cards and are slaves to work. Have every gadget and toy.
I was lucky my parents lived through the real depression when you did not have money. And taught me to save everything and fix it, today if the TV is five years old buy a new one, any appliance today costs more to fix than to buy
There were many excellent posts mainly about what to teach, but no one said how.
How can you teach a child the value of money, the dog example was excellent.
I met a 7 year old who cuts grass, gives 20% to charity pays his friend a dollar an hour and still saves money.
I met a 22 year old guy who spends his paycheck every week.
I met another university student in Montreal no job, came home for the weekend and took a plane????
What happened to buming a ride or the bus?
I learned the best advice about money is when you do not have any.
I don’t really understand how we went through a Great Recession, high unemployment high debt loads yet how many 10 or 15 year old cars do you see on the road or every Coffee shop is full at 2:00 we cannot teach kids about money when they see a rich world

#177 Jimmy on 05.27.14 at 7:10 am

It’s pretty much futile to teach finance to young people. Most of them will simply forget everything they were taught and the others will follow what their parents tell them. Especially when dealing with foreign born Canadians (I know this too well from my own Greek family) they have strong beliefs in real estate to the point of where logic doesn’t even matter. All that matters for them is owning real estate and they will drill it into you. Can’t say I’m confident the school curriculum will have any impact.

#178 Kitchener Advice on 05.27.14 at 7:14 am

Some additional comments
Why out of 174 comments did I remember the dog story. Why did I blank out the posts about Income statements or 72 rule or all the others. Most are very good advice, but…….

Because we need basic stuff that’s easy to understand we need to live within our means ( I cannot find the post above, but its there), save to buy what we want (The Dog)

Once we got the basics move onto the harder stuff

Now we can save for the future, so now teach how to invest, No one mention DRIPS, which surprised me as it is one of the best ways to save money and you can do it monthly and there are zero fees. oh well ETFs are all the rage.

Most importantly our learners need to remember!
Here is a story I was told 40 years ago, and it still sticks in my mind.
My teacher (Business) said I do not understand my neighbour! He will jump into his car and go to the corner store and buy milk. On the other hand I will walk to the corner store. He then asked which milk do you think cost more? And then he smiled I also saved money on a health club.

My point is we need to keep the basics simple to understand and information they will remember a lifetime. But most importantly we need to lead by example.

#179 Kitchener Advice on 05.27.14 at 7:19 am

I feel like writing this morning

So as you commute to work today, look around you how many cars have more than one person in the car.
Can you imagine if we all car pooled, think of the saving in gas, and no more traffic congestion.

Better still take the bus or ride your bike.

Opps I forgot you all live in the suburbs. and have mortgages and are slaves to work.

Just for your information I bought a house so I could walk to work.

#180 maxx on 05.27.14 at 7:20 am

In age-appropriate bites:

1- Save 10 percent of all income: allowance, odd jobs, money gifts, etc;
2- Open a bank account as a class exercise with a youth-friendly bank, explain what interest is and start tracking it on a regular basis, ie monthly;
3- Start teaching them how to use a banker’s calculator in age-appropriate steps: who wants to know what just their allowance will be worth at retirement? Imagine what that means when you start working and saving even more! Ensure that they understand the value of their time in terms of future wealth and the impact of wasted years;
4- Forget about the Joneses and other show-offs- they never learned how to get rich and have nothing to teach you except how to lose your future wealth; ensure that they understand that all debt MUST be repaid and the stress many experience when they don’t from collection agencies; most importantly, teach them that debt means you have to climb out of a time-wasting hole before you even begin to build your wealth;
5- Gambling is extremely dangerous and the overwhelming odds are that you will lose- and quickly. Teach them that many have gone bankrupt and have lost far more than just money, such as family and friends- give examples and statistics;
6- Figure out exactly what your means are and live well below it. Frugality is most easily practiced when young, because when you’re older, a lack of financial resources and deprivation equals deep misery, with no reward for a lifetime of hard work;
7- Review your net worth annually. This habit, which takes so little time, will refocus your efforts by allowing for course corrections, such as determining a new level of wealth to which you aspire;
8- Buy what you can second-hand and develop a network of great sources for bargains. We live in a society of excess everything and so much can be gotten for pennies on the dollar; a banker’s calculator is ideal for projecting the value of what a single bargain can save in real dollars to retirement age;
9- Teach them about tax: retail and income tax and what that means in terms of REAL purchase prices;
10- Teach them that THEY are in control of their future wealth. Teach them that the road to wealth takes effort and devotion, it’s not magic and really does work;
Finally, take them to the local library and check out children’s money books. Read parts of them in class and start discussions, the fun will take care of itself.

#181 Kitchener Advice on 05.27.14 at 7:27 am

Lets move onto Government spending, the ones you all voted for. It does not matter, PC, Liberal NDP they will all take your money and make grand promises. And then spend it on something we do not need

Sorry I forgot most are boomers who love to borrow,

So we need to vote in a government that will spent billions on trains that no-one will take. Spend billions on gas plants that will not heat anything but public debate. Maybe go to BC where they spent Billions on Ferries that would not run on the ocean. How many remember the Arrow fighter jet what the heck did that cost in scrap metal.

Do any of you really have a clue what the government spends your money on? Why is there no tax payer revolt about wasting billions of dollars on mega projects.

Opps I forgot we did not learn the basics, live within our means and save to buy something.

So How can we expect to teach the next generation when we cannot not even control the government we elect.
Sorry Garth I do not want to be doom and gloom, but really this cannot end well.

#182 Kevin on 05.27.14 at 7:39 am

A lot of people have mentioned “compound interest.” If you’re going to be teaching this to students, I would strongly suggest updating the terminology.

Specifically, “compound interest” is not some powerful, magical force that can grow fortunes. Strictly speaking, “compound interest” is the compounding of interest earnings on debt instruments, which historically do not pay high returns (and currently pay almost nothing). If you expect to see magical “compound interest” on a savings account paying 1%, or a GIC paying 1.5%, you’re going to be very disappointed.

“Compound returns,” however, is a much more accurate term, which refers to the compounding of growth of the value of equity assets, and could even include the reinvestment of dividend earnings.

Finally, “compound interest” on debt is largely a myth. People mistakenly portray all debt payments as “compound interest,” but that’s inaccurate. Mortgage debt does not compound in Canada. Nor does credit card debt. The only time “compound interest” is a factor with a debt is if the minimum payments on that debt are less than the interest accumulation. That is, the payment does not even cover all of the interest, therefore a portion of that interest gets “compounded” by being added to the principal, making next month’s balance even higher. To my knowledge, no loans work this way in Canada. This would be a “negative amortization” loan, and while a few of them were floating around in the US before the GFC, I don’t think they ever existed in Canada, and certainly do not today.

