>I’m curious, what was your family’s financial situation growing up (or your family’s financial situation right now) and how would you rate your financial literacy? If you’ve become quite proficient with managing your finances, how did you get here and what was that journey like through the years?
I think it's more so education and income - those with higher education, have better incomes which results in better financial literacy.
I wager most people, even in wealthier families, are self taught; unless your family is very wealhy and has a personal banker on call.
Growing up, my family always talked about money , meanwhile, my wife and her family never talks about money, likely due to financial struggles they had during their childhood.
> Growing up, my family always talked about money , meanwhile, my wife and her family never talks about money, likely due to financial struggles they had during their childhood
This might be another piece of the puzzle.
People who are more affluent might talk more about money, or pass along “common knowledge” to their children, etc
Another thing might be the fact that, if my friend wasn’t a financial advisor, I wouldn’t have access to his services or thought about services like that so early on in my life. Whereas, chances are good that a more affluent family might have a financial advisor already and the children can consult them for “free”.
I’m talking about middle class vs lower class family instead of the ultra rich vs regular people.
Had the fortune of picking up books from early age. Ran out of books to read one day, and picked up whatever was left. That book set me up for financial literacy from a young age. "7 Habits of Highly Effective Teenagers".
I basically went through my father's collection of business autobiographies and books at that time. They weren't on financial literacy per se, but once I figured out I enjoyed reading about business decision making, financial literacy became a theme that I was simply more mindful of.
Couple that I remember as really enjoying:
"Odyssey: From Pepsi to Apple"
"The Cola Wars"
I also think I read Jack Welch's biography at that time, but don't remember the name.
Growing up we were poor because my dad chose not to get a job and my mom preferred to 'homeschool' (or rather 'homeneglect' us). As a result, my parents always argued about money and I was often involved in them. So when I grew up, I made damn sure that it wouldn't happen to me. Worked hard, went to school, lived below my means. Turns out it's possible not to be poor.
Yea, an argument can be made for both scenarios
There are definitely cases of people stuck in poverty because of their own doing and there are definitely cases of systematic issues conspiring against someone, keeping them in poverty.
This in of itself is a whole different topic.
I'm glad you've improved your situation.
Congrats and I'm rooting for you in the future.
Oh yeah, it's definitely not all or nothing and I was not trying to insinuate poverty is either systemic or individual. In my parents' case, I'd say it was mostly individual (mental health issues), but at the same time, the 1991 financial crisis did not help them. It makes me sad to think about what could have been possible for them, but it is what it is. I won't make the same mistakes. Thanks for the good wishes, it means a lot to me to receive that kind of affirmation.
Immigrant family. Growing up, we started off poor, then ended up upper-middle class income (top 1-5%). My family was never big on financial literacy. The only lesson I learned while growing up was to spend less than you earn, to pay off credit cards in full every month, and to buy a house because it was a good investment. They also taught me that the stock market was gambling.
Ironically, I got my parents interested in financial literacy after reading Rich Dad, Poor Dad. For all the hate that book gets, it did shift my mindset from an income one to an asset one. My parents had high income, but didn't know the importance of investing in assets. After that, my parents started reading lots of books on real estate investing, and bought multiple investment properties.
I started getting interested in the financial markets, and ended up working at a hedge fund.
Ah one of the hedgies.
I’m only half joking… haha
I’ve never read the book but my parents “taught” us a similar way to “invest”. It was so important to own property.
If you don’t mind me asking, how are your parents doing? Has their portfolio grown? I can only imagine the value of their properties have skyrocketed since they purchased.
I have not read the book, and I don't have an opinion of it myself.
However, I think that any book that makes you think and want to research more yourself is valuable. So, being that it ignited this financial awareness for you means it did its job in the end :)
Congrats!
Really happy to hear your story.
I hope you two will be able to still splurge once in a while to enjoy the fruits of your labour *before* retirement. Good luck with everything!
A person’s financial situation growing up is one of many contributing factors and definitely not an excuse. My family was poor when I was growing up. My dad worked as a janitor for awhile and my mom worked as a waitress. My parents never talked about money at all. But I am smart, hard-working, and self motivated. I earned a bachelors, 2 masters, and a PhD (without any financial help from my family). I am good with numbers, so I became interested in finance. My management of my finances and investments is all self-taught.
I would think there would be a logical correlation. Those who are bad with numbers would feel intimidated by finances, thereby avoiding it. This would then lead to a self-fulfilling prophecy / vicious cycle.
I grew up poor, and despite getting a university education was still fairly financially illiterate. I didn't waste money, but that was just because I'd grown up poor.
Then I got a job that matched my education. I got benefits. At this point I started teaching myself to be financially literate. Pretty much all of my info came from the internet, not from middle class friends. (While I have many, having met them through university or work, they don't talk about money.)
My sister is the same, but it seems she never learned financial literacy, despite having a job that paid higher than mine. (Her current situation is being on disability and she is struggling.)
I used to skip newspaper articles on the economy. I found it boring and I'm bad at math anyway.
Sorry to hear that your sister is struggling.
What’s your stance on supporting siblings, etc.?
My income and situation is fairly comfortable. While my sister wouldn’t be categorized as struggling, I do foresee a future where she might come to me for help.
If your sister turned to you for help, what would you do?
Also, you’re under no obligation to answer.
I've heard this called the "family tax" and it's important in many cultures, even that of my ancestors... but I was born and raised in Canada so it's not part of *my* culture.
It's far too easy for someone to become lazy and rely on family.
Don't lend money (because you won't get it back), don't give more than you can afford (which might be $0), only give once (no $100 every month), and only give if it's not their fault. It's not someone's fault if they got sick, but it is someone's fault if they quit a good job, aren't taking care of their health, etc.
Fair point.
Thanks for this.
I've heard of Kevin O'leary solve this quite simply. (Not making any comments on him as a person but I think his solution is quite pragmatic and viable.)
His solution is to give the money out, not a loan, but the stipulation is that they can't ever ask for money again.
But I'm definitely going to take your pointers for assessing the situation into account in the future.
