When you’re young, eager to succeed, and trying to get your finances squared away in the process, it can be just as important to talk to your parents or guardians about financial issues as it can be to speak with any professional advisor. Just like you, your parents will have gone through a lot of trial and error on their way to achieving financial stability. Everyone makes mistakes and if they’ve been mature and responsible enough in the past, your parents will have learned from theirs. They’ll also likely have some solid advice that you could benefit from.
So, if you’re thinking about making any changes to your bank accounts, starting any investments, or making any other big financial decisions, it can be good to get a second opinion from them. Not only will they appreciate you coming to them first, but they might even give you some pointers that a financial advisor, banker, or investment broker won’t. After all, financial professionals, while their information might be correct, are ultimately trying to get your business. However, your parents will hopefully only have your best interests in mind.
Have You Ever Fallen Victim to Identity Theft, Fraud or Any Kind of Scam?
This one of the most important questions you can ask your parents and one that you should keep in mind when going over your finances. No matter what financial decision you’re making, especially for larger expenses like mortgages or car loans, it’s essential to remember that somewhere, someone will be profiting from your business. The problem is, there are a lot of scam artists out there who prey upon those who aren’t properly informed about how they can steal someone’s money and personal or financial information. With almost everyone having access to a computer, it’s becoming increasingly easy for scammers to do so. Unfortunately, scam artists and identity thieves have been around since long before your parents were born and will continue to be around long after they’re gone.
So, now is the time to ask your parents about any bad investments, scams, identity thefts or fraud (credit card fraud, etc.) that they might have fallen victim to in their time. While some parents will have been lucky and savvy enough not to have been scammed, remember that scam artists can be clever and make a living by stealing from hard working individuals. If one or both your parents have ever been victimized by a scam artist, don’t judge or make fun of them, because it happens to the best of us. Instead, you should learn from their mistakes and use their experience to make sound judgement calls when it comes to financial transactions.
Here are few examples of recent Canadian Financial Scams you should watch out for.
Where and When Should I Invest My Money?
Another question with a seemingly endless string of possibilities. You’ll definitely benefit from asking your parents about any good and or bad investments they might have made. In today’s financial world, there are a number of different investments you can spend your money on that can either make or break your bank account. If your parents seem to be in good financial health, chances are they’ve made some sound investments. Many parents will have invested in various companies (or their own), maybe minerals, oil and gas stocks, etc. Since the stock market fluctuates regularly, they can also give you some advice about when the best time to cash in on your investments might be.
Investments are certainly not limited to stock shares either. One of the first things that your parents and most financial advisors will steer you towards are going to be things like RRSP accounts and mutual funds. They’ll probably also tell you to start contributing to your RRSP as soon as your can, and how much money to regularly put into that account, versus how much you should be depositing into your chequing or TFSA. You can also ask them about what level of risk their mutual funds are and how much they tend to get in return for the money they’ve been investing. You don’t necessarily have to take your parents advice about how much and where to invest your own money, but it’s a good idea to at least listen to what they have to say.
Should I Sign Up For a Certain Credit Card or Other Service?
As soon as you open your first account and start making regular trips to your bank, it’s inevitable that you’ll run into tellers or salespeople trying to sell you their products. Those salespeople have a quota to fill, you are a client and they need your business. One of the first things they’ll try to sell you will probably be a credit card. It’s their job to offer you deals, credit limits, every perk in the book to rope you in. And, the reality is that in this day and age, credit cards are all but essential. In fact, prudent use of a credit card or any other similar financial product for that matter is a good tool for building a solid credit score.
Since there’s a strong possibility that your parents go to the same bank as you, it can be helpful to ask them which products they’re currently using and if they find those products to be helpful or not worth the trouble. Some credit cards come with annual signing fees, which they might advise you against. Maybe there are certain places or stores they shop at where you can get rewards/travel points. They can also tell you about whether it’s best to go to your bank or another type of lender for any loans that you might need, and which organization offers the best interest rates.
For information on Canadian Banking Fees, click here.
How Much Money Should I Be Saving/Spending, and Where Should I Store It?