#183 Kitchener Advice on 05.27.14 at 7:54 am

This might be a good time to reprint the statistics Garth has written about time and time again. I cannot remember them all but there are lots of good ones and it might be a good time to repost them all

The number/percentage of people who save money
The number/percentage of people who save for retirement
The amount of Debt each Canadian owes
The amount of Debt our governments have, Total Debt 1 Trillion plus can you even understand that number

What about those graphs that go straight up. And there are many more I did not mention.

I ask the question again, how many of you on this blog follow any basic financial advice?????? Because the Statistics prove the majority of you are not following your own advice.

So for the record
I own a house, mortgage free but its more than half my net worth, C minus
I walk to work, A Plus
I save 20% of my income a month A plus
But I spend it each year on holidays D minus
I have $90,000 in TFA, all in Stocks, and I will admit I am nervous after the great bull run A plus
I have RRSPs, 50% stocks 50% bonds B minus could have, should have saved more
I have DRIPS, C minus as I should have done more
I have a company pension plan, I was lucky!
I have 5% of assets Excluding my house in gold, A plus or F depends on your outlook

I own a car that is leased, but I am going to buy it out, for a loan, I plan to pay off next year, Not good C Minus

I have no debts apart from $20,000 borrowed to invest in stock market. Okay I like to gamble. C Minus

I do not consider myself rich, I worry about money and I worry about housing market and stock market and living to 100. My wife does not work, cannot find work . we do not get any government subsidies.

I am sure many of you are much better off, but I ask the question Am I doing this right because I did not follow my own advice of thrifty living.

#184 raider on 05.27.14 at 7:57 am

1.) Time-value of money (why it rots in a savings account)
2.) Different facets of risk (liquidity r., re-investment r., interest-rate r. …) and their conclusions (e.g., diversification, portfolio theory)
3.) Personal finance 101: The benefits of converting active into passive income.
4.) Basic investment vehicles
5.) Canadian tax-law and how to minimize your tax-burden and (i.e. they should make Alex Doulis and Garth books mandatory in school!)

#185 TurnerNation on 05.27.14 at 8:27 am

Last week’s dead pool. There are two others on the list…stand by.

Canadian Broker Byron Capital Winds Down Operations
Byron Capital Markets Ltd. has ceased operations, effective immediately. Thank you for your business and support.

#186 Marty Crane on 05.27.14 at 8:29 am

They need to be able to understand how money (the dollar bills) still represents a barter and trade system. Or it meant to… so they should learn about the history of the creation of currency.

They need to understand the medium through which most economic ideas are translated. i.e the money

#187 Bargains everywhere on 05.27.14 at 8:31 am

#180 maxx on 05.27.14 at 7:20 am

Excellent advice, Maxx! I agree with absolutely everything you say. I think your point number 6 should be repeated over and over.

6- Figure out exactly what your means are and LIVE WELL BELOW IT. Frugality is most easily practiced when young, because when you’re older, a lack of financial resources and deprivation equals deep misery, with no reward for a lifetime of hard work.

You really must live well below your means in order to build a base of savings for the future. It’s much easier to do this when you’re young and don’t mind living with hand me down furniture etc. We lived frugally with old furniture, used cars and camping vacations etc when we first got married while friends drove nice sports cars and took skiing vacations in Switzerland. Guess who’s got more money today? (And we still drive used cars now – just nicer ones!)

The other point I would make is that nobody cares about your money more than you do (except for trying to take it out of your pocket and put it in theirs through fees etc) so be careful with it learn about investing and it will reward you in the long run. These days, my money works much harder than I do!

#188 Dual Citizen In Canada on 05.27.14 at 8:45 am

#118 WhiteKat on 05.26.14 at 10:08 pm
I seeked US Citizenship before I left to come back to Canada with my company. I think giving my family dual citizenship is a huge asset. So what if you have to file every year? I pay around $1000 a year for a professional to do my taxes and with the current US/Canada tax treaty, I come out ahead. Go live in the states for a while so you can see what you are missing. My family and I will always have a choice.

#189 Read The Wealthy Barber on 05.27.14 at 8:59 am

Spend one semester going through The Wealthy Barber. Why re-invent a perfectly good Canadian wheel.

#190 pass off $143 pencil sharpener installations without a hitch. on 05.27.14 at 9:01 am

Ray you took words out of my keyboard !

Darn i am too slow !

2 points for you !!!!

#191 Daisy Mae on 05.27.14 at 9:17 am

#61 espressobob: “‘Home Ec’ was something some of us had shoved down our throats back in grade 9, way back when. We can be thankful! But what happened?”


I remember that course. ‘Home Economics’. It was just a name. Did it actually TEACH us anything about economics?

#192 prairieboy43 on 05.27.14 at 9:19 am

Financial literacy for men?
1) Do not marry a Princess.
2) If you do get married. Make sure both of you are not afraid to get your hands dirty. I.E. do the work.
3) Save 30% of your after tax income.
4) Smile.

#193 Daisy Mae on 05.27.14 at 9:28 am

School systems know what they need to teach and how to teach it. They don’t need our input. But the curriculum must be INTERESTING and ENTERTAINING so that it holds the kids’ attention.

#194 Zeeman1 on 05.27.14 at 9:34 am

Garth, financial literacy is not taught in schools, because if it was the liberals would never get elected.

Besides, what government would want to be hindered by informed and responsible citizenry?

#195 Brandon on 05.27.14 at 9:48 am

I was the first wave of students to go through the new Ontario highschool curriculum (No OAC). I did not learn a single thing about managing finances. I failed a university level math course in grade 11 and took the same one in summer school. The one I failed was all about parabolas and calculus … the exact same course in summer school was calculating mortgage interest. The contrast was mind boggling. There is still a disconnect – teaching students how to calculate compound interest isn’t the same as teaching them to understand finances

#196 WhiteKat on 05.27.14 at 9:52 am

Re: #118 WhiteKat on 05.26.14 at 10:08 pm

“I seeked US Citizenship before I left to come back to Canada with my company. I think giving my family dual citizenship is a huge asset. So what if you have to file every year? I pay around $1000 a year for a professional to do my taxes and with the current US/Canada tax treaty, I come out ahead. Go live in the states for a while so you can see what you are missing. My family and I will always have a choice.”

Like I said, IF you actually plan to live in the US, dual citizenship can be a bonus, otherwise it puts huge restrictions on your ability to save and invest, never mind the annual compliance headache and expense.

To only spend 1000 a year on a professional, you must be avoiding things like RESPs, TFSAs, RDSPs, and Canadian mutual funds. Having any of these, or worse, several of each, can easily set your annual bill into the 1000’s, as I have personally discovered.

RESPs, and TFSA’s are considered ‘foreign trusts’ requiring specific reporting, and the gains are taxable by the USA. Canadian mutual funds are ‘passive foreign income corporations’ subject to convoluted tax reporting (good luck getting the info from the bank that you need) and draconian taxation making them liabilites to own. Every buy/sell kicks off a mountain of paperwork. Even RRSPs, although they have special status in the US/Canada tax treaty, are not recognized as such if you do not file the proper paperwork every year. Every bank account over 10,000 requires a ‘foreign bank account report’ to be filed annually. The capital gains from the sale of your principal residence are taxable by the USA. Passive income (pension, unemployment insurance benefits, investment income, etc) are taxable by the USA. There’s more, but I will stop here.

