Who is going to buy your home?
Every successful business needs an exit strategy for the owner, whether it is selling the business, passing it to the next generation or selling off the assets.
Individuals also need a strategy to exit the workforce. They need financial resources for retirement which could come from a company or government pension, savings or the capital from downsizing the home that doubled in value in the past few years. Right now we have a ready market for our homes: the boomers are moving here in droves, driving up the price of homes and offering diversity for our exit strategy.
But will this opportunity be there for you if you downsize later? Will the next generation be ready to provide that exit opportunity? How are our kids going to be able to afford to purchase a home (yours, or your neighbour’s), raise a family, save for their retirement, or save for their kids’ education? If we are in business and smart, we groom a successor. In the rest of our lives, we may need to groom that succession as well. All of the statistics show the same story – more education equals more career security and more earning potential. To prepare for our succession, we need to ensure the next generation is educated!
At the recent Malaspina Foundation Business Breakfast the Keys to Success campaign was unveiled. The goal of the Foundation is to double the amount of money available for scholarships, awards and bursaries. Education costs!
If education costs cause dropouts, our exit strategy is at risk.
Half of the College and Bachelors graduates leave school with student loans. The amount owing in recent years is on average $13,000 for College graduates and $20,000 for Bachelors graduates. This debt load is 30% more than in 1995 and a whopping 76% more than in 1990. Only 20% had paid off their debt in 2 years, and those were the ones with the lowest loans.
A report from the CBC News online in September 2004 indicated that many of the graduating students had debts other than student loans. They often owed money to their parents and to credit cards. The average debt load is well over $30,000. Education costs too much.
At the breakfast, Foundation Chair Mike Brown announced that the Pepsi Bottling Group "kick-started” the campaign with a $15,000 donation over the next 3 years. "Pepsi will match the donation of any company, business or individual that pledges $250 per year for three years. That alone could provide 60 new $500 awards for students.”
At this event, several other donors were recognised for creating new awards this year, including the Campbell household! We decided to set up a new award for an Aquaculture student. One of our reasons is that we would like to see more young people graduate with less debt and a better start in their career or business development. We aren’t thinking of selling up yet, but you cannot be too early in lining up a new buyer.
Having decided to do this, it is rather good to get some immediate gratification. A $1,000 contribution attracts a $437 tax credit so there is an interesting way to leverage that investment in the future, which is only costing $563!
Gill Campbell is a certified financial planner and an independent insurance broker. Please email her with specific areas that you would like her to consider in developing future columns