Thursday, December 29, 2011

The $0 New Year's Eve Party

Christmas is expensive and having kids to please doesn't make it any cheaper. I am dreading the arrival of the January credit card statements especially because I have a policy of never carrying a balance. I may just have to kick off the new year by dipping into my savings account to keep that policy alive unless I can limit my New Year's Eve party budget to zero dollars.

So if you are one of the (un)fortunate souls who is joining my family this year for New Year's Eve, here's a sneak peak at what the party may look like.

10 Ways to Party Like You're Broke

1. Send out invitations through Facebook. Event pages are free and easy to use. Your friends don't have to be Facebook users to get the invite. You can enter their email addresses manually.

2. Don't plan to drink alcohol unless you've still got a Christmas stockpile. Drink water or whatever else you have kicking around. Got leftover pop? Add some juice and make punch.

3. Don't shop for food. Use your holiday leftovers and comb those bottom and top shelves in your pantry for odds and ends that can be crafted into snacks for the party.

4. Out of napkins? Put out a roll or toilet paper or a box of Kleenex. It's tacky but it will make your guests chuckle.

5. If you have the urge to decorate, have the kids do some artwork. What are their dreams for the new year? Have them draw it. Or cut up your Christmas cards and make paper chains (with glue or tape) to drape across the living room. Or just keep the Christmas decorations up.

6. Dress up. Put on the fanciest clothes you have hanging in your closet. They are there anyways so you might as well use them. Go for your high heels, black ties and all.

7. Use the TV for background noise. There are always New Year Eve countdown specials on with live music and other family-friendly entertainment.

8. For kids' activities, play board or card games, have a dance party or sing-a-long and set the kids lose outside for a while with flashlights. Or, get out all the Lego and build the biggest tower you can as a group.

9. For adults, get a bunch of rocks from outside. Give everyone two rocks and a marker. Have everyone write their most special moment from the previous year on one rock and their biggest hope for the new year on the other. Have everyone share their stories and dreams.

10. Skip the made-in-China noisemakers. Go old-school and bang pots and pans at midnight.

All the best for 2012! 

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

Sunday, December 11, 2011

Christmas Spending - Frugal or Frivolous?

How high would you score on a Scrooge-o-meter?
More than once or twice I've heard my favourite money guy, Kevin O'Leary, tell an audience that if you want to discover the truth about an organization (or individual) follow the money because "money never lies." If O'Leary is right then we should be able to use our cheque books, credit card statements and debit slips to find out where our hearts truly are this Christmas. Are you more like Scrooge or Cratchit?

Until recently, all the financial evidence pointed to the fact that I was ringing the bell on the Scrooge-o-meter. I have always been the sole parent and breadwinner for my family. Having a frivolous Christmas was never an option. Every dollar mattered. I filled stockings with underwear, bath soap, shampoo, toothpaste, and even cash. Every November I would do an inventory of household goods and use that list to make what I thought were very practical purchases that qualified (in my fiscally responsible mind) as Christmas-worthy gifts. But were they?

This year, I have a new person in my world who believes that Christmas is not about giving Mom a kilogram of bath salts or Dad a package of razor blades from Costco. No, this hardworking soul believes that Christmas gifts should not be practical. He believes that Christmas gifts should be fun, carefree and most definitely not serious. In other words, Christmas gifts should be frivolous.

That's an idea that, at first, was a bit bothersome for a frugal mom like me. I mean really, doesn't it make more sense to blow you Christmas budget on things the family really needs? Won't that turn into savings for the next fiscal year? I think so. Or should I say, I thought so.

I've realized something this year.
Frugal gifts say, "It's all about the money."
Frivolous gifts say, "It's all about the person."

So this Christmas shopping season I have taken a step back from making practical purchases and I confess that it is kind of fun to lighten up.

In the process, I've realized something else. A frivolous approach to gift buying doesn't effect the amount of money you have to spend. I have a budget and I'm sticking to it. And, though it pains me a little that not stocking up on underwear, bath soap, shampoo, and toothpaste at the tail-end of 2011 will defer the expense to 2012, I can deal with it. I want my family to know that Christmas is all about the person and not about the cash. In fact, this Christmas I may just ring the bell on the Cratchit-o-meter.

