Adam Goodman

Your First Money Talk

I recently wrote the article below for a money magazine.  The article was published in June 2009.

Your First Money Talk
Five years ago, my financial life was a disaster. I spent every dollar I made and had no idea why I needed to save my money. Whether it was on cars, clothing, or just going out and having a good time, I spent my money recklessly and never gave it a second thought. I believed I was living the dream – little did I know I was setting myself up for failure. You see, my problem wasn’t that I didn’t understand the basics of financial management. My problem was that I didn’t understand why I had to care. Unfortunately, this problem isn’t unique to me. Many young people don’t understand why they need to care about financial management when they are young. In junior high and high school, students are taught math, science, art, foreign language, and yes, even physical education, but the fact of the matter is that with a jam packed curriculum, it‘s possible to graduate from grade 12 without ever studying one of the most practical and useful subjects in life – personal financial management. If someone had sat me down and explained to me why I needed to care about managing my finances at the age of 16, I probably wouldn’t be 29 years old and living in my mom’s basement.

This could have been avoided if I made some better money decisions when I was younger – of course you need the right information to make the right decisions. My first job was as a swim instructor at the age of 16. I made close to $800 per month, which is a substantial amount of money for a 16 year old (over the course of my swim teaching career, I made close to $20,000). Unfortunately, instead of saving this money or investing it, I spent it. I bought comic books, clothes, and ate out all the time – I was the typical teenager having fun and living life. No one ever told me I was doing something wrong; in fact, barely anyone talked to me about money at all. As in most households, money management wasn’t a subject at my family’s dinner table, my friends didn’t talk about it, and there was no mention of the words “financial management” in high school. To be fair, I did have a conversation or two about how to save money, but no one ever talked to me about why I needed to save money – teaching someone how to do a task is great, but if that person doesn’t understand why they need to do that task, all the know-how in the world won’t help. Fast forward ten years, I accumulated a large amount of student debt in university and continued to spend my money. The result is that I still live at home in my mom’s basement.

As a teenager I didn’t know a lot about my future, but I did know that like almost every other teenager in the world I wasn’t going to live at home forever (as a side note to any parents reading this, I’m sorry to say this, but all the free food and laundry in the world can’t compete with the satisfaction of being independent). There are costs associated with being independent, and you need to understand what these costs are so you can plan for them, and the best way to understand is to have a conversation about them. Now you may not fully understand the costs of independence from just one conversation, in fact it might take up to 10 conversations, but every conversation you have gets you one step closer to understanding.

To get you started, let me paint a picture for you about the costs of moving out. Have you ever sat down and thought about how much living on your own will cost? Well, assuming you make an average starting salary, you can expect over 2/3 of your income would be going to pay for the necessities of life such as food, rent and utilities. To put this in even more perspective, the previously mentioned costs don’t even cover the cost of buying things you want, such as a new iPod, new clothing, or a trip to Asia! Did I also mention that this doesn’t even cover the costs of furnishing your place, that is unless you want to sleep on the floor (note: these costs don’t even take into account a down payment on a house or condo, which usually start at $15,000). The table below outlines expenses that the average graduate can expect to pay.

Expense Name Cost per Month
Rent $850
Utilities $50
Phone / Internet / Cable $150
Food $200
Public Transportation $109
Taxi $50
Entertainment $300
Miscellaneous $250
Student Loan Repayment $350
Total $2,389

* Data based on research conducted on the cost of living in Toronto as of January 1, 2008.

** Average starting salary after taxes per month in Toronto is $2,892

*** All estimates are based on research conducted for Following the Goods: Financial Management for the Young and Ambitious (

Now the point of me telling you this isn’t to scare you off, rather it’s to emphasize the importance of why you need to take an interest in personal financial management at an early age; one day you are going to move out, and you’ll need money to pay for the things you want. If you don’t start managing your money when you are young, it will be hard to afford the things you want. In my case, I went away to university and when I graduated I had to move back home because I didn’t save any money when I was younger, so I couldn’t afford to live on my own. If I would have saved even half of the money I had made teaching swim, I would have had $10,000 in the bank, and it would have given me a great starting point to afford the costs of moving out. More importantly, having extra money to fall back on means being able to afford the fun things in life, such as travelling the world and shopping for things you want, as opposed to only being able to afford the things you need (rent/food). I’m not asking you to sacrifice your childhood and start working at the age 13; I’m a firm believer that you need to enjoy life. Instead I wanted to have a conversation with you about the costs associated with independence just in case no one sat you down and put the costs of life into perspective. You just took your first step in becoming informed on financial management, and there is a whole world out there for you to explore. Ask your family and friends to suggest some books for you to read on financial management, or sit down and talk to them about the costs of life and how to save money for the things you want.

Have you bought your copy of Following The Goods? Buy it today!

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