The point is that WITH CAREFUL planning, IF YOU KNOW WHAT YOU ARE GETTING INTO, some of the traps can be avoided. But if you think you can just live like other Canadians and be a ‘US taxpayer’ at the same time, you will set yourself up for a world of pain, and will not be able to avail yourself of the tax deferred investment vehicles that other Canadians can use – a big disadvantage if you plan to live the majority of your life in Canada.

In addition, screw up, and miss a ‘Foreign Bank Account Report’ (FBAR) or make a minor foot fault on your reporting, and you face some pretty nasty penalties. I hope you have a good accountant that you can trust, and have some knowledge of the reporting requirements and are reviewing his work yourself.

So, to summarize, a young person at least needs to know in advance what they are getting into by having US citizenship, in order to decide whether or not the costs are worth the benefits. And if he/she decides to keep US citizenship, he/she must make sure to avoid those investments that will cause them pain when dealing with the IRS. Also, he/she needs to make sure that their Canadian spouse is OK, with having all joint accounts (balances, transactions, etc) reported annually to the IRS by their financial institutions via the CRA (coming soon with FATCA), keeping in mind that the FATCA reporting had better match the ‘Foreign Bank Acount Reports’ that they are filing annually on their own.

I seriously hope you know what you are doing, DualCitizen, and wish you and your family luck with your decision to be ‘US persons’ while living as Canadians in Canada.

#197 Daisy Mae on 05.27.14 at 9:53 am

#145 Nancy (Re #113): “What a dumb ass comment.
How about get the girl a financial advisor at 13 because she is mature enough to understand.”


Good for you! ;-)

#198 No complaints; nobody listens on 05.27.14 at 9:53 am

As always, with GT’s posts, there is ample evidence of him being a writer who wants to do good. When he calls out and illuminates the stupid, the greedy, and the inept, he is really trying to show them a better way. This blog entry is a very clear example of his essentially benevolent nature. Further evidence of this benevolence is the tolerance that he so clearly practices in allowing certain malcontents (such as the soon-to-combust homo sapiens et alia) to ramble and rant. His tolerance, though, has a limit as he will smite the malcontent’s post with his glorious mallet of deletion should the content violate this blog’s standards of decency.

But, and there is always a but, in his heart of hearts, he must realize that human behaviour being what it is, history teaches us that the folly of men when left to their worst excesses inevitably results in opportunities for a smaller group of people to profit from that folly. If everyone followed his advice, it would probably dilute the benefits that a few of us have realized.

He must also surely be aware that part of the ingenuity of our species is that whenever we think we have found ways to defeat the idiots amongst us, someone comes up with a better idiot. So, my recommendation is to at least provide people with the basics (budgeting, saving, investing) but do it in a low key way so as not to draw too much attention. Avoid expending too much time and effort trying to save people from themselves that could be put to better, more profitable uses.

#199 Holy Crap Wheres The Tylenol on 05.27.14 at 9:55 am

#103 Smoking Man on 05.26.14 at 9:31 pm
Two words the annoy the shit out of me.
“I Think ” used before expresing an Idea.
I Think we should focus on
It’s such a cop out.
I perfer words like..” This is what we are going to do to fix the problem . ”
It’s the difference between winners and losers.
Listen for it in campaign speeches.
“Cogito ergo sum”
Smoking Man you have to live for today, forget about your hatred. “I think therefor I am”
You have to understand campaign speeches are full of Crap. What they say they will do with their power and what they actually will do once in power are positions that are diametrically opposed!

#200 Holy Crap Wheres The Tylenol on 05.27.14 at 10:05 am

#177 Jimmy on 05.27.14 at 7:10 am

It’s pretty much futile to teach finance to young people. Most of them will simply forget everything they were taught and the others will follow what their parents tell them. Especially when dealing with foreign born Canadians (I know this too well from my own Greek family) they have strong beliefs in real estate to the point of where logic doesn’t even matter. All that matters for them is owning real estate and they will drill it into you. Can’t say I’m confident the school curriculum will have any impact.

Neighbor is Greek heritage, grandfather came over and bought property, his father bought property, my neighbor bought property, his children (all four) bought property, its in the blood. However I can say grandfather died and left four income properties and three homes to son, son died and left same properties plus a half a dozen others to my neighbor, my neighbor is sitting with half a dozen investment properties himself. So I said to him one day George what are you going to do with all of these properties when you retire? His words I’m not retiring and I want to buy another property this year! It’s in the blood!

#201 ozy - CANADIANS DESERVE IT on 05.27.14 at 10:10 am

CANADIANS DESERVE IT, you can’t wake them up or make them smarter Garth!

the way they treat each other, the way they see the world, feel inside and act outside – is the driving force.

are you a priest or something, to think you can CHANGE THEM? hahaha


let them drown in financial illiteracy – IT’S WHAT THE DOCTOR PRESCRIBED. I mean, god.

#202 WhiteKat on 05.27.14 at 10:12 am

ooops, re: prior comment, a couple of clarifications here for those who actually might be interested (I know most are not, but I would hate to mislead a few happy ‘duals’ or wannabees)

1. taxation on capitals gains on sale of principal residence has a 250K exemption (i.e. only capital gains in excess of 250K are taxable)

2. re: passive income being taxable (so is earned income), my point was that passive income is not subject to the FEIE (foreign earned income exemption)

3. re: all joint accounts where one person is a ‘US person’ are FATCA reportable is not quite true. Exclusions include accounts < 50K, and most (not all) registered accounts. Note: just because certain accounts are excluded from FATCA reporting does not mean they are excluded from US taxation or reporting by the US taxpayer (for example FBARs are required for all accounts over 10K versus 50K FATCA limit, RESPs over 10K are reportable on FBARs but not FATCA reportable, etc)

4. Also note, that if you have signing authority on ANY accounts (business, volunteer, power of attorney) these are FATCA reportable if they meet the reporting threshholds (over 50K). This can cause you problems as an employee if you require account signing authority as part of your job.

#203 pinstripe on 05.27.14 at 10:22 am

DO NOT make any changes to the current financial teachings. People need to learn from their mistakes.

If/When everyone becomes educated and smart the entire financial system will still function having the rich and the poor. Nothing will change.

#204 ozy -new suburbs were built JUST for immigrants on 05.27.14 at 10:27 am

new suburbs were built just for immigrants

what was scarborough in 1950 is now the 905 area

the truth is, immigrants competing for shelter, wanting to make their dream of a house come truth, lead to 100% in price increase in last decade.

this is the TRUTH. And with construction workers and land available under pressure, it rippled through the whole resale market as well.

think this is not true? ask the 3 million immigrants of past decade to SELL and see where house prices stabilize

notice my non-racist stance, those immigrants came from all continents and races and shared a dream…

too bad it’s failing

#205 JamesKitchener on 05.27.14 at 10:33 am


To the best of my knowledge a principal residence is tax free no matter what the gain. But you have to actually live in the house.