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

Friday, December 2, 2011

The High Cost of Low Literacy at Home

The Velcro Effect Makes it Easier to Learn
I was at a literacy seminar once where the speaker pulled out a strip of purple Velcro. Several times, in the quiet of the lecture hall, she ripped the two purple strips apart and put them back together again. Rip, stick, rip, stick, rip, stick, until she finally told us that literacy in one area of life improves the "stickiness" of new "literacies" in other areas of life. The more you know, the more you will learn.

Beyond the literacy of reading and writing, we've had several different categories of literacy defined in recent years. These are new terms defined largely by social advocacy groups and sometimes picked up by the public sector. A few examples include computer literacy, media literacy, environmental literacy, emotional literacy, nutrition literacy and, of course, financial literacy. All of which are primarily promoted by non-profit advocacy groups that are on a mission to ensure that all Canadians have a chance to learn the language of money or feelings or whatever literacy a group is promoting.

It's no secret that I am on the financial literacy bandwagon and I promote teaching children and adults the language of money whenever I can. But when I think back to the Velcro effect, I can't help but turn the gaze upon myself as a parent. Literacy-focused non-profits raise all kinds of private money from corporations and individuals. They also receive government grants for their causes. Promoting literacy is expensive you need offices, trained staff, teaching and promotional materials.

While I'm sure these efforts are beneficial on some level, I can't help but wonder if that money needs to be spent at all. Can't basic literacies be taught at home? Are we parents just too busy to bother or is our own literacy too low to do the job?

I might not be an expert in computer literacy, media literacy, environmental literacy, emotional literacy, nutrition literacy, and financial literacy, but I do talk to my daughter about the basics of surfing the Net, the power of advertisements on YTV, the benefits of recycling paper, how to save her tears for times when she is really hurt, the difference between a healthy meal and junk food, and how to read a stock chart. I can do all of this for free and when I get to the end of my expertise in a particular language, I am literate enough in a general sense to know that we should consult a professional or get outside help.

The speaker was right. The more I know, the more I can learn. Rip, stick, rip, stick, rip...and it's free.

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

Monday, November 7, 2011

Maximizing the Value of Birthday Money

It's unavoidable: birthday money. No matter how old or how successful I get, there are a handful of elders in my family who insist on celebrating the passing of another year by putting a cheque in a card and sending it to me for my birthday. Not that I'm complaining. But what should an adult do with a birthday cheque or any other kind of "found money"? How should it best be spent? Or should it be spent at all?

Five ways to maximize the value of birthday money
  1. Pay down your credit card or line of credit. Even twenty-five dollars from your auntie in Halifax can add up to more than a few cents of savings on interest payments.
  2. If you have contribution room in your TFSA, put it in there and let it grow tax free.
  3. Put it in your emergency account. You can never really have too much money on hand in case life goes sideways.
  4. Put it towards something big that you are saving for.
  5. At the very least, cash the cheque and put the money in a coffee can under your bed for a rainy day.
In August, I had a guest business coach on Money Moment, Doug Turner, who talked about saving money forever, not just for a rainy day. Doug's radical suggestion seems particularly relevant when it comes to passive income such as money that just drops into my mailbox on my birthday. After all, I didn't lift a finger to earn that money and so, it seems, that one of the easiest ways to show respect for a cash gift is to maximize its value and, if I don't have debt to pay down, then I should sock it away...maybe forever.

And, just in case you have a rich uncle who likes to write big, fat birthday cheques, breathe easy. In Canada there is no income tax on cash gifts unless the recipient is your spouse or minor child.

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

Thursday, October 20, 2011

Want-it-now! and other Financial Pitfalls

Financial Literacy Now!
I don't usually put things off. I'm more of a "get the job done so that I can go on to the next thing" kind of person. But sometimes frustration can trigger a rather nasty episode of procrastination. Tomorrow is a professional day. The kids get a long weekend, but teachers will be at a variety of subject-specific conferences. I have been invited to present a workshop for K-12 teachers on the subject of financial literacy, a subject that is just a blip on the K-12 curriculum.

I wonder how many teachers will sign up for my workshop on "lessons that boost storytelling skills and build financial literacy." They don't have to teach kids about money (unless they are teaching the four-week financial unit of Planning 10) so why would they bother attending my workshop? And, as I know from having done these workshops for teachers before, the ones who come usually have a decent level of financial literacy already. So how is my work advancing the financial literacy cause? Why bother?