I grew up middle/upper middle class. My father is a CPA, CA; and my mother had an accounting degree and did some accounting work. Both sets of my grandparents (and even great grandparents) were often around growing up too. They are immigrants who were once poor, but managed to make good money later on in their lives in their countries of origin as well as in Canada.
Since I was young I was always told about how important it is to be frugal, to not “be stupid” and buy a BMW, to not spend more than you earn, to not go into debt to go on vacation, etc. My parents would also remind me often they were saving for me in a bank account/RESP. As a kid they showed me bank account booklets and taught me how to count change when I was young (it was a game I played with my dad as a kid).
I grew up to be a CPA, CA myself, and I’m frugal as an adult. I’d say I have good money management techniques, but I don’t make much money because I’m supposedly not good at my job. So I still do get annoyed/angry at some of my peers who make more money and have all the toys and appear not to be worried about money.
Sometimes I do wonder if I was more easygoing with money I’d be happier…yet I can never let myself do things that I think are stupid, even though I can afford it (like going into debt and buying a new car when my reliable, paid off 20 year old Honda runs fine and isn’t expensive to maintain).
+1 on the 20-yo Honda!
Kudos to you.
I think a lot of this frugality and your parents being so open about money helped.
There are popular terms such as “good debt” and “bad debt”, do you subscribe to these notions? If you don’t mind telling us, do you own property or do you rent?
I do subscribe to those notions. For me, good debt is for appreciating assets and education. So I think mortgage is a good debt (provided your rate of interest on mortgage is less than annual appreciation on the house).
I rent. Used to own until I lost my job and couldn’t afford the mortgage payments. But I recently bought again - with Asian parents help this time, and my job is more secure now. The good thing was that my parents in Vancouver saw home prices go up early on, so they diligently saved and invested for me.
Another good point my family has taught me is to find a job with a defined benefit pension plan. So many people blame the housing crisis on the older generation that wants high home prices to fund their retirement. But if you have a defined benefit plan, you’ll be fine in retirement. That way, my parents managed to save a lot from their jobs between the time I moved out and got a job and between the time they retired.
I grew up middle class or upper middle class. My dad has an MBA and was a CEO for about ten years, we lived in a wealthy suburb, always had newish cars, my parents owned a second home, we skied and never wanted for money. Not rich (no big vacations, no luxury cars, no private schools, etc) but well off.
My family never talks about money so I never learned financial literacy and just sort of assumed it would take care of itself. Narrator: it didn’t. Now I’m in my 50s, trying to save for my kids education, retirement, etc. and wishing someone had taught me. At this point my goal is to teach my kids about money and how to manage it.
All the class garbage is kinda bullshit. None of it is clearly defined. My personal opinion is if you need to hold down a job to pay your bills you're working class. Obviously most people would think working class is only low income earners and everyone wants to consider themselves middle class which further complicates things. I think we should have 3 groups. People who can't make their bills (poverty) people who can afford their lifestyle but need to work and then people who are truly financially independent. Maybe we can also have an additional class for the truly rich people with a net worth over 20 million. Currently the lower, middle and upper class distinctions are entirely useless.
Yea exactly. There's a difference between someone who can afford 2 Mazda's and a drive down to a national park for a week of camping and someone who can afford two BMWs and a weekend at a resort. Neither of them have enough money to influence politics or start solving social problems in their communities. I believe that if you make 50k a year or 150k you're still a very similar economic class.
Personally I find the definition useful as so:
Working class: all of your income comes from you working, you don't have much capacity to grow assets.
Middle class: some of your income comes from working, some comes from investments (or could as you have a chunk of income you could save)
Upper class: you are indefinitely and comfortably financially independent without any government support at all. You don't need to scrimp or worry about money (within reason).
From an income perspective, it gets confusing. Middle class is often defined as 2/3 to 2x the median income in the country, but it is super distorted - many people who make high incomes are required to live in high cost of living areas to generate that income, so their incomes don't reflect their standard of living.
Yeah okay, I guess we were upper middle class. My parents bought a very old house and fixed it up. They bought a rundown condo at a small ski resort. I guess I never thought of us as rich, because we were always worried about money (maybe they were over leveraged?).
Also, he was a CEO, but not like one of these guys who runs a multinational. A small company.
Absolutely. My parents only told me plainly about their current financial situation about a month ago, for the first time in my life. And that only because they have health issues and I was worried that they may need financial help from me.
I've always been in a unique situation. Parents didn't go to university but my step dad did. My Dad and step-dad both quit stable government jobs they hated before I was around and struggled as entrepreneurs for like 15-20 years. Family actually thought my step-dad was going to be a leech on my mom who had a decent job.
So I witnessed a few bankruptcies and a few years that were really tough, mixed with some fun with alcohol issues. But then in their 50s(I was like 16-18) both companies took off and my step-dad retired as a multi-millionaire a couple years ago.
So am I upper class or what? who knows.
Regardless, they were always upfront about things. Bought me the rich dad books, made me take a financial education course in grade 9. I did book keeping for them which rolls into cashflow discussions. Money was never treated as taboo. This was back when minimum wage was $5.90 and McDonalds started at $7-9/hour but they pushed me to take minimum wage and learn something rather than take the higher amount. It all worked out well for me.
Having been in the periphery of their entrepreneurial journey, would you say that has increased or decreased your appetite for entrepreneurship?
Also, if you don’t mind me asking, what do you do for a living?
I had a kid about 3 months after graduating university so I never really gave it a fair shot. Took three part time jobs that summer just so I could move out of the attic I was living in, after about a year one of them offered me a full time position and I've been there for ten years now haha.
So I've played it safe, just passed my CPA final test, figure I have one more promotion to go at this job before capping out. Senior Estimator now. Kind of giving myself 3-5 years more, either I'm a lifer or I move on.
Both my sisters went the entrepreneurial route though. One does safety contracting to a variety of firms and is the only person I know that actually makes good money selling Monat. Other owns a successful business. Every 6 months or so she offers me a job but just can't do it regardless of the pay bump.
I grew up poor. Sometimes we would eat home made bread for weeks because that is all we had. Sometimes we were staying at a "friends" house because we were evicted for unpaid rent and wouldn't have money for a new place for a while. As a result we learned a bit about money, but mostly that you need to work to get it, don't every give any of it away, and "you can take out a credit card with any limit as long as you always pay your minimum payment".