#206 JamesKitchener on 05.27.14 at 10:42 am

Here is what I would teach or preach Strategic First

Financial and Non Financial

What are your goals for today, this week, this month
Next three months next six months and the next year.
Then where do you want to be in 5, 10 ,25 years

What do you need to do to achieve those goals

How are you going to achieve those goals

Adjust your goals as often as needed

Most importantly keep those goals on your desk as a reminder what you need to keep focus on in life.

Every day when you do something look at your goals, is what I am doing now part of my goals, if not then why are you doing it.

Then you can follow the other advice on the blog

Case in point, I was on a retirement seminar and the person asked everyone to write down how old they expect to live for, then they subtracted their age. Then he asked everyone to compare it to how many years they have been working.

My point is that I need to plan the next 25 years, never stop planning.

Good luck!

#207 JamesKitchener on 05.27.14 at 10:48 am

Pearls of Wisdom post 101
Point three needs to be repeated
Teach them to save 50% of their gross income. Do whatever it takes to achieve this, be shrewd. Shop at Sally Ann; garage sales; have room mates, etc. Life will be fun and interesting.

Buy everything on sale you can double, treble your income buy purchasing items on sale.
Even doing small things for example

How many of you bought tomato plants instead of growing them from seeds.

How many of you bake cookies

How many of you preserve food

How many of you teach your children making a Christmas gift is far better than a store bought item.

Every nickel saved is a nickel earned.
The best way to learn is to teach.

#208 Alex n Calgary on 05.27.14 at 10:57 am

I used to do IT at a number of law firms that did tons of real estate, they were all deep into condo’s. You see enough massive real estate commisions go over your desk and people making money on spec’d condo’s over the years, you are gonna get into it as well.

I saw the multiple downpayment cheques from people on spec condo’s, everyone in the firm, the accountants, and legal assistants (who do most of the work in those fiefdoms called law offices) were all chasing it as well.

Not a place to talk about greaterfool, a older woman who had her money into a condo stopped talking to me after I mentioned a potential market correction. Although that was two years ago and nothing much has happened but they all got richer on paper while I had to move to my 4th rental house in 4years after getting booted again from owners moving back, or house being sold, or torn down for infills, but its cool, and by cool I mean it was -42 windchill the day I moved ) cmon bubble decrease!

Stupid affordibility index in Calgary based on little cheaper houses that are so far out of the city center they are useless. Rig pig neighbourhoods with alleys and roads so narrow, the 10,000 super duty pickups parked on them effectivly narrow them to 3/4 lane for you to drive up.

Sigh, this whole thing has been hard, keep it up Garth, our only shimmering star, or we would have bought by now, many of us would have, cmon affordible old house that is slightly close to downtown come to us!

#209 Kilby on 05.27.14 at 11:22 am

As some have mentioned, the “Wealthy Barber” is a good, basic education tool, could be the textbook for schools if tweaked for today’s environment. We paid ourselves first and put away 10% or more from every paycheque and it worked out very well.

#210 Ford Prefect on 05.27.14 at 11:37 am

I have not read all of the many comments so do not know if this famous book has been suggested: “Extraordinary Popular Delusions and the Madness of Crowds” by Charles Mackay, LL.D., first published in 1841. My edition dates to 1980 and cost me the princely sum of $7.95, new!

The cover blurb is entirely accurate and is as follows “If you read no more of this book than the first hundred pages – on money mania – it will be worth many times its purchase”

This book, in my opinion, would be at the head of any list on teaching financial literacy.

#211 Ronaldo on 05.27.14 at 11:39 am

Some of the most financially illiterate people that I have ever met work in the school system itself. That goes for many other professionals in the working world.

Some of the best training I received in high school was opting for the commercial programs over university programs. I took every bookkeeping course, typing, shorthand, law and best of all the industrial arts which taught me a lot about doing things like building, metalwork, drafting, electrical,etc. Got a job and worked all through high school. Kept ledgers of my earnings and expenses. Even dabbled in the stock market as a teenager. Learned about good debt and bad debt. Car loans vs. loans to purchase investments. Learned about leverage, one of the greatest wealth creators there is. Learned that a dollar saved is a dollar earned. The money you save by not having to hire plumbers, electricians, carpenters, landscapers, etc. etc. is money in the bank.

I passed on these skills to my sons. Neither went to university but instead opted to go to tech school to get their training. Both today are very wealthy successful businessmen and I know that they will pass these skills on to their children as well. Both were taught at an early age that there is no free lunch.

#212 PeterfromCalgary on 05.27.14 at 11:51 am

How to spot danger signs that something is fraudulent.

#213 Mak the investor on 05.27.14 at 11:52 am

1. Taxation should be taught at school. When you start making money you should know how it will be taxed.
2. How to identify the right value of a etf/mf/stock when purchasing it? Is the price right?
3. Change of philosophy: How to start your own business rather than how to find a job.
4. How to create your investment portfolio. The rule of 90 can be taught here.

#214 maxx on 05.27.14 at 12:00 pm

#187 Bargains everywhere on 05.27.14 at 8:31 am

My kind of people….head of the class! And well done. ;-)

#215 jess on 05.27.14 at 12:21 pm

Stockbrokers Who Fail Test Have Checkered Records – Wall ……/SB100014240527023048190045794897542…
by Rob Barry – in 123 Google+ circles
Apr 14, 2014 – More than 51500 stockbrokers failed a basic exam needed to sell securities at least once, according to data that Wall Street regulators don’t

Over the first three months of 2012, JPMorgan’s Chief Investment Office,

used its Synthetic Credit Portfolio (SCP) to engage in high risk derivatives trading;
mismarked the SCP book to hide hundreds of millions of dollars of losses;
disregarded multiple internal indicators of increasing risk;
manipulated models;
dodged Office of the Comptroller of the Currency (OCC) oversight;
and misinformed investors, regulators, and the public about the nature of its risky derivatives trading.

Subcommittee reports:

A critical risk model for a portfolio containing hundreds of billions of dollars of financial instruments, operated by the man who developed the model at the behest of the portfolio manager, included flawed and untested components, and depended upon manual uploads of key trading data daily for its calculations. This untested, unautomated, error prone VaR model was nevertheless put into place at a bank renowned for its risk management.

pay to play?

sure it’s the kids?

New Chris Christie Scandal: NJ Gov Gave Pension Fund Billions to Wall Streeters Who Bankrolled His Campaigns
Christie appears to have broken state and federal anti-corruption laws with impunity.

#216 Pete on 05.27.14 at 12:27 pm

A bit old-fashioned, but we should be re-instilling in our young people a healthy fear of debt. As long as you are in debt, your life is owned and controlled by somebody else. It is an enduring mystery to me that so many people find this tolerable for so long. The thing that sucks about debt which seems to escape so many, is that it eventually need to be paid back!