Financial and other Pitfalls
Last week, the business editor at The Province newspaper asked me to write a week's worth of tips and advice on money for kids between the ages of 10 and 20. This is part of a larger financial literacy series that starts Sunday, October 30th. My tips will run the second week.

As I pondered the assignment and wrote the seven tips, along with an additional three pitfalls that teens and their parents should avoid, I started to think that tomorrow's financial literacy workshop may not be futile after all. When I drafted the pitfall on delayed gratification (see #3 below), I realized this: Just like every dollar counts when it comes to spending and saving, so does every workshop participant count when it comes to building a more financially literate citizenry and a brighter economic future for all of us.

I have to remember that I don't have to have the world today, the "world" being a country in which every student leaves high school financially literate. The truth is I want this now, but I can wait and doggedly continue to do my part to make it happen one step at a time while side-stepping frustration and procrastination.

On the same note, here are three money pitfalls that youth and their parents should try to avoid.

#1 Not letting teens manage their own money.
Teens, don’t let your parents handle your finances. Parents, give your teens some money to manage entirely on their own. It is far better to regretfully blow $500 when you are 15 than $5,000 when you are 25, or $50,000 when you are 35.

#2 Making money a taboo subject.
Don’t make money a taboo subject in your home.  Money should be one of the easiest things to talk about at the dinner table: the good, the bad and the ugly. Share everything, including the gaps in your knowledge. Learn together.

#3 Not practicing delayed gratification.
Don’t buy into the idea that you have to have the world today. Even when you have saved up for something, slow down and wait seven days before you go out and buy it. You don’t want to be a slave to a want-it-now attitude. Practice some self-control.

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

Friday, October 7, 2011

TFSA Over-contribution Nightmare

Are you one of the 1.5% of Canadian TFSA holders who "accidentally" over-contributed to your TFSA in 2010? If you recieved a letter about this from Revenue Canada in August, you have just 60 days from the date the letter was sent to make sure that you are not stuck paying for your ignorance of the TFSA rules.

It turns out, that you cannot transfer your TFSA from one institution to another without it being considered an over-contribution. Here's what happened to me.

Ignorance could cost me $1,100
Early in 2010 I decided to move my TFSA holdings from a savings account at one bank to an investment account at another. I did this myself without giving much thought to it. After all, it was just a transfer. Though I was maxed out on my contributions, I was not technically adding any more money to my TFSA. Wrong.

Any movement of cash out of you TFSA is considered a withdrawl. You cannot put money back into a TFSA account during the same fiscal year that you withdrew it. Once it's out, it has to stay out. You can top it up during the next fiscal year. If you do so before that, you will be charged 1% of the total of each month's highest excess amount for the year. My $10,000 "over-contribution" meant that I was charged 1% on $110.000, even though I had technically not added an extra $10,000 to my TFSA but had simply moved my money from one spot to another.

Fortunately, as you can see in a press release issued by Revenue Canada on August 19th, there is room for a pardon on this mistake as long as you respond within 60 days of the date of their letter. I had a late summer holiday and came back to a mountain of paperwork. I found my letter (dated August 18th) this week. I have to respond by October 18th and here's what I have to do.

Making your case
This is what Revenue Canada told me to do:
  1. Write a letter to Revenue Canada pleading your ignorance of the rules and asking them to please waive the penalty.
  2. On the one-page TFSA Return 2010 (form 0026301), fill in the "information about you box" and then sign the back at the bottom.
  3. Attach any bank paperwork that proves your innocent mistake.
  4. Put it all in the provided envelope and get it in the mail ASAP. I'm mailing mine today!

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

Friday, September 30, 2011

Financial Education Impacts Economy

It's official. Financial education is good for the economy. The Boston Consulting Group has just released the results of an independent study on the impact of Canada's non-profit Junior Achievement Program (JA) on the Canadian economy. It turns out that teaching students in grades five through twelve about business and finance pays big dividends. Here are just a few of the tangible results.
  • For every $1 spent, JA Canada returns $45 to Canadian society.
  • $425 million dollars per year of economic activity can be attributed to JA alumni.
  • JA alumni are 50% more likely to start a business.
  • JA alumni on average earn 50% more than those who do not participate in the program.
  • JA programs reach 250,000 students per year and are delivered free of charge.
    What is Junior Achievement?
    I spoke with Chris Hindle, Marketing and Communications Manager for Junior Achievement BC, to find out what this largely volunteer organization is all about and how their activities fit into the financial literacy movement. Chris began by expressing one of JA's central messages: to build financially literate citizens you need to start with youth.

