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Youth ill-prepared to manage money, poll says

Jack Hollingsworth/(c) Jack Hollingsworth

Finance major Gabrielle Chan is months away from completing her degree and hopes to work in the banking industry, but wishes her education on money matters had started even earlier in life.

The 22-year-old University of British Columbia student may be knowledgeable now in the area of personal finance, but says this know-how was lacking when she landed her first job.

Ms. Chan was in Grade 10 when she started working as a seasonal retail sales associate during the holidays, later shifting to part-time status.

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Her parents helped her set up a chequing account, but she didn't come around to learning how to invest her hard-earned cash until a couple of years later - and there was still confusion.

"I started with the GICs in Grade 12 because I just wanted to do something with my money, but I didn't really know actually what GICs were or what I was going into," she said.

Ms. Chan said she didn't want to trouble her parents by asking them endless questions about finances, and laments that she didn't learn more about some of the basics earlier, like ways to manage money and the differences between credit and debit cards and chequing and savings accounts.

A recently released survey suggests that many Canadians also see the importance of educating youngsters about money matters.

The poll conducted for the Canadian Institute of Chartered Accountants of more than 1,000 Canadians found that while 78 per cent of parents have tried to teach their kids financial skills, two-thirds believe they haven't been very successful.

The Harris-Decima survey also found 84 per cent of Canadians believe young people are ill-prepared to manage finances when they enter the work force, and 85 per cent believe financial management skills should be taught in schools to help solve this problem.

As a member of Richmond, B.C.-based Financial Literacy for Youth, Ms. Chan is hoping to help other young people be better prepared when it comes to dealing with dollars and cents.

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The non-profit group is led by a core team of university students and graduates, but early on, had also recruited high school students to help develop its program.

Ms. Chan said FLY started off piloting a six-lesson curriculum for high school students in several schools, and later shifted gears to run a one-day conference to help educate youngsters about personal finance and money management.

Instructors begin by dispensing basic information about the power of saving, and how starting early is important, particularly when it comes to accumulating interest. The curriculum also includes instructions on reading tax and credit card statements, and teaches about basic investment and savings.

"Back in my days, I was always really scared to go into a bank myself and open a bank account or to ask them questions, and when I had my first job I really didn't know what to do with my paycheque," she said.

"I really hope that by joining this [group] I can help the kids nowadays to give them the information that I wasn't given so that they will be able to know [how]to prepare themselves better." Ms. Chan said the program is aimed at high school students, specifically those in Grades 10 to 12 - an age group that's likely just started working and contemplating what to do with their paycheques.

Yet the institute's survey revealed it's not just youngsters who face challenges when it comes to financial planning.

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The poll found 22 per cent of 18- to 29-year-olds have no savings or investments. Yet the survey also revealed that 51 per cent of adults are currently saving less than 10 per cent of their monthly income, while 11 per cent save nothing at all.

Of those aged 55 or older, 40 per cent reported they haven't saved enough for their retirement.

Nicholas Cheung, a principal with the Canadian Institute of Chartered Accountants, said financial literacy is a "lifelong skill."

"As we become adults, we have major financial decisions to make," he said in an interview. "We have a new baby that's coming or the fact that you might want to buy a car or save for retirement. All these things have unique opportunities and challenges that we need to educate ourselves about."

While poll respondents felt money management and financial literacy should be taught in schools, they also indicated that the financial services industry and government should bear responsibility in helping to teach kids financial literacy, Mr. Cheung said.

A total of 1,011 phone surveys were completed between June 29 and July 9, 2010. Poll results are considered accurate to within plus or minus 3.1 percentage points, 19 times out of 20.

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