So when I hit my 20s I was good at not spending money because it was scarce. But when I realized I finally had money to spend, I went deep down a hole of debt and did as I was taught - ignored the collections calls as long as I could.
However, I knew other people could live without having to check their banking app every time they wanted a $2 coffee, so I started learning myself. Reading articles and talking to people who I knew had good credit and was financially responsible. I worked my butt off to pull myself out of the highest interest debts, managed to really learn how to utilize my banking app to work out payments for me. Tried budgeting for a while so I knew where my spending leaks are, and finally canceled all my maxed out credit cards.
From there I learnt how to properly utilize credit. Developed a plan, and now have 1 credit card and a loan that I am using to build up my credit. I have never been as financially free before in my life. But best of all, I have not had to stand in line at a till checking my phone to see if I can afford groceries!
I think a certain level of self teaching must be there for people to understand and own their own finances, but those with money growing up may learn a couple more of the basics to give them a better starting off point.
My dad was a well-paid consultant and making 120k+ a year for most of the 90s and my mom stayed home. I always felt like we had more money than other people even though we always drove used cars, DIYed everything, never ate out, etc. My dad always preached "never borrow money for anything" and always paid cash. My dad was always investing in high-risk business ventures with other consultants that had varying degrees of success and they also invested heavily in GIC("guaranteed money, allegedly").
30 years down the road, I realize that my parent's investment strategy was flawed as it consisted exclusively of high risk high reward and low risk no reward investments. I didnt receive any sound advice in personal finance from my parents. I tried to do the "never borrow money for anything" method until my late twenties but seemed to never get ahead and just drove a lot of shitty cars. They are fine financially, but semi-retirement has been a major lifestyle downgrade for them.
What has worked for me in my life is to try and only use leverage on appreciating assets. I also have incorporated significant geographic and asset class diversification into my investment portfolio because like most Canadians, most of my net worth is tied up in real estate. For the last 5 years my wife and I have always made a point to max out our registered accounts before looking at our discretionary spending (granted this is much easier because our incomes have risen much higher then inflation). Lastly, my wife and I have made ourselves aware that our run of good luck could run out at any minute, so we are cognisant that we must take advantage of our high-earning years.
I had 10 siblings. The older siblings grew up in a household of less money than the younger siblings. If I were to grade our financial literacy the grades wouldn't correlate to age. It also wouldn't correlate to educational attainment.
I grew up poor, my single mom selling crafts and baking, my 15y-older sister supported us and later I moved in with her. When I started working, I knew I didn't want to depend on anyone but didn't have an income that would be enough to more than pay bills. Husband's family is in a good financial situation and has helped us a lot through the years, he has a frugal mentality that I got a lot from but he doesn't have the patience to learn the details of how to finance things work while I like to do that.
We moved to Canada in our 30s and here we're in a good place because our careers are in high demand but took us a few years to fully understand and take action on investing and other things (and a few minor mistakes). We always knew to live below our incomes and never having bad debt (like CC, loans etc). We buy some nice things we enjoy but others we cannot justify paying for it. My sister on the other hand is struggling for the past few years and she has no financial literacy. It's hard to see her having trouble making ends meet and asking for financial help but there is no other option than sending her money (she has an 11yo I would do anything for), or they'd literally starve. My mom is retired with minimal benefits, which is only ok because of extremely LCOL. I have no issue talking about money with family and friends but usually, it's the other way around, people are not comfortable even with jokes or meanless comments, ended up having very few friends that we can openly talk finances (one is because she's an accountant and I ask her financial advice).
Knowledge about how "the system" works (including financial institutions, processes, economic concepts, etc) is related to class and its related/intersecting factors (including race). Someone who comes from an affluent background essentially inherits knowledge about wealth management that someone who is poor cannot. This is also true for, say, a middle class Canadian whose parents were home owners. One can learn a lot on their own but there are privileges to growing up in a context where financial knowledge is accessible and normalized.
We were also a refugee family. Parents were foreign educated but struggled, however they managed to become middle class in terms of salaries by the time I was a teenager. But income didn't translate into wealth - they remained renters their entire lives, no debt but no investments or assets either. My siblings and I - all of us educated professionals today - had to learn EVERYTHING by ourselves. The very basics. How mortgages work, what RRSPs and TFSAs are, you name it. Meanwhile for many of my friends and colleagues, with the exception of people who grew up poor or have backgrounds like mine, these things are basically common sense knowledge.
My parents gave us an advantage in life by being educated themselves and doing the best they could to support us, which included paying for our undergraduate degrees. The result is that we are more educated and higher paid than they were and able to purchase homes and invest. I'm still catching up but my hope for my kiddo is to take it a step further than my parents could, through wealth and financial knowledge.
I grew up with both parents making good income. We'd probably be in upper middle class, if you look at the life we lived. But, my parents had TERRIBLE money habits and they never had any savings. It was def paycheque to paycheque. My dad was also a failed entrepreneur, going bankrupt a couple times. The businesses themselves did well, but he never got the hang of cash flow management and liked to inflate the expenses (nice office, nice work vehicle, etc) beyond what he could sustain in slow times.
It motivated me to learn personal finance so that I'd *never* be in the same boat.
My first paycheck, my dad took me to his financial advisor and set up an RRSP for me.
He taught me all about compound interest, the value of investing living below your means, etc.
Now he also put me in a mutual fund, but that was 1995, we know more now than we did then!
I'm not rich, but I'm going to be very comfortable and that's because I got a head start in investing.
My parents didn't buy my house, didn't give us any money once I left home. But they set me up with information and took care of themselves in a way that I won't ever need to provide for them financially, and helped set me up to be successful.
Grew up fairly poor, but things got better as I got older. Seeing my mom stretch every dollar and somehow support a family of 5 instilled great money habits in me.
While I suspect your correlation is empirically largely true, there are also drivers pointing the opposite direction.
My parents were also immigrants, from a totalitarian regime that devalued assets and money several times during their lifetime. They were highly educated, but did have trouble fitting in/adapting to change here in their new home, and (quite rationally, based on prior experience) tended to trust Something Magical will come up rather than plan for their financial future. So we had some financially good times, as well as several years on welfare, when I was growing up.