In the generation that grew up in the 40’s and 50’s, the only acceptable debt was the mortgage, and even that was taken on carefully and reluctantly. Taking on debt for consumption was practically unheard of – in any case it is unlikely that any bank would lend to an individual for anything but a house. It would be no bad thing to return at least part way to that kind of ethic.

#217 cramar on 05.27.14 at 12:33 pm

The Susie Ormans and David Chiltons of the world make millions teaching this stuff to those who were never educated in our school system. Just institutionalize the principles they teach. Simple ’nuff!

Then of course, there are ancient Judeo-Christian principles that are just as valid today in the iPhone social-media era as they were in the Bronze Age! For example, “the rich rule over the poor, and the borrower is servant to the lender (Prov. 22:7)”, written approx. 3,000 years ago.

#218 Aj on 05.27.14 at 12:35 pm

“Financial literacy is part of the elementary and secondary curriculum ” – In Ontario I call BS on that one. I graduated in 03, yet I didn’t learn anything relevant in finance until I moved onto Business Admin in Post-Secondary, or through my own personal endeavours outside the school.
Then again it’s probably for the best as the majority of teachers I know/meet here in Ontario are more concerned about getting a pay raise than how a salary raise could cause prices of goods or living expenses to raise as well.

Anyway here are some ideas I have picked up on in the last decade since I’ve escaped the school system:

1. Ask questions and double check to ensure you have everything explained to you so you know AND understand it (especially your obligations).
2. Workout the full costs BEFORE you buy in (Sure you save money on the phone by getting it for free, but what is your total cost of a 3 year plan at $75/month?)
3. Shop around and don’t be afraid to ask if that’s the best price you can get.
4. Research beforehand and go to a variety of different sources to get the full picture.
5. Learn the basics before you do anything (what prefered shares are before you jump in the market)
6 and most importantly – Sit down and set up a plan! Know what your going to do, where your exits are and stick to it!!!

Props to Mak @213 – we definitely need more people my age group looking to become entrepreneurs (they really, really don’t teach that well in high school!!)

#219 bdy sktrn on 05.27.14 at 12:44 pm

Oh and also that if you buy a qp and then divide it up and sell it to your friends you get yours free or at least that’s what some kids told me.
now there’s some real world advice!

#220 jamesKitchener on 05.27.14 at 12:46 pm

Thanks 210 – Ford Perfect
I appreciate book references

I just downloaded the Kindle edition for free!
Save another $7.25

#221 UVZ on 05.27.14 at 12:52 pm

I don’t think it is a financial illiteracy problem. Rather, a cultural/emotional issue.

Many people don’t see homes as investments or mortgages as debt or “death grids” or whatever that means in French.

Intelligent people convince themselves of wonky financial math to justify a (perceived) lifestyle and status. Why do you need a Mercedes?

#222 WhiteKat on 05.27.14 at 1:09 pm

@JamesKitchener #205, re: “WhiteCat
To the best of my knowledge a principal residence is tax free no matter what the gain. But you have to actually live in the house. ”

You do realize I am referring to Canadians who happen to also be ‘US persons’ and thus ‘US taxpayers’ right?

Although Canada does not tax the capital gains of one’s principle residence; USA does (minus the first 250K of capital gains). Thus it is easy for someone living in say TO or Vancouver to find themselves owing Uncle Sam big time when they cash out on their 1 million house that they paid 100,000 for decades ago. I know someone personally who got caught up in this, and had no clue USA was different than Canada in this respect until AFTER they sold their principal residence here in Canada.

#223 Holy Crap Wheres The Tylenol on 05.27.14 at 1:10 pm

#213 Mak the investor on 05.27.14 at 11:52 am
1. Taxation should be taught at school. When you start making money you should know how it will be taxed.
2. How to identify the right value of a etf/mf/stock when purchasing it? Is the price right?
3. Change of philosophy: How to start your own business rather than how to find a job.
4. How to create your investment portfolio. The rule of 90 can be taught here.

Absolutely correct sir, this would be a well advised course curriculum. Now try to get this past a school board!

#224 Iso-Classical on 05.27.14 at 1:13 pm

Vehicles…teach them about the REAL costs of owning a vehicle!

The first big purchase a teenager dreams about is owning his/her own vehicle. Why not educate them about the true costs of owning one such as:
-insurance costs for those <25 YOA
-gas mileage
-financing costs
-the different loans available (3 yrs, 5 yrs, 7 yrs)
-resale value
-time of year to buy, time of year to sell
-general maintenance such as oil change
-available manufacturer and 3rd party warranties

After noting all of that Randy, you can't fix stupid! Teenagers and young adults will make poor financial decisions no matter what you teach them, the point is to give them the background to UNDERSTAND and GRASP why the decision was poor and to learn from it…fool me twice shame on me!

#225 NoName on 05.27.14 at 1:20 pm

Teach kids about tax, by their 30% of their favorite snacks and 50% of ice cream.

And this, interesting read

#226 WhiteKat on 05.27.14 at 1:24 pm

@JamesKitchener, Here is a link corroborating what I said re:capital gains taxation on sale of principal residence in Canada for Canadians who are also US taxpayers.

#227 Toronto_CA on 05.27.14 at 1:32 pm

For youths:

– Right now, debt is Canada’s most pressing issue. Good debt versus bad debt; the concept of adjustable mortgages; revolving credit; pay day loans; credit card debt; student loans; HELOCs; car loan debts. A whole course could be taught on the various kinds of debt and the benefits of borrowing versus the costs of borrowing. A discussion on interest rates and loan terms and how they have evolved since the Great Financial Crisis would be key.

– show children how to calculate Net Worth, and how this number should be increasing rather than decreasing during their working lives. Don’t spend more than you earn and this will happen naturally, but knowing how to calculate your net worth and some basics on of accounting / balance sheets will also come in handy.

– Retirement planning – DC vs DB pension plans, RRSPs, TFSAs, Group RRSPs, etc. Teach them! There’s a great chart in David Bach’s Automatic Millionaire (otherwise a crappy read) that shows how compounding is so darn effective for people in their 20s. It is profound how big a difference starting early makes, and I think this chart would have at least some kids starting to save for retirement as soon as they graduate university/college/tradeschool maxing out their allotted RRSP/TFSA room.

– Career planning – I knew I wanted to be a CA when I was 14. But I have seen many smart young kids who could be anything choose really odd majors and end up in dead end jobs. Baffles me. I think some kind of personal finance course should discuss the job prospects and median incomes for different careers.

– Budgeting. Ugh. Everyone will hate this. But if they made the course require everyone to mark down how much they spend and earn over a month then use that to project a budget it would personalize the learning and make it useful. Show them how to set up a budgeting spreadsheet with personalized spending categories.

– Investing – exlain about MERS and why active funds are no better than index funds in most cases don’t even beat the returns of the market (especially ones with high fees). ETFs vs mutual funds; bonds vs bond funds; money market accounts, GICs, HISAs. Discuss rebalancing a portfolio and asset weightings. Dollar cost averaging.

