Financial Literacy Month gives us an opportunity to share lessons which are crucial to maintaining your financial well-being with friends, family, and the community. Throughout April, our colleagues will be providing helpful insights about the role of finance in their lives, and how they are passing on the lessons they have learned to their children and families. We hope their feedback can assist you when talking to someone in your family about the benefits of understanding the world of finance throughout their lives.
We spoke to Shivan Somaratne, Investment Associate, about what the next generation should be learning in regards to finance and the value of money. Visit our Financial Literacy page for resources parents and teachers can use when talking to children and young adults about finance.
As someone who is in financial planning and wealth management, why do you think it’s important to be financially literate? How have you benefitted from being in this industry?
I find that the current state of financial literacy in our country is very troubling. In my opinion, I think it should be required learning at all grade levels, as it is one of the most important life skills a person can possess. Working in the Financial Services industry, I have greatly expanded my knowledge base on the complexities of financial literacy and have benefited by implementing the strategies that I have learned about into my personal finances.
When did you start to learn about the importance of finance?
I started supporting myself at the age of 15. For the first year of my working life I had absolutely no idea what I was doing with my finances. I would spend my entire paycheck before I would even receive it. It wasn’t until I learned about budgeting from a friend’s dad that I started to learn the importance of managing my personal finances.
What should the next generation be learning in regard to finance and value of money? Are you teaching this to your own children?
This is something I talk to my 5-year-old about all the time. I think teaching children about the value of money and the value of hard work are paramount. My son has a list of daily chores that he completes in exchange for a small weekly allowance. He is then allowed to purchase goods on his own with the money he earns.
Talk to us a little bit about starting a college fund for your child/children? Is this important for parents to include in their overall financial plan?
If you have a child, open a college savings plan…period! This is one of the most valuable gifts you can give your child. I have 529s for both of my boys, we contribute to their plans regularly.
What is your best piece of advice in regard to saving/investing/knowledge that you’ve either given or received?
If your employer offers a 401(k), make sure you join the plan. Contribute aggressively and actively manage your investments. You will be surprised at how quickly your account value grows.
What is something you found challenging when learning the benefits of financial literacy and how did you overcome it?
I found debt management very difficult early on. At age 18, I opened up a couple high-interest credit cards, and quickly realized that money wasn’t free! I found that being strategic with your debt repayment was the best method for me. Aggressively paying down high-interest debt, and utilizing low-interest debt to increase buying power when needed.
Shivan’s teenage years taught him many lessons about managing money and creating budgets. While he initially struggled with his personal finances, the advice of a friend’s parent helped get him on the right track. Now he is passing the lessons he has learned about finance throughout his life down to his own children. This week, reflect on how you manage your money and if there are any areas you can improve on in your budget or retirement planning.