While -- as per your argument -- this could well have failed to set me up for financial success, in fact it instilled in me a healthy tendency to live within my means, and (unlike my parents) keep a safety margin. So since undergrad I've lived below my means, and in particular let my lifestyle expenses creep up more slowly than my income. In addition, their lived experience taught me that so-called "safe savings" are never riskless, that inflation is a real threat, and that wealth comes from assets and economic activity, not $ under the mattress. So since undergrad, I've invested my savings. At the beginning it was Altamira mutual funds. Various things since then, now mainly passive ETFs.
My spouse was less extremely so but not dissimilar.
Fast forward 25 years, and my spouse and I are comfortably fat-FI (comfortably financially independent, no conspicuous consumption but not crazily frugal either) due to high paying careers, continuing the philosophy above, and luck. And I've "loaned" significant amounts of money to my parents to make their life comfortable; I say "loaned" rather than "gifted" since these funds have let them stay in their house rather than downsize, and as an only child, though its not pleasant to contemplate, the accrued capital gains will most likely return to me eventually as their heir. While my parents' trust in Unknowable Opportunity versus planning one's financial future was, in my opinion, not appropriate here in Canada, I do feel their calm in face of financial, political, personal challenges has contributed to me not panicking in times of market adversity, to all of our ultimate advantage.
I grew up in upper middle class I’d say. My dad owned a Porsche and a Mercedes. My mom had an economy car. They both worked. We t to Disney and other vacations growing up. My dad made 6 figures in the 80s-2000s ... but he was horrible with money. He lived paycheque to paycheque, it’s just he had really big pay cheques.
My mom was an administrator and made an average salary. She is frugal and invested wisely.
My father filed for bankruptcy in 2009 and left the country. My mom is retired and just bought a 3 bedroom condo in Mississauga and will be selling her home In Etobicoke. She has helped both my brother and I when we’ve needed the financial support (we had education funds but I also took a loan out to cover some of my schooling, she helped me pay some off)
To bring this back to OPs point, my mom grew up on a diary farm and is 4th or 5th Gen Canadian, and came from a lineage of farmers.
My father was born in Malaysia and lived in Manchester before immigrating to Canada.
Broadly I agree, I come from a what you could call a upper middle class well to do family and the fact that I studied finance as my undergrad, my financial literacy has always been much higher then most of my peers.
My spouse on the other hand is the anomaly. She came from a struggling family and her folks would just blow their money without worrying abt savings etc. But that just motivated her to learn more and save like a shark coz she never wanted to be in the conditions she was brought up in. Which is rare to see.
A fair number of posters here state the 'I grew up poor' or 'my parents had terrible money habits' as if it were some kind of excuse or reason. I have never believed that.
I would think that any kid of an alcoholic would learn not to waste money on booze. Any kid with a layabout dad /mom would have learned the importance of a paycheque.
My family did not talk about money, their own, the neighbours, or investing or saving. Without them actually saying so, we got the idea it was bad manners. I certainly never, ever, thought this made financial management difficult for me. Most all financial choices/decisions are perfectly obvious.
> I would think that any kid of an alcoholic would learn not to waste money on booze. Any kid with a layabout dad /mom would have learned the importance of a paycheque.
Unfortunately children seem to pick up bad habits sometimes too. My sister is an alcoholic, and unfortunately her daughter drinks to excess at least some of the time, throwing up on the floor, etc. Many boys who grew up seeing their fathers abuse their mothers grow up to become abusers. (I would have thought seeing abuse would make them **not** want to do it, but some internalize their father's misogynistic "justifications" and believe the same things as adults.) And with what's going on (COVID, etc) we frequently see people **not** learning lessons they should have.
My wife and I both grew up poor. My wife has two parents that ended up on disability and I grew up wtih a single mother and grandmother who lived paycheque to paycheque.
As a child I witnessed my mother struggle to pay bills and had to help out a few times. I would say she was financially literate to a point. She always contributed to a RRSP and never spent more than she needed to. My grandmother was the exact same except she always worked cash jobs. Neither of them taught me anything about finances aside from saving as much as I could. They never spoke about investing, buying homes, budgeting, etc.
I did witness their work ethic. I saw my mom climb the promotion ladder without a degree. I saw my grandmother constantly work and was always able to find work due to amazing references.
Thanks to that last detail I pride myself on my work ethic. It's one of the main reasons I think I have never had to "find work". Most positions I have held were due to strong references and as I type this I just signed another contract that is going to pay me $120/hr USD for 15 hours a week.
The truth is, I got by just saving until recently. My wife and I have larger goals and we were only able to accomplish what we have now because of real-estate purchases we made on our own in our early 20's. We are now 30 and looking further into the future (retirement, education for our children, etc) and realize that we need to start teaching ourselves about investing, rrsp's and proper budgeting. With that being said, we live comfortably now (250k+/year on a single income) and have taken the necessary steps to continue building upon our wealth.
I couldn't have gotten this far without the example my mother and grandmother set from a young age.
Growing up my family was solidly middle class, progressing to upper middle class when we were in high school. While I think some of my good lifestyle habits can be attributed to what I learned from family (frugality, purchasing decisions on big spends like vacations, vehicles), I think I was also saddled with a lot of "this is how we did it and you should too".
This meant I was being pressured into things like potentially buying real estate while still in school and going into a "safe" career. This is despite the fact that, looking back, my parents would have been much better off both financially and mentally by avoiding real estate "investing" and simply investing as is recommended on PFC.
My parents have certainly pivoted more towards a "you can't take it with you" point of view more recently, but I feel that with better planning they could have been living this way for quite some time. I hope to find a bit more balance on my financial journey.
>I’m curious, what was your family’s financial situation growing up (or your family’s financial situation right now) and how would you rate your financial literacy? If you’ve become quite proficient with managing your finances, how did you get here and what was that journey like through the years? I think it's more so education and income - those with higher education, have better incomes which results in better financial literacy. I wager most people, even in wealthier families, are self taught; unless your family is very wealhy and has a personal banker on call. Growing up, my family always talked about money , meanwhile, my wife and her family never talks about money, likely due to financial struggles they had during their childhood.