-Tax basics, such that everyone can download StudioTax and file a dummy return with a T-4 slip, RRSP slip, Tuition slip, and some medical expenses/charitiable receipts.

Ugh. There really is too much to teach in one class isn’t there?

#228 Stickler on 05.27.14 at 1:48 pm

– Time value of money
– Concept of a risk free rate of return
– Capital Structure basics
– Balance sheet basics
– Income statement basics
– Taxes (in all forms) and their impact on take home pay, investment returns, etc.

#229 Dual Citizen In Canada on 05.27.14 at 1:49 pm

#196 WhiteKat on 05.27.14 at 9:52 am
Thanks for the littany of things to be weary of. I did my homework, just as you. I think the main difference is that I am small fry to the IRS and not worth the resources to persue. I have nothing to hide and I am not paranoid. Can’t go through life being a worry wart. Life is too short for that.

#230 Stickler on 05.27.14 at 2:04 pm

– opportunity cost

#231 Dreaming InTechnicolour on 05.27.14 at 2:14 pm

Wonder what the stats are like for Canada, particularly in BC & Ont:

#232 Tim Hudak Makes Trees Seem Less Wooden on 05.27.14 at 2:15 pm

And don’t forget to tell the kids that taxes are the price of a free, decent society.

Rawls’ veil of ignorance should be a guide to recognizing the need for fairness in things, and the unpredictability of luck.

(This is distinguished from the veil of ignorance you put on to ignore the needs of other fellow human beings, as neoconservatives do today, to the economic detriment of us all)

#233 frank le skank on 05.27.14 at 2:26 pm

Captain Obvious strikes again!

#234 Dr. Wu on 05.27.14 at 2:44 pm

The financial system should be taught in literature class, because it’s fictional. In fact, the general concept of western civilization, history, current events, political science, economics, business, all belong on the bookshelf beside Dickens, Hemingway etc.

What’s presented as reality, is not reality.

In today’s world fiction is redundant.

#235 Ayn Rand Army on 05.27.14 at 2:50 pm

Just read the article and none of the comments so far, but the first and foremost thing to teach everyone is the invention of what money is historically. what it does, how it functions as an intermediary to barter and enables the division of labour and specialization.

Then what savings and interest rates mean when money was backed by gold and how the market demand for savings, capital and interest rates are related.

Then for comparison contrast today’s money system with massive inflation and credit expansion and low interest rates that are destroying savings and capital formation and along with it jobs and production.

All of the above is STEP 1, the other nine can build upon the first by maybe explaining exchange rates and how different countries with their governments and hostilities towards free markets and business affects their economies and purchasing power and capital inflows and outflows.

#236 Ayn Rand Army on 05.27.14 at 2:58 pm

The simplest answer is to read Peter Schiff’s – How an Economy Grows and Why it Crashes.

This book explains all the basic concepts of economics and money theory at a level both children and adults can understand.

Overflowing with wit and common sense, this new Collector’s Edition of How an Economy Grows and Why It Crashes explains:

The roots of economic growth
Why some countries are rich and others are poor
The importance of trade and risk taking
The sources of inflation
The effects of interest rates and government stimulus
The destructive nature of consumer credit
Why saving is better than spending as a cure for a bad economy
And other frequently discussed, yet poorly understood, economic principles

While the story may appear simple on the surface, as told by the Schiff brothers, it will leave you with a deep understanding of How an Economy Grows and Why It Crashes.

#237 Doug in London on 05.27.14 at 2:59 pm

A lot of good ideas have been posted here, with little left out. If I could add one thing, it would be to make sure EVERYONE understands the first law of thermodynamics, namely that energy can’t be created nor destroyed, and how that idea applies to other things like money matters. If, for example, you want to get more electrical power out of a generator you MUST put in more mechanical power. Perpetual energy machines don’t work and they never will.
So, how exactly does that apply to money matters? Quite often I hear complaints taxes are too high and should be cut, yet those same people who say that also complain about cuts to government services or more user fees. It appears a lot of people don’t understand you can’t have it both ways. Similarly, would so many people dig themselves deeply in debt if they really thought it through and understood they must pay it, as well as the interest, back? You don’t get something for nothing.

It would also be worthwhile teaching these kids that everything goes in cycles, just like the natural cycles of seasons, animal populations, water levels in the Great Lakes, and so on. Similarly, assets and sectors of the economy go through cycles, and you should avoid buying (or better yet sell) at or near the top.

#238 Ayn Rand Army on 05.27.14 at 3:03 pm

Then there’s the Mises Institute with all the free books there, like Economics in One Lesson, and What has Government Done to Our Money and Human Action.

Then there’s Ayn Rand’s Classic, Atlas Shrugged, which is still the national best seller of all time in the USA second only to the bible with the third and final Part 3 coming out this summer in film for those who don’t have time to read.

#239 Entrepreneur on 05.27.14 at 3:10 pm

I agree with #181 Kitchener Advice on Government spending but I would go a few steps further and teach on how to be a politician, and most importanty, how to form a new party (the one they want).

#240 High Plains Drifter on 05.27.14 at 3:13 pm

There are periods, where a strategy very different to conventional wisdom wins the day. Take war profiteering for example, no takers so far, where have they been? O.K. then, here we go, never take a knife to a gun fight. Do try to get along first. Never underestimate a foreigner in uniform. Get to the end with your soul intact.

#241 mike p on 05.27.14 at 3:16 pm

1. Credit cards should be a way of funneling air miles etc when buying milk and eggs and nothing else…
2. Compound interest
3. Dividends
4. Basics of being taxed
5. tfsa
6. Diversity, rebalancing, liquidity
7. Pay yourself/save first
8. Start early
9. etfs vs mutual funds vs gics etc
10. Spend more on experiences and people and less on stuff.

#242 Westcdn on 05.27.14 at 3:16 pm

I am way behind on my readings on this site. I thought there were a lot of intelligent comments recently. I like SM and Ralph comments and the occasional flame from Garth. As a lawyer said to me – the truth lies between two point s of view.

I thought I was going to get hammered in May as the “momo” stocks were being sold hard – it looks like dividends are back. I am a macro man so screw short term trading. China and Japan economies look to be failing (thro in France) so stay with NA stocks. As I have mentioned before, I have a high error rate. My guts are telling me EM currencies/money are going to fall relative to NA. I see higher interest rates and “inflation” going down the road. My idea of deflation is a lower standard of living due to financial repression where costs go up but income stays flat.
I was musing – Would I work for twice the effort and half the pay? That runs against human nature where it seems to be to get the most for the least effort. I will sign up with the honest hard working over the sleaze balls who promise something for nothing – think Hillary Clinton types and most of the elected lawyers.
All I want to commit to such an effort makes is to make Canada more productive and no one gets a free ride. How many teachers, police, firefighters, doctors, nurses and compliant administrative support to tell us what to do if we behave properly?
I guess I am negative today….. On the bright side of things, it looks like the Ukraine elected the right person. As for Canada, Justin and Wynne give me pause.

