“…getting a well-rounded education on finances provides a holistic mindset for how money works and how you will get money to work for you over the long term.”

Michael Thorpe, founder and president, Blackwell Financial

Need help with finances? Have no fear—Michael Thorpe is here to help!

Thorpe is a financial advisor and the founder, president and senior advisor at Blackwell Financial. He promotes financial literacy, especially pertaining to building intergenerational wealth, sharing practical knowledge you can pass on to your family and community. 

The entrepreneur also sits on the board of directors at the Canadian Association of Urban Financial Professionals (CAUFP). In addition, he proudly serves as a reservist in the Canadian Armed Forces.

IGNITE recently had the chance to sit down with Thorpe to learn what financial advising is all about and to garner his insight and knowledge on student money management.

Here’s what he had to say:

Tell us about yourself! How did you get started in financial planning?

Thorpe: I’ve always been a people person and I have focused on relationships.

I worked in urban planning prior to making the shift and I came to a point where I wasn’t directly seeing what impact on people my work was doing. I worked for a self-made billionaire at the time and decided I wanted to pursue entrepreneurship and find a career where I could interact with clients.

Michael Thorpe.

What are some of the biggest financial mistakes you see students make?

Thorpe: I’ve come across some well-informed students who sought me out. But I would say the top two mistakes I see are not seeking knowledge on financial matters and sticking to a budget.

Gaining financial information when you can is good, but getting a well-rounded education on finances provides a holistic mindset for how money works and how you will get money to work for you over the long term.

For those of us who aren’t well-versed in financial language, can you explain what credit is?

Thorpe: Credit is a measuring tool that indicates the capacity for someone to borrow and repay the money.

Your credit score is calculated mainly using the following factors:

  • Your credit and bill payment history
  • How much credit you currently are using vs the total amount available to use
  • The length of time you have had a credit history
  • Public records of your bill history
  • How many inquiries have been made to check your credit history

One of the best ways is to get a low-balance credit card—like $500 to $,1000—and use it to pay for regularly occurring bills, like cell phones or internet plans.

Unless you know you have good spending discipline, try not to use the card for purchases you can’t afford. Rather, use it to start building up a good credit history of paying bills on time to show future creditors you can handle debt.

Credit cards.

In plain terms, how would you describe “investing”?

Thorpe: Investing is a way of using your money to gain future profit and gain growth.

When you invest your money and give it to an institution, fund or property, you take on a varying range of risks with the expectation that you will be rewarded for your risk and get more money than you originally gave.

If a student is able and wants to start investing while in school, how would you recommend they get started?

Thorpe: One of the easiest ways to invest is to go to your local bank and open up a Tax-Free Savings Account (TFSA).

This is a free investment account type, created by the government to encourage Canadians to save. You can put cash (risk-free) into a low-interest TFSA or invest in mutual funds, stocks or other funds like exchange-traded funds (ETFs) that will grow in value without triggering any taxes.

Other than the bank, students can check out free trading apps like Wealthsimple to help them explore investing!

"There's an app for that."

My parents told me to start saving money for retirement now. In your opinion, is it smart to get an early start on retirement savings?

Thorpe: Money that is invested will compound and start to grow more and more as time goes on.

Invest $100 today, that could grow to $105, then that $105 becomes $112, that $112 becomes $129 and so on. The longer you have money in a consistent investment, the more you will have long-term.

I think it is important for students to think long-term. But there are many financial expenses that will come up in the short-term and they may want to also prioritize—like paying off student debt, building emergency savings, saving for living on their own and so on.

I tell clients to enjoy what they have now as long as they know they can meet their future financial goals.

What spending strategies would you recommend students incorporate to set them up for financial security after graduation?

Thorpe: Depending on your income and expenses, try to allocate a certain amount of money for you to comfortably enjoy. Unnecessarily depriving yourself of using the money you work for can take away some of the motivation and satisfaction and vice-versa; spending all your money will cause some regret later on.

Giving a number or percentage for required savings will not apply to everyone, but one way to help to stay within your means is to have a few accounts set up for daily spending, long-term savings, entertainment and other areas to help know what you have set aside for a particular purpose and not spend more than that.

Comedian Kathy Griffin says, "I love organization."

Where can students learn more about managing money?

Thorpe: The internet can be used at any part of your financial journey, whether to learn new ideas and concepts or to deepen knowledge and learn how to apply existing principles better. Google is pretty obvious—but one area some students may not be using are podcasts and social media channels.

Family and friends who are older and have had some opportunity to figure their own finances out would be another good source.

And, don’t be afraid to talk about money financial mindsets with people you can trust! When you are ready, it would also be helpful to talk to a financial advisor or planner about your finances. It may be too early in your financial journey to becoming a client, but they can help confirm or dispel any information you have about finances and help orient you to the direction and approach you need to get to your goals. 

If I were to win $1000, how would you advise me to use it?

Thorpe: Depends on your life story! I would tell you to take a small portion and enjoy it now—like treating yourself to a good meal or relatively small expense. Use part of it to cover books or the cost of an upcoming course, and then put some money away for long-term savings.

Mr. Krabs showers in money.

This interview has been edited for length and clarity.

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