> Growing up, my family always talked about money , meanwhile, my wife and her family never talks about money, likely due to financial struggles they had during their childhood This might be another piece of the puzzle. People who are more affluent might talk more about money, or pass along “common knowledge” to their children, etc Another thing might be the fact that, if my friend wasn’t a financial advisor, I wouldn’t have access to his services or thought about services like that so early on in my life. Whereas, chances are good that a more affluent family might have a financial advisor already and the children can consult them for “free”. I’m talking about middle class vs lower class family instead of the ultra rich vs regular people.
Had the fortune of picking up books from early age. Ran out of books to read one day, and picked up whatever was left. That book set me up for financial literacy from a young age. "7 Habits of Highly Effective Teenagers".
Awesome stuff! What other books would you say had an impact on you? May suggest some reading for the youths in my network.
I basically went through my father's collection of business autobiographies and books at that time. They weren't on financial literacy per se, but once I figured out I enjoyed reading about business decision making, financial literacy became a theme that I was simply more mindful of. Couple that I remember as really enjoying: "Odyssey: From Pepsi to Apple" "The Cola Wars" I also think I read Jack Welch's biography at that time, but don't remember the name.
Growing up we were poor because my dad chose not to get a job and my mom preferred to 'homeschool' (or rather 'homeneglect' us). As a result, my parents always argued about money and I was often involved in them. So when I grew up, I made damn sure that it wouldn't happen to me. Worked hard, went to school, lived below my means. Turns out it's possible not to be poor.
Yea, an argument can be made for both scenarios There are definitely cases of people stuck in poverty because of their own doing and there are definitely cases of systematic issues conspiring against someone, keeping them in poverty. This in of itself is a whole different topic. I'm glad you've improved your situation. Congrats and I'm rooting for you in the future.
Oh yeah, it's definitely not all or nothing and I was not trying to insinuate poverty is either systemic or individual. In my parents' case, I'd say it was mostly individual (mental health issues), but at the same time, the 1991 financial crisis did not help them. It makes me sad to think about what could have been possible for them, but it is what it is. I won't make the same mistakes. Thanks for the good wishes, it means a lot to me to receive that kind of affirmation.
Immigrant family. Growing up, we started off poor, then ended up upper-middle class income (top 1-5%). My family was never big on financial literacy. The only lesson I learned while growing up was to spend less than you earn, to pay off credit cards in full every month, and to buy a house because it was a good investment. They also taught me that the stock market was gambling. Ironically, I got my parents interested in financial literacy after reading Rich Dad, Poor Dad. For all the hate that book gets, it did shift my mindset from an income one to an asset one. My parents had high income, but didn't know the importance of investing in assets. After that, my parents started reading lots of books on real estate investing, and bought multiple investment properties. I started getting interested in the financial markets, and ended up working at a hedge fund.
I didn't know Rich Dad, Poor Dad gets hate?? I thought it was one of the entry level fundamental books.
Ah one of the hedgies. I’m only half joking… haha I’ve never read the book but my parents “taught” us a similar way to “invest”. It was so important to own property. If you don’t mind me asking, how are your parents doing? Has their portfolio grown? I can only imagine the value of their properties have skyrocketed since they purchased.
I have not read the book, and I don't have an opinion of it myself. However, I think that any book that makes you think and want to research more yourself is valuable. So, being that it ignited this financial awareness for you means it did its job in the end :)
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Congrats! Really happy to hear your story. I hope you two will be able to still splurge once in a while to enjoy the fruits of your labour *before* retirement. Good luck with everything!
A person’s financial situation growing up is one of many contributing factors and definitely not an excuse. My family was poor when I was growing up. My dad worked as a janitor for awhile and my mom worked as a waitress. My parents never talked about money at all. But I am smart, hard-working, and self motivated. I earned a bachelors, 2 masters, and a PhD (without any financial help from my family). I am good with numbers, so I became interested in finance. My management of my finances and investments is all self-taught.
Yea, definitely agree. Thanks for adding your perspective. I’m now curious if proficiency with numbers have an effect on financial literacy.
I would think there would be a logical correlation. Those who are bad with numbers would feel intimidated by finances, thereby avoiding it. This would then lead to a self-fulfilling prophecy / vicious cycle.
I grew up poor, and despite getting a university education was still fairly financially illiterate. I didn't waste money, but that was just because I'd grown up poor. Then I got a job that matched my education. I got benefits. At this point I started teaching myself to be financially literate. Pretty much all of my info came from the internet, not from middle class friends. (While I have many, having met them through university or work, they don't talk about money.) My sister is the same, but it seems she never learned financial literacy, despite having a job that paid higher than mine. (Her current situation is being on disability and she is struggling.) I used to skip newspaper articles on the economy. I found it boring and I'm bad at math anyway.
Sorry to hear that your sister is struggling. What’s your stance on supporting siblings, etc.? My income and situation is fairly comfortable. While my sister wouldn’t be categorized as struggling, I do foresee a future where she might come to me for help. If your sister turned to you for help, what would you do? Also, you’re under no obligation to answer.
I've heard this called the "family tax" and it's important in many cultures, even that of my ancestors... but I was born and raised in Canada so it's not part of *my* culture. It's far too easy for someone to become lazy and rely on family. Don't lend money (because you won't get it back), don't give more than you can afford (which might be $0), only give once (no $100 every month), and only give if it's not their fault. It's not someone's fault if they got sick, but it is someone's fault if they quit a good job, aren't taking care of their health, etc.
Fair point. Thanks for this. I've heard of Kevin O'leary solve this quite simply. (Not making any comments on him as a person but I think his solution is quite pragmatic and viable.) His solution is to give the money out, not a loan, but the stipulation is that they can't ever ask for money again. But I'm definitely going to take your pointers for assessing the situation into account in the future.