#243 april on 05.27.14 at 3:24 pm

Well…according the RBC…but aren’t they in the business of making money of real estate purchases????

#244 devore on 05.27.14 at 3:26 pm

#177 Jimmy

It’s pretty much futile to teach finance to young people. Most of them will simply forget everything they were taught and the others will follow what their parents tell them.

Most of them will forget everything they were taught, PERIOD. We don’t stop trying, because some of it sticks, even though most has to be learned first hand.

#245 jameskitchener on 05.27.14 at 3:27 pm

My apologies I read your post too quickly
I was not aware you were referring to Dual citizenship

#246 Derek R on 05.27.14 at 4:08 pm

It’s one thing making a list of what kids need to know about finance; it’s another thing making it interesting to them. One way I can think that it might be done is to personalise it and let them know that other people will try to steal their money by legal means even more often than by illegal methods. And that you can tell them how to spot the thieves. That should motivate them.

The actual points that should be covered:

1) Show them how to calculate the amount of money they can earn in one lifetime from a realistic wage.

2) Show them how to calculate a lifetime of costs (food, housing, transport, entertainment, taxes, etc.) and compare the lifetime costs of owning and of renting.

These two items show why saving is necessary — ie. we spend more than we can earn when we are very young and very old. They also show that money isn’t limitless: there is a maximum that any person can expect to make by work alone. That leads on to…

3) Describe how investment can increase the maximum and fill the gap between income and spending in old age. Differentiate between investing and gambling. Show how thieves will try to sell you a gamble as if it was an investment.

4) Describe how debt can decrease the lifetime amount available if used carelessly. Discuss how debt can be used carefully to reduce lifetime costs or increase lifetime income under the right circumstances.

If that is tied in with a discussion of how shysters use investment and debt contracts to persuade people to spend more of their lifetime earnings that they otherwise would have, the whole thing can be presented as a financial self-defence class.

With luck that might get some of the teenagers thinking.

#247 Old Man on 05.27.14 at 4:23 pm

#238 Doug In London – you are quoting Einstein who has been proved to be wrong, as physics cannot comprehend a different reality. Momentum = mass x velocity, so what is up when velocity stays constant due to a momentum stop and change? This means that the mass had disappeared to accommodate this change which defies the laws of physics.

#248 Gainsaywhodare on 05.27.14 at 4:24 pm

Calgary has got to be near its peak. For Sale signs popping up left and right in inner city. All the original bungalows on R2 subdividable lots are sold within days for their ‘supposed’ land value of 500k-600k. In the coming months, they will be torn down and replaced by sexy infills. Why anybody would think that within the next year, people are going to buy into ample supply of inner city infills priced at 800k-900k is just beyond me. Seeing all the abundant listings of new infills today, and a glut more that will soon be listed in the next few months, I sure wouldn’t want to be an inner city builder right now. It just has no more room to bloat.

#249 Herb on 05.27.14 at 4:56 pm

Some of our commenters should be working at OISE! I am sure that taxation and retirement planning would be soaked right up by elementary and high school students and be at their beck and call for the rest of their lives.

How about starting off with ‘readin’, ‘ritin’ and ‘rithmetic? How are we doing with plain literacy before we continue to financial literacy? Can a kid in high school process and hoist in a message and find the words to express his thoughts intelligibly? Can he add, subtract, multiply and divide with and without a calculator? Then teach him how to manage his personal finances, making, protecting and increasing his money. That’s when high finance and taxation should enter the equation and yield the financial literate.

Teach him the meaning and implications of two very important Latin expressions: caveat emptor, and cui bono. Show him that he is a consumer and under attack from all sides by individuals and corporations who are interested in separating him from his money, not his welfare or success in life. Show him what marketing does and why and how it works. And then convince him to always ask why he is being passed any advertising, news or political information by whatever means. Who wants to benefit from him knowing and acting on it? Kid, you’re a target, and here’s how you protect yourself!

And then we will have produced the all-singing, all-dancing knowledgeable and responsible consumer – and voter – who is no longer a victim, but an informed and independent agent. And our current economic and political systems will seize up!

#250 WhiteKat on 05.27.14 at 4:57 pm

@DualCitizen #230 You said: “Thanks for the littany of things to be weary of. I did my homework, just as you. I think the main difference is that I am small fry to the IRS and not worth the resources to persue. I have nothing to hide and I am not paranoid. Can’t go through life being a worry wart. Life is too short for that.”

My old man used to say, “If you are going to do a job, make sure you do it right the first time”. I would suggest this approach, especially applies to a Canadian, US taxpayer, who is filing annually whether that person is “small fry” or not.

You do not want to find out, after you have moved back to the USA, and get the dreaded audit notice in the mail, that you were not quite up to snuff on all your reporting requirements while you were living in Canada.

I say this, not to worry you, and yes, life is short, which is all the more reason to “get it right the first time”.

BTW, I know “small fry” who have been hit hard by IRS penalties (not taxes), so please don’t think that because you are “small fry” that you are safe. I agree, IRS would not pursue you as a Canadian living in Canada, but once you cross that border to live all bets are off.

Anyway, you say you have done all your homework, so I guess you have nothing to worry about then. Hopefully all your family members, who likewise are keeping the USA door open for future , have also doing the same. No doubt, you have educated them on the importance of doing their own due diligence.

#251 WhiteKat on 05.27.14 at 4:59 pm

grrr…’ARE also doing the same’, not ‘HAVE also doing the same’

#252 malliemcg on 05.27.14 at 5:11 pm

I’d look at the themes from richest man in Babylon

1) pay yourself first (save 10% of your income)
2) use the above to invest in assets that pay you
3) don’t listen to a brick maker for gem advice (1920’s when the shoe shine boys offers stock tips)
4) live within your freaking means…

Would have been useful to me. I’m lucky my biggest mistake was a brand new car when the loansters were throwing money at a just out of uni just got a job. Still if I had have avoided that I’d be better positioned today.

#253 Bill Gable on 05.27.14 at 5:28 pm

Garth is always reminding us that the Economy is maxi dependant on jobs, and growth etc.

One sign of stress in the system is what’s happening in RETAIL.
Is it happening in your town?

I notice closed stores, on what used to be golden streets, like Deman and Robson, here in Vancouver. Are you seeing the same thing?

For a hint of what’s to come (maybe) > let’s look south, to the USA for these new numbers – *warning, best you don’t eat before you read this next bit*

RETAIL Death Rattle?

