Financial Habits Best Learned Young
22 January 2021 1
22 January 2021 1

Enriched Academy Staff

Happy New Year to all of you. I LOVE January.

Why, do you ask?

Because it marks the beginning of my personal financial year. This is where I sit down, complete my Net Worth Tracker, organize my budget, and fill out my Financial Freedom calculator so that I can figure out how much to set aside for the year ahead. My current financial goal is to retire by 45, and I seem to be on the right track (right now). Wish me luck.

I thought I would take this opportunity to write a post for parents out there who are wanting to motivate and teach their kids about financial literacy and money management. We get a lot of clients in our  Financial Freedom coaching program who take the education that they’ve learned and pass it on to their little ones. Financial literacy should start as young as possible!

Growing up, my grandparents always gave me Israeli Savings Bonds for birthdays and holidays instead of physical presents. I never understood why, and to be honest, it always pissed me off. Until I hit 18. Around my 18th birthday, all of the bonds had matured, and I was presented with a cheque for $10,000. I couldn’t believe my eyes when I saw all of those zero’s! I kept thinking about all of the things that I could buy with that money, but my mom had another plan in place for me. I’m so glad that I listened to her advice. Looking back now, I don’t think I’d be where I am today without my mom’s guidance and financial education.

She immediately took me into the bank and had me open up a self-directed TFSA where all of the money was invested into Index funds. At this time, I had NO idea what any of these words meant. I just thought that there was a savings account and a chequing account. But my mind was blown after my mom had taught me about the different types of accounts one could have – and this was at the young age of 18.

For the entire year after, I didn’t think about or look at the TFSA. I just let it sit there and allowed the market to take its course. One day, I decided to take a peek and see what was happening. I had made just over $800! And I literally did nothing all year with that money. It just sat in the account, made a 7.5% return, and compounded interest while invested in these Index funds. Seeing the $800 return sparked my interest in investing. I had a conversation with my dad afterward about the money I had made, and about investing in general. He told me to “make your money work for you, and don’t work so hard for it”. That saying has stuck with me to this day.

Three years ago, I hit a milestone. I turned 30 (I’m currently 33). And since I’ve been tracking my Net Worth for the last 3 years, I remember taking a look at my savings and investment portfolio and having just over $100,000, at the age of 30. I’m now 33, and my investment portfolio has doubled in growth over the last 3 years. What’s the secret you ask? I’ll tell you how I did it.

Keep in mind that I am not a homeowner. I choose to rent. But I do have a partner, a car, and a lovely 2-year-old Bernese Mountain dog (named George). We live a great life in Toronto (one of the most expensive cities in Canada. So yes, it is possible to save).

  1. Set goals for yourself and work hard. After that first year of investing, it became a personal goal to max out my RRSP and TFSA every year. And I can happily say that I’ve completed this financial goal since the age of 19. Before working for Enriched Academy as the head of their coaching program, I worked as a freelancer in the entertainment industry, and prior to that, worked in the restaurant industry.
  1. Pay yourself first, and have fun after. I know that I have a different mentality about money than other people my age do. I don’t spend a lot on material things. I go out for dinners and drinks with friends, have a great apartment in Toronto, and bike/walk almost everywhere I can. I spend the majority of my money on experiences, food, and travel. I have the mentality that I need to pay myself first by maxing out my RRSP and TFSA, and then I can have fun afterwards. Knowing that I have that money in an account makes me sleep like a newborn baby every night.
  1. Educate yourself and invest! I know that I wouldn’t be where I am now without investing. Learn the basics, take a course (like our one-on-one coaching program), and put some money into diversified investments so you begin to understand the principles. It doesn’t need to be a lot! Start with $10/week. A majority of my portfolio is invested in Index ETF’s, but I hold a few blue-chip stocks that pay out a dividend.
  1. Budget, budget, budget. This is so important and will be the basis of your financial plan. Once you have a budget in place, you will see where your income is coming from, and what you’re spending money on. And if you have any “leftovers”, you can start putting it into your savings/investment account. This is really where you’ll start to see your Net Worth grow.

I know that I’m not like the majority of Canadians. And that’s ok. I'm incredibly thankful to both of my parents who took the time to educate me about money. It’s never too late. So make sure that you take the 2021 year as a teaching opportunity and start to make the financial changes that you need to yourself. Your kids will thank you later.

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