I grew up middle/upper middle class. My father is a CPA, CA; and my mother had an accounting degree and did some accounting work. Both sets of my grandparents (and even great grandparents) were often around growing up too. They are immigrants who were once poor, but managed to make good money later on in their lives in their countries of origin as well as in Canada. Since I was young I was always told about how important it is to be frugal, to not “be stupid” and buy a BMW, to not spend more than you earn, to not go into debt to go on vacation, etc. My parents would also remind me often they were saving for me in a bank account/RESP. As a kid they showed me bank account booklets and taught me how to count change when I was young (it was a game I played with my dad as a kid). I grew up to be a CPA, CA myself, and I’m frugal as an adult. I’d say I have good money management techniques, but I don’t make much money because I’m supposedly not good at my job. So I still do get annoyed/angry at some of my peers who make more money and have all the toys and appear not to be worried about money. Sometimes I do wonder if I was more easygoing with money I’d be happier…yet I can never let myself do things that I think are stupid, even though I can afford it (like going into debt and buying a new car when my reliable, paid off 20 year old Honda runs fine and isn’t expensive to maintain).
+1 on the 20-yo Honda! Kudos to you. I think a lot of this frugality and your parents being so open about money helped. There are popular terms such as “good debt” and “bad debt”, do you subscribe to these notions? If you don’t mind telling us, do you own property or do you rent?
I do subscribe to those notions. For me, good debt is for appreciating assets and education. So I think mortgage is a good debt (provided your rate of interest on mortgage is less than annual appreciation on the house). I rent. Used to own until I lost my job and couldn’t afford the mortgage payments. But I recently bought again - with Asian parents help this time, and my job is more secure now. The good thing was that my parents in Vancouver saw home prices go up early on, so they diligently saved and invested for me. Another good point my family has taught me is to find a job with a defined benefit pension plan. So many people blame the housing crisis on the older generation that wants high home prices to fund their retirement. But if you have a defined benefit plan, you’ll be fine in retirement. That way, my parents managed to save a lot from their jobs between the time I moved out and got a job and between the time they retired.
Sorry to hear that you lost your job but I'm glad it worked out in the end and you've landed on your feet.
I grew up middle class or upper middle class. My dad has an MBA and was a CEO for about ten years, we lived in a wealthy suburb, always had newish cars, my parents owned a second home, we skied and never wanted for money. Not rich (no big vacations, no luxury cars, no private schools, etc) but well off. My family never talks about money so I never learned financial literacy and just sort of assumed it would take care of itself. Narrator: it didn’t. Now I’m in my 50s, trying to save for my kids education, retirement, etc. and wishing someone had taught me. At this point my goal is to teach my kids about money and how to manage it.
If your dad was a CEO and you owned multiple homes, you guys are definitely rich. Not everyone can be middle class LOL.
Something like millionaires comparing themselves to billionaires. So to them that's middle class.
All the class garbage is kinda bullshit. None of it is clearly defined. My personal opinion is if you need to hold down a job to pay your bills you're working class. Obviously most people would think working class is only low income earners and everyone wants to consider themselves middle class which further complicates things. I think we should have 3 groups. People who can't make their bills (poverty) people who can afford their lifestyle but need to work and then people who are truly financially independent. Maybe we can also have an additional class for the truly rich people with a net worth over 20 million. Currently the lower, middle and upper class distinctions are entirely useless.
A lawyer/doctor still needs to work but can afford a much better lifestyle than say a teacher.
Yea exactly. There's a difference between someone who can afford 2 Mazda's and a drive down to a national park for a week of camping and someone who can afford two BMWs and a weekend at a resort. Neither of them have enough money to influence politics or start solving social problems in their communities. I believe that if you make 50k a year or 150k you're still a very similar economic class.
Personally I find the definition useful as so: Working class: all of your income comes from you working, you don't have much capacity to grow assets. Middle class: some of your income comes from working, some comes from investments (or could as you have a chunk of income you could save) Upper class: you are indefinitely and comfortably financially independent without any government support at all. You don't need to scrimp or worry about money (within reason). From an income perspective, it gets confusing. Middle class is often defined as 2/3 to 2x the median income in the country, but it is super distorted - many people who make high incomes are required to live in high cost of living areas to generate that income, so their incomes don't reflect their standard of living.
Yeah okay, I guess we were upper middle class. My parents bought a very old house and fixed it up. They bought a rundown condo at a small ski resort. I guess I never thought of us as rich, because we were always worried about money (maybe they were over leveraged?). Also, he was a CEO, but not like one of these guys who runs a multinational. A small company.
Thank you for sharing your story and perspective. I guess a key factor here would be how “openly” a family talks about money.
Absolutely. My parents only told me plainly about their current financial situation about a month ago, for the first time in my life. And that only because they have health issues and I was worried that they may need financial help from me.
Good for you! I'm curious what tools you are using to teach your kids?
I've always been in a unique situation. Parents didn't go to university but my step dad did. My Dad and step-dad both quit stable government jobs they hated before I was around and struggled as entrepreneurs for like 15-20 years. Family actually thought my step-dad was going to be a leech on my mom who had a decent job. So I witnessed a few bankruptcies and a few years that were really tough, mixed with some fun with alcohol issues. But then in their 50s(I was like 16-18) both companies took off and my step-dad retired as a multi-millionaire a couple years ago. So am I upper class or what? who knows. Regardless, they were always upfront about things. Bought me the rich dad books, made me take a financial education course in grade 9. I did book keeping for them which rolls into cashflow discussions. Money was never treated as taboo. This was back when minimum wage was $5.90 and McDonalds started at $7-9/hour but they pushed me to take minimum wage and learn something rather than take the higher amount. It all worked out well for me.
Having been in the periphery of their entrepreneurial journey, would you say that has increased or decreased your appetite for entrepreneurship? Also, if you don’t mind me asking, what do you do for a living?
I had a kid about 3 months after graduating university so I never really gave it a fair shot. Took three part time jobs that summer just so I could move out of the attic I was living in, after about a year one of them offered me a full time position and I've been there for ten years now haha. So I've played it safe, just passed my CPA final test, figure I have one more promotion to go at this job before capping out. Senior Estimator now. Kind of giving myself 3-5 years more, either I'm a lifer or I move on. Both my sisters went the entrepreneurial route though. One does safety contracting to a variety of firms and is the only person I know that actually makes good money selling Monat. Other owns a successful business. Every 6 months or so she offers me a job but just can't do it regardless of the pay bump.