    "Youth are at the centre of the financial responsibility solution," said Chris, referring to a presentation that JA made to the Task Force for Financial Literacy in 2010. He added, "Our recommendation is that early intervention encourages positive financial behaviours." He also acknowledged that while financial education is important, our kids are just not getting it at school. JA, he said, has a solution.

    Their solution is to offer a selection free financial educational programs that are delivered in classrooms by volunteer business people. According to their fact sheet, more than three million Canadian students have participated in JA programs since 1955. Today, through it's seventeen charters in ten provinces, JA volunteers reach over a quarter of a million students every year. Their programs include: Business Basics for grades five through eight, Investment Strategies and Economics for Success for grades nine and ten as well as more advanced business programs for grades eleven and twelve.

    What I love about JA is its non-profit, volunteer approach to financial education. I've even met a few local entrepreneurs who volunteer as teachers. Their passion for business and financial literacy are inspiring. But, how do we get our ministries of education and school boards to pick up on that enthusiasm so that every student, not just the ones who happen to have a JA program come to their school, can be better equipped to deal with the financial realities and responsibilities of citizenship?

    Well...while we wait for our decision-makers to figure out that financial education makes a significant impact on the economy, please stop by the Junior Achievement Canada website and find out how to get involved as a volunteer, make a donation or book a program for your school.

    Financial Literacy News
    Copyright 2011. Laura Thomas. All Rights Reserved.
    For reprint information contact moneyme at telus dot net.

    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.

    Friday, September 16, 2011

    Surrendering to Money

    Surrender (verb). 1. to relinquish to another under duress or on demand: to surrender a city. 2. to relinquish or forego as a voluntary concession to another: he surrendered his place to a lady. 3. to give oneself up physically, as to an enemy. 4. to allow oneself to yield, as to a temptation or influence. 5. to give up.

    Surrendering to money means...

    Paying what you owe. It's possible to avoid creditors, for a while. It's possible to live on credit, until no one will lend to you anymore. It's possible to borrow endlessly from friends and family, until they start saying no. It's possible to burden your loved ones with your end-of-life expenses, if that is the legacy you wish to leave behind you. But wouldn't it be easier to surrender and pay what you owe?

    Sharing what you have with others. Beyond shelter, food, clothing and basic cost-of-surviving expenses, what else do you need? Instead of surrendering to your wants, could you give that extra $20 in your pocket to someone who is struggling or who would benefit from some heart-felt compassion? Giving up money when you don't have to is an act of surrender, a powerful one.

    Working hard, really hard. We give our time and talent in exchange for money. Respect that exchange. Embrace it. Give in to it. If you don't have much money, that may be because you have not surrendered to this fact of life. You have to get your body and mind out into the market place in order to make money.

    Giving up luxuries unless you can afford them. Surrendering to money means surrendering to a budget. If you are living without a budget or far beyond your budget, then you have not surrendered to money. It means that you have been tempted by marketing ploys or influenced by unrealistic expectations.

    Giving up the idea that you can live outside the economy. There is no outside. Michel Foucault, the French philosopher, was right. We are always inside society and always influenced by the powers and authorities that govern it. That includes the marketplace. You cannot escape money, not if you want to belong.

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

    Friday, September 2, 2011

    Use Back-to-School Shopping to Celebrate Saving

    It's the final few days before Canadian kids head back to the grind. On one hand, I'm cheering for all the kid-free hours I'm going to get back. At the same time, I'm weeping for all the money I'm supposed to spend to mark my triumphant return to Freedomville.

    At least, I was weeping. Today, I've come up with a plan to ease the pain of this expensive season and that plan is to throw a little education of my own into the mix.

    I'm planning to get more bang per buck by giving my daughter a money lesson. I'm going to show her how to save money when you have to spend it. And I'm going to use back-to-school shopping to show her how it's done.

