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Mortgage man tackles Canadian innumeracy

It’s not unusual for a mortgage brokerage boss to be concerned about how his business handles money; it’s less usual that he’d be concerned about how other people handle theirs.

It’s not unusual for a mortgage brokerage boss to be concerned about how his business handles money; it’s less usual that he’d be concerned about how other people handle theirs.

Especially young people.

But that’s Kevin Cochran’s mission outside his day job: teach upcoming generations how to handle the money they earn so they might have some later in life. That’s good news because they appear to be less fiscally informed than their forebears in an age where finances have become increasingly complex and economies have become increasingly fragile.

Cochran is not the only entrepreneur spearheading a national financial literacy campaign. Readers might recall self-made multimillionaire Braun Mincher and his crusade to institute money management instruction in U.S. high schools. (See “Market contagion another symptom of financial illiteracy epidemic” – Public Offerings issue 989; October 7-13, 2008.)

Cochran’s focus is Canada, which needs all the help it can get, because while a lot of Canadians have been lulled into complacency by the comparative strength of the country’s banks and robust resource economy, deepening personal debt loads, a rapidly aging population and a stalled growth rate bode ill for Canada’s economy.

For example, the latest TransUnion quarterly analysis of Canadian credit trends found that Canada’s average consumer debt rose to $25,960 in 2011’s fourth quarter from the third quarter’s $25,594, while the country’s annual growth fell below 1% for the first time since the global credit and information management company started tracking credit trends in 2004.

In short, too many numbers won’t be adding up soon unless more people leave high school knowing how to do that adding correctly.

Via his EnRICHed Academy, Cochran, a Toronto native, has been talking to high school students about financial literacy for the past 12 years. This is not entirely out of the goodness of his heart. The program’s DVD set costs $149, but it’s not just for high school students.

As Cochran points out: “Most people are in debt, not because they didn’t make enough money. They’re in debt because they didn’t know what to do with the money they made.”

So his program teaches young adults how to earn, save and invest that money.

Like Mincher, Cochran, a father of three children under the age of seven, learned the hard way about the perils of a low fiscal IQ: after finishing high school he was already $21,000 in debt, most of that racked up via credit cards.

Cochran’s is not an isolated case. But while the public school system deserves a caning for failing to teach students about money in a country where six out of 10 people live paycheque to paycheque, Cochran also points fingers elsewhere.

“[Financial education] has to come from the parents; we can’t blame everything on the school system; they’re our kids.”

Some are trying: a recent Canadian Institute of Chartered Accountants study found that 78% of parents surveyed have tried to teach their children financial management skills, but 60% doubt they’ve been successful.

Cochran’s research provides insight into why. His course includes interviews with children and adults about basic money matters. Answers from the two age groups often employ a disturbingly similar tactic: wild guesses.

So Mincher’s and Cochran’s initiatives are rightly aimed at the young, but the reality is that too many people in every demographic know too little about money, how to create wealth and how to preserve it.

That’s the bottom-line lesson today for the class of 2012. •