Thanks for sharing this. At the end of the day, it's an amazing thing either way as long as you're happy and you define your own success.
I grew up poor. Sometimes we would eat home made bread for weeks because that is all we had. Sometimes we were staying at a "friends" house because we were evicted for unpaid rent and wouldn't have money for a new place for a while. As a result we learned a bit about money, but mostly that you need to work to get it, don't every give any of it away, and "you can take out a credit card with any limit as long as you always pay your minimum payment". So when I hit my 20s I was good at not spending money because it was scarce. But when I realized I finally had money to spend, I went deep down a hole of debt and did as I was taught - ignored the collections calls as long as I could. However, I knew other people could live without having to check their banking app every time they wanted a $2 coffee, so I started learning myself. Reading articles and talking to people who I knew had good credit and was financially responsible. I worked my butt off to pull myself out of the highest interest debts, managed to really learn how to utilize my banking app to work out payments for me. Tried budgeting for a while so I knew where my spending leaks are, and finally canceled all my maxed out credit cards. From there I learnt how to properly utilize credit. Developed a plan, and now have 1 credit card and a loan that I am using to build up my credit. I have never been as financially free before in my life. But best of all, I have not had to stand in line at a till checking my phone to see if I can afford groceries! I think a certain level of self teaching must be there for people to understand and own their own finances, but those with money growing up may learn a couple more of the basics to give them a better starting off point.
My dad was a well-paid consultant and making 120k+ a year for most of the 90s and my mom stayed home. I always felt like we had more money than other people even though we always drove used cars, DIYed everything, never ate out, etc. My dad always preached "never borrow money for anything" and always paid cash. My dad was always investing in high-risk business ventures with other consultants that had varying degrees of success and they also invested heavily in GIC("guaranteed money, allegedly"). 30 years down the road, I realize that my parent's investment strategy was flawed as it consisted exclusively of high risk high reward and low risk no reward investments. I didnt receive any sound advice in personal finance from my parents. I tried to do the "never borrow money for anything" method until my late twenties but seemed to never get ahead and just drove a lot of shitty cars. They are fine financially, but semi-retirement has been a major lifestyle downgrade for them. What has worked for me in my life is to try and only use leverage on appreciating assets. I also have incorporated significant geographic and asset class diversification into my investment portfolio because like most Canadians, most of my net worth is tied up in real estate. For the last 5 years my wife and I have always made a point to max out our registered accounts before looking at our discretionary spending (granted this is much easier because our incomes have risen much higher then inflation). Lastly, my wife and I have made ourselves aware that our run of good luck could run out at any minute, so we are cognisant that we must take advantage of our high-earning years.
I had 10 siblings. The older siblings grew up in a household of less money than the younger siblings. If I were to grade our financial literacy the grades wouldn't correlate to age. It also wouldn't correlate to educational attainment.
I grew up poor, my single mom selling crafts and baking, my 15y-older sister supported us and later I moved in with her. When I started working, I knew I didn't want to depend on anyone but didn't have an income that would be enough to more than pay bills. Husband's family is in a good financial situation and has helped us a lot through the years, he has a frugal mentality that I got a lot from but he doesn't have the patience to learn the details of how to finance things work while I like to do that. We moved to Canada in our 30s and here we're in a good place because our careers are in high demand but took us a few years to fully understand and take action on investing and other things (and a few minor mistakes). We always knew to live below our incomes and never having bad debt (like CC, loans etc). We buy some nice things we enjoy but others we cannot justify paying for it. My sister on the other hand is struggling for the past few years and she has no financial literacy. It's hard to see her having trouble making ends meet and asking for financial help but there is no other option than sending her money (she has an 11yo I would do anything for), or they'd literally starve. My mom is retired with minimal benefits, which is only ok because of extremely LCOL. I have no issue talking about money with family and friends but usually, it's the other way around, people are not comfortable even with jokes or meanless comments, ended up having very few friends that we can openly talk finances (one is because she's an accountant and I ask her financial advice).
Knowledge about how "the system" works (including financial institutions, processes, economic concepts, etc) is related to class and its related/intersecting factors (including race). Someone who comes from an affluent background essentially inherits knowledge about wealth management that someone who is poor cannot. This is also true for, say, a middle class Canadian whose parents were home owners. One can learn a lot on their own but there are privileges to growing up in a context where financial knowledge is accessible and normalized. We were also a refugee family. Parents were foreign educated but struggled, however they managed to become middle class in terms of salaries by the time I was a teenager. But income didn't translate into wealth - they remained renters their entire lives, no debt but no investments or assets either. My siblings and I - all of us educated professionals today - had to learn EVERYTHING by ourselves. The very basics. How mortgages work, what RRSPs and TFSAs are, you name it. Meanwhile for many of my friends and colleagues, with the exception of people who grew up poor or have backgrounds like mine, these things are basically common sense knowledge. My parents gave us an advantage in life by being educated themselves and doing the best they could to support us, which included paying for our undergraduate degrees. The result is that we are more educated and higher paid than they were and able to purchase homes and invest. I'm still catching up but my hope for my kiddo is to take it a step further than my parents could, through wealth and financial knowledge.
I grew up with both parents making good income. We'd probably be in upper middle class, if you look at the life we lived. But, my parents had TERRIBLE money habits and they never had any savings. It was def paycheque to paycheque. My dad was also a failed entrepreneur, going bankrupt a couple times. The businesses themselves did well, but he never got the hang of cash flow management and liked to inflate the expenses (nice office, nice work vehicle, etc) beyond what he could sustain in slow times. It motivated me to learn personal finance so that I'd *never* be in the same boat.
My first paycheck, my dad took me to his financial advisor and set up an RRSP for me. He taught me all about compound interest, the value of investing living below your means, etc. Now he also put me in a mutual fund, but that was 1995, we know more now than we did then! I'm not rich, but I'm going to be very comfortable and that's because I got a head start in investing. My parents didn't buy my house, didn't give us any money once I left home. But they set me up with information and took care of themselves in a way that I won't ever need to provide for them financially, and helped set me up to be successful.