One topic that your parents have likely bugged you about at some point (with good reason) is what you’ve been doing with your money. This will be especially frequent when you’re working a regular, hourly wage job, instead of one with a more reasonable salary. It’s important to save for the future, so when they see you spending money on something that they consider “a waste,” it’s probably because they themselves have, at one time or another, spent a similar amount of money on a similar “waste of money.”
While it may not be relevant now, sooner or later you’ll find they’re advice becoming more appropriate, as you go through life and slowly realize how good it feels to have money your bank account. So, it’s a good idea to ask them about what kind of accounts they might have. You can also ask them if the banking fees that they pay are standard, and if the services they get in return are worth those fees. They might tell you how much of your paycheck to set aside, maybe teach you about the benefits of automatic savings and payments, and the importance of having an emergency fund.
What Kind of Expenses/Taxes Do You Have to Deal With When You’re a Homeowner?
One of the most important things you should start considering when you’re young, then ask your parents about (if your parents are homeowners themselves), is just how expensive it is to be a homeowner. Property taxes, mortgage loan payments, interest rates, unexpected emergencies, repairs, etc. It all adds up, so getting your parents advice about they dealt with buying their first home, is priceless.
You can also ask them about the Canadian Home Buyer’s Plan and whether they decided to choose it to finance their down payment, rather than taking the money from their savings account. The process of being a homeowner will have taught your parents much of the knowledge they still use today, so they’re likely a good authority to speak to when you’re considering purchasing your first house.
After I Was Born, Did You Live Off One Income While One Parent Stayed Home?
This is a common occurrence when two parents decide to have children. Whether it was your mother or father that stayed home until you were ready for daycare, someone needed to look after you while other paid the bills. If you’re thinking about having kids some day, this is a good question to ask your parents.
Just like becoming homeowners, living off one income during your infancy will have taught your parents a lot about saving and budgeting. Lessons which they can now pass on to you. Kids are a big responsibility, both emotionally and financially, so it’s important to learn about those aspects before making the decision to have them.
For an article about mothers and what they can teach us about money, click here.
Have You Ever Had Serious Debt Problems, Gone Bankrupt, or Dealt With a Collection Agency?
This is another area where you should approach your parents with care and respect. After all, the subject of their debt could be embarrassing for them and they might not want to admit the problems they’ve had if any. Nevertheless, those problems could very well be something you’ll have to deal with in your lifetime, so it’s important to ask them about it.
So, ask your parents if they’ve ever had a bad debt problem, gone bankrupt, or if they’ve ever been subject to the legal ramifications of a collection agency. If so, ask them how they managed to get through it. Debt and bankruptcy can certainly have serious consequences for your finances and your credit, so these are topics you should discuss with them, even if they’ve never had to experience them.
If you have children of your own, read this article for a few things you should teach them about personal finance.
Do You Have Enough Money to Retire Comfortably With?
Whether or not your parents have been making a high income up until the time they’re considering retirement, just remember, they’ve probably sacrificed a lot to make sure you’ve had a happy and healthy life. So, when they’re reaching the typical age of retirement, it’s also a good idea to for you to make sure that they’re financially secure enough to do so.
Once they’ve had one or more kids, and a mortgage to boot, it can often be difficult for many parents to afford to retire at the age they were planning on, even with benefits like the Canada Pension Plan set up. For that matter, it’s helpful to ask them about how the CPP actually works and whether you or they actually qualify for it. This is another area where you can ask them about how they’ve been dealing with their RRSPs since those are an important part of retirement. It’s good to get a vague idea about how much they’ve been depositing into the account on a monthly basis and how many years they’ve had to do so to save up enough by the time they’ve turned 65.
For more financial advice that has withstood the test of time, read this.
What Is Your Greatest Accomplishment?
When asked what their greatest accomplishment in life was, most parents will, of course, say “you.” What they might not elaborate on is the process they went through to make sure that you’ve had food in your belly and a roof over your head until you can start making a life of your own. As we mentioned earlier, your parents’ advice can be just as valuable as any a financial advisor’s, so talk to them first about any money issues you wish to discuss.
Whether or not they voice it regularly, the majority of parents just want their children to succeed, maybe give them some grandchildren in the process. So, whatever advice they do give you will be for your benefit and the benefit of your own kids.