Wal-Mart Profit Plunges By $220 Million as US Store Traffic Declines by 1.4%

Target Profit Plunges by $80 Million, 16% Lower Than 2013, as Store Traffic Declines by 2.3%

Sears Loses $358 Million in First Quarter as Comparable Store Sales at Sears Plunge by 7.8% and Sales at Kmart Plunge by 5.1%

JC Penney Thrilled With Loss of Only $358 Million For the Quarter

Kohl’s Operating Income Plunges by 17% as Comparable Sales Decline by 3.4%

Costco Profit Declines by $84 Million as Comp Store Sales Only Increase by 2%

Staples Profit Plunges by 44% as Sales Collapse and Closing Hundreds of Stores

Gap Income Drops 22% as Same Store Sales Fall

American Eagle Profits Tumble 86%, Will Close 150 Stores

Aeropostale Losses $77 Million as Sales Collapse by 12%

Best Buy Sales Decline by $300 Million as Margins Decline and Comparable Store Sales Decline by 1.3%

Macy’s Profit Flat as Comparable Store Sales decline by 1.4%

Dollar General Profit Plummets by 40% as Comp Store Sales Decline by 3.8%

Urban Outfitters Earnings Collapse by 20% as Sales Stagnate

McDonalds Earnings Fall by $66 Million as US Comp Sales Fall by 1.7%

Darden Profit Collapses by 30% as Same Restaurant Sales Plunge by 5.6% and Company Selling Red Lobster

TJX Misses Earnings Expectations as Sales & Earnings Flat

Dick’s Misses Earnings Expectations as Golf Store Sales Plummet

Home Depot Misses Earnings Expectations as Customer Traffic Only Rises by 2.2%

Lowes Misses Earnings Expectations as Customer Traffic was Flat

Now come MORE job cuts, just at the wrong time!



#254 Son of Ponzi on 05.27.14 at 5:32 pm

are you talking escape velocity as per Carney?

#255 maxx on 05.27.14 at 5:46 pm

#183 Kitchener Advice on 05.27.14 at 7:54 am

“So for the record
I own a house, mortgage free but its more than half my net worth, C minus
**This grade would depend on the value of your home, your age, the degree to which you like your home, the neighbourhood and total net worth relative to house value;
I walk to work, A Plus
**Definite no-brainer here and walk score also adds more to the the above grade;
I save 20% of my income a month A plus
But I spend it each year on holidays D minus
**No, C, as this spend is a life investment and saving success is directly proportional to the enjoyment you get out of life. Having said that, increase the travel bang for your buck and spend half the current amount. Then, A.
I have $90,000 in TFA, all in Stocks, and I will admit I am nervous after the great bull run A plus **B+, but rebalance for A+;
I have RRSPs, 50% stocks 50% bonds B minus could have, should have saved more
**rebalance, don’t look back, and max them out: A+;
I have DRIPS, C minus as I should have done more
**see above;
I have a company pension plan, I was lucky! **Triple A+! Hang on to that baby;
I have 5% of assets Excluding my house in gold, A plus or F depends on your outlook”

Keep it going to retirement and beyond: magna cum laude.

#256 4 AM Sunrise on 05.27.14 at 5:46 pm

To outsmart thy enemy, you must know thy enemy. Get a summer job at a bank – they’ll hire anybody with a pulse, and the younger/greener the better. I had 15 years of self-education in personal finance before I got my first job at a bank. In my first few months, I got into tussles with management because I was too naive to understand that the bank’s profits depended on me giving BAD advice to customers.

#257 jamesKitchener on 05.27.14 at 6:01 pm

Thanks for reading and your comments Maxx
$400,000 house I am 55

#258 Ralph Cramdown on 05.27.14 at 6:22 pm

#254 Bill Gable

Don’t forget:
– Amazon sales up 25% vs. last year’s quarter
– Apple’s iTunes division sales up 11% vs. last year’s quarter
– Starbucks comparable store sales up 6% vs. last year’s quarter in its US/Americas division.
– Whole Foods’ sales at stores open at least a year rose 5.4 percent in the first quarter

#259 natrx on 05.27.14 at 6:38 pm

1) Do not go into consumer debt. Once you do, you will always be behind in life. Do not be that person.

2) Old people may look like they have alot of money, but really they mostly don’t. Household debt is at a all time high.

3) For every extra dollar amount of interest you pay (especially house mortgage), you could have earned at least the bank savings rate off that amount compounded!

4) When you watch a bank commercial, just laugh at it. They are just trying to get you to borrow to spend more money on stuff you don’t need.

5) While in your life, you might feel broke, it is really a matter of priority. People who say they’re broke often say it as if it’s a proud thing. When in reality, they have spent their money on other things.

6) Do not buy a new car. Especially on monthly payments. If you were to pay your monthly payment, and decided to sell it before you actually paid it down, you would owe a lump sum payment on it since the car is worth less than what you have left remaining to be paid.

7) When you go to University, you will feel financially inadequate compared to students who seem to have it all. Don’t worry about that. Just worry about yourself. Do not feel inadequate at all and concentrate on experiencing and learning as much as you can.

8) It is not the rate of interest you pay, it’s the amount of interest you pay relative to your earnings that matter.

9) When it comes to credit card debt, ignore the monthly minimum amount. That is their way of getting the maximum amount of interest off you. Only spend on your credit card what you have in your savings. Do not rely on your next paycheck to pay for it. Because you will actually spend that paycheck somewhere else, and be left with that debt balance.

10) Just don’t be obsessed about housing. Or Cars. Or the shiny things. Invest in your relationships, learning, knowledge. And most of all, try to not be indebted in life. Because once you sign on, things in your life can and will change dramatically. But that fixed payment with interest will be there till the end.

If you have a 25 year mortgage, a bulk of it gets paid in the last 5 years. The first 15 years is primarily interest costs.

#260 Millennial31 on 05.27.14 at 6:54 pm

These are all wonderful suggestions. I am 31. I WISH someone taught me about financial literacy when I was younger.

However my parents (both baby boomers) always had no debt and saved like crazy. I can agree with some above who stated the best lessons come from observing your parents and how they handle money.

That said, a couple points:

1) The idea of saving makes complete sense BUT with rent so high and wages not, most people do not want to be in a situation where they are making 2k/month and saving 2-300 bucks.

The lack of fear of debt comes from this psychology:

If I am saving only 200$ after rent I am basically wasting my money and saving nothing. If I have a mortgage that costs the same (a one bedroom condo in Toronto for example, where I live), even though I am saving less I AM BUILDING EQUITY and I can realize capital gains.

They have a point, even basement apartments are 800/month.

I feel like the older generations on the blog who advocate “save and shun debt it is not cool” do not understand how expensive the cost of living is today, especially in Toronto, where most of the work is.

The most important thing you can have is a higher paying job or in most cases, jobs.

This is what most young people do. At least those dumb enough to go to university because they were good in school like myself. We realize we can never save enough for this joke market so we focus on attaining higher education in hopes of at least combating the fear of debt and zero savings through a higher earning capacity.

-my 2 cents.

#261 JohnG on 05.27.14 at 8:32 pm

Explain what debt really is – an exchange of your future production.


#262 Doug in London on 05.27.14 at 8:51 pm

@Old man, post #248:
The first law of thermodynamics was known long before Einstein published anything. It was figured out by 19th century scientists and engineers. I mentioned nothing of momentum in my post.