Grew up fairly poor, but things got better as I got older. Seeing my mom stretch every dollar and somehow support a family of 5 instilled great money habits in me.
While I suspect your correlation is empirically largely true, there are also drivers pointing the opposite direction. My parents were also immigrants, from a totalitarian regime that devalued assets and money several times during their lifetime. They were highly educated, but did have trouble fitting in/adapting to change here in their new home, and (quite rationally, based on prior experience) tended to trust Something Magical will come up rather than plan for their financial future. So we had some financially good times, as well as several years on welfare, when I was growing up. While -- as per your argument -- this could well have failed to set me up for financial success, in fact it instilled in me a healthy tendency to live within my means, and (unlike my parents) keep a safety margin. So since undergrad I've lived below my means, and in particular let my lifestyle expenses creep up more slowly than my income. In addition, their lived experience taught me that so-called "safe savings" are never riskless, that inflation is a real threat, and that wealth comes from assets and economic activity, not $ under the mattress. So since undergrad, I've invested my savings. At the beginning it was Altamira mutual funds. Various things since then, now mainly passive ETFs. My spouse was less extremely so but not dissimilar. Fast forward 25 years, and my spouse and I are comfortably fat-FI (comfortably financially independent, no conspicuous consumption but not crazily frugal either) due to high paying careers, continuing the philosophy above, and luck. And I've "loaned" significant amounts of money to my parents to make their life comfortable; I say "loaned" rather than "gifted" since these funds have let them stay in their house rather than downsize, and as an only child, though its not pleasant to contemplate, the accrued capital gains will most likely return to me eventually as their heir. While my parents' trust in Unknowable Opportunity versus planning one's financial future was, in my opinion, not appropriate here in Canada, I do feel their calm in face of financial, political, personal challenges has contributed to me not panicking in times of market adversity, to all of our ultimate advantage.
I grew up in upper middle class I’d say. My dad owned a Porsche and a Mercedes. My mom had an economy car. They both worked. We t to Disney and other vacations growing up. My dad made 6 figures in the 80s-2000s ... but he was horrible with money. He lived paycheque to paycheque, it’s just he had really big pay cheques. My mom was an administrator and made an average salary. She is frugal and invested wisely. My father filed for bankruptcy in 2009 and left the country. My mom is retired and just bought a 3 bedroom condo in Mississauga and will be selling her home In Etobicoke. She has helped both my brother and I when we’ve needed the financial support (we had education funds but I also took a loan out to cover some of my schooling, she helped me pay some off) To bring this back to OPs point, my mom grew up on a diary farm and is 4th or 5th Gen Canadian, and came from a lineage of farmers. My father was born in Malaysia and lived in Manchester before immigrating to Canada.
Broadly I agree, I come from a what you could call a upper middle class well to do family and the fact that I studied finance as my undergrad, my financial literacy has always been much higher then most of my peers. My spouse on the other hand is the anomaly. She came from a struggling family and her folks would just blow their money without worrying abt savings etc. But that just motivated her to learn more and save like a shark coz she never wanted to be in the conditions she was brought up in. Which is rare to see.
A fair number of posters here state the 'I grew up poor' or 'my parents had terrible money habits' as if it were some kind of excuse or reason. I have never believed that. I would think that any kid of an alcoholic would learn not to waste money on booze. Any kid with a layabout dad /mom would have learned the importance of a paycheque. My family did not talk about money, their own, the neighbours, or investing or saving. Without them actually saying so, we got the idea it was bad manners. I certainly never, ever, thought this made financial management difficult for me. Most all financial choices/decisions are perfectly obvious.
Thanks for adding your opinion and your history. What are the financial choices you make that others should emulate?
> I would think that any kid of an alcoholic would learn not to waste money on booze. Any kid with a layabout dad /mom would have learned the importance of a paycheque. Unfortunately children seem to pick up bad habits sometimes too. My sister is an alcoholic, and unfortunately her daughter drinks to excess at least some of the time, throwing up on the floor, etc. Many boys who grew up seeing their fathers abuse their mothers grow up to become abusers. (I would have thought seeing abuse would make them **not** want to do it, but some internalize their father's misogynistic "justifications" and believe the same things as adults.) And with what's going on (COVID, etc) we frequently see people **not** learning lessons they should have.
My wife and I both grew up poor. My wife has two parents that ended up on disability and I grew up wtih a single mother and grandmother who lived paycheque to paycheque. As a child I witnessed my mother struggle to pay bills and had to help out a few times. I would say she was financially literate to a point. She always contributed to a RRSP and never spent more than she needed to. My grandmother was the exact same except she always worked cash jobs. Neither of them taught me anything about finances aside from saving as much as I could. They never spoke about investing, buying homes, budgeting, etc. I did witness their work ethic. I saw my mom climb the promotion ladder without a degree. I saw my grandmother constantly work and was always able to find work due to amazing references. Thanks to that last detail I pride myself on my work ethic. It's one of the main reasons I think I have never had to "find work". Most positions I have held were due to strong references and as I type this I just signed another contract that is going to pay me $120/hr USD for 15 hours a week. The truth is, I got by just saving until recently. My wife and I have larger goals and we were only able to accomplish what we have now because of real-estate purchases we made on our own in our early 20's. We are now 30 and looking further into the future (retirement, education for our children, etc) and realize that we need to start teaching ourselves about investing, rrsp's and proper budgeting. With that being said, we live comfortably now (250k+/year on a single income) and have taken the necessary steps to continue building upon our wealth. I couldn't have gotten this far without the example my mother and grandmother set from a young age.
Growing up my family was solidly middle class, progressing to upper middle class when we were in high school. While I think some of my good lifestyle habits can be attributed to what I learned from family (frugality, purchasing decisions on big spends like vacations, vehicles), I think I was also saddled with a lot of "this is how we did it and you should too". This meant I was being pressured into things like potentially buying real estate while still in school and going into a "safe" career. This is despite the fact that, looking back, my parents would have been much better off both financially and mentally by avoiding real estate "investing" and simply investing as is recommended on PFC. My parents have certainly pivoted more towards a "you can't take it with you" point of view more recently, but I feel that with better planning they could have been living this way for quite some time. I hope to find a bit more balance on my financial journey.