Wednesday, September 21, 2011

Getting Real About Personal Finance with a Money-smart Dad

My interview with Som Seif, President of Guggenheim/Claymore Investments Inc.

Som Seif
A money-smart dad
Som hit my radar this summer when he filled in a few times for Kevin O'Leary on CBC's The Lang & O'Leary Exchange. I was impressed by his analysis of the business news particularly because he focused on how blips and pitches in the economy impact the budgets of ordinary Canadians (by ordinary, I mean those of us who do not call Bay Street "home"). As it turns out, this Toronto-based investment banker and father of two is passionate about financial education.

According to Som, being financially literate means having the ability to understand:
  1. your personal finances and balance your income and expenses.
  2. how much money you will need in retirement.
  3. how to invest to meet your future needs.
These skills, he believes, are lacking today. "I don’t believe that families in Canada have the financial literacy they need to balance their own budgets," said Som, pointing to recent reports that personal debt and spending are out of control and that many Canadians do not realistically prepare for retirement. 

Though he believes that families are responsible for their children's financial education, Som acknowledges that this may be a problem for parents and caregivers who are not financially literate or disciplined when it comes to spending. I agree.We need to get real about the state of our household finances as well as the state of financial literacy in Canada, especially when it comes to raising the next generation.

Kids & Money
Beyond "getting money to buy stuff you want," Som didn't learn a lot about budgeting and investing until after high school. It wasn't until university, and then later at his first job, that he learned the importance of having a balanced budget and investing for retirement. Som's hope is that Canadian high school students will start being taught the details of investment and retirement, particularly the benefits of investing early. For younger students, he believes that the fundamentals of balancing a budget should be part of the elementary curriculum as soon as possible.

One of Som's contributions to the "talking to kids about money early" movement involves teaching his two-and-a-half year old daughter about saving. Som shared a story about the time he took her to the bank to set up her RESP account. In the advisor's office, they emptied her piggy bank (which had about $500 in it) and counted out the money. Then they gave the money to the advisor. His daughter was not happy about this. She had been diligently putting money in her piggy bank a couple of times a week for a long time. She cried for hours after they left the bank leaving he and his wife wondering, jokingly, if his daughter had picked up on some mysterious reason we shouldn't give our money blindly to the bank.

Talk about getting real about money! Som's daughter freaked out because she was blind in that situation. She didn't understand why her money was going to the bank or what would happen to it there. We adults face that all too often when it comes to financial products. When I asked Som what word he wishes that we all understood better, he said, "fees." 

Not surprising coming from an ETF guy, but he has a point. We have to get real about borrowing, spending and investing for retirement. And we need to get real about the fees we are paying as we do. The sooner we (and our kids) get money-smart, the less likely we will find ourselves crying for hours when we leave the bank...something that's not hard to do these days with all the blips and pitches.


Watch for Som on my new financial literacy show Money Moment with Laura Thomas. And if you have a personal story to tell about dealing with debt or credit, check out the Credit Education Week website. There is an essay contest for Grade 12 students (maximum 1000 words) and one for adults (maximum 300 words). The deadline for both is October 21, 2011.

Copyright 2011. Laura Thomas. All Rights Reserved.
For reprint permission contact moneyme at telus dot net.

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