    Make a list
    My daughter is going into grade three and for the first time she is going to have her own desk where she can keep her own school supplies. Up until now we have purchased the school's package of supplies because they have always been pooled for the whole class to share. This has meant that back-to-school shopping has been limited to clothes, a back pack and lunch bag.

    This year we are taking it up a notch. We are going to choose and purchase school supplies on our own with the aid of our handy supply list. Along with that list, we are making a list of clothing and other supplies that she thinks she will need for the first few months of school.

    Budget wants and needs
    Once we have our list, we are going to talk about how much money Mom has to spend for back-to-school stuff. Then, we are going to arrange the supplies in order: mandatory items at the top, wants at the bottom. I have set aside a certain amount of money to spend with a twist. I have promised my daughter that any money we have left over will be hers to put in the bank and save.

    Have a temperate shopping spree
    Armed with the idea that any leftover cash is hers to keep, we will hit the stores, the discount stores. Knowing that we live in a low interest rate environment (and may be doing so for a very long time) it's critical that I teach my daughter the importance of saving today's money so that it will grow for tomorrow. This incentive will help shape discussions about her choices as they arise during our spree.

    When she picks up a notebook with a funky design that costs $2 more than a plain one, I can smoothly remind her that the extra $2 could be hers if she makes the thrifty choice. The same goes for clothing. Is there really a difference between $25 gym shoes and $50 gym shoes? Very little, unless your child has special footwear needs.

    Eat ice-cream and celebrate the joy of saving
    Hopefully, at the end of our shopping spree, there will be at a few dollars left for her to put in the bank. If there is, we will make a big deal out of it. I will count out the amount in cash down to the penny, hand it to her in a special envelope and then we will go to the bank to deposit it during the first week of school. I may even offer a bonus of a few percent interest that she can deposit as well, a little something extra for every dollar saved.

    And then we'll go for ice-cream, of course. What would a celebration of saving be without a little ice-cream? Freedomville, here I come!

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

    Wednesday, August 3, 2011

    Financial literacy in schools: Are we afraid of change?

    I was so excited last week when I heard that the Ontario Ministry of Education had released its new curriculum guidelines for bringing financial literacy to the classroom this fall. Well, I have good news, bad news and scary news.

    The good news
    The good news is that Ontario teachers are getting some support. The Scope and Sequence resource documents provided by the ministry have several practical lessons on how to use the existing subject areas to teach students about money. Some examples are: using an art lesson to teach grade-four students how companies use images to promote their wares; and, getting grade-six students to think about why a game company might choose to advertise their newest release with a hip hop song instead of Beethoven.

    Another bit of good news is that teachers have the opportunity (though not the mandate) to take a three-day workshop on financial literacy at the Ontario Teacher's Federation Summer Program called A Sound Investment. But none of this is mandatory. There are no prescribed learning outcomes for financial literacy. Teachers don't have to take the workshop, which brings me to the bad news.

    The bad news
    The bad news is that Ontario's weave-it-in-but-don't-make-it-mandatory approach to financial education, like British Columbia's, is not likely to have the learning outcomes we should be aiming for. Wouldn't it be great if the day after graduating from high school young people could walk into banks, insurance companies or brokerage houses and be able to clearly express their needs and wants in the appropriate language. Wouldn't it be fabulous if all high school grads had the confidence and ability to negotiate a reasonable price for whatever financial services they require.

    It gets scary
    The scary news is that more than a few adults don't care about the financial literacy of young people. Many seem to subscribe to the school-of-hard-knocks. And some think that because kids don't have much money, they don't really need to learn about it. While others believe that the family, and not the government-run education system, should take responsibility for this aspect of education.

    Reading the comments posted in response to a Globe and Mail article on this issue, many people seem to believe that it is ironic that any overblown, deficit-ridden, budget-breaking government would try to teach anyone anything about money, especially about fiscal responsibility.

    This leaves me wondering. Do we (if "we" is really the government leaders that we put in power as our representatives) really give two hoots about financial literacy in the preventative, educational sense? Or are we only interested in it as an anesthetic, a soothing fantasy stirred up in our collective imaginations by crashing markets and a double-dip recession? Are we scared to make financial literacy a mandatory part of the education system? Are we afraid of change?

    Maybe we are
    After all the false hype about mandatory financial education in Ontario, I'm left with two thoughts. First, at least some Ontario students will have teachers over the years who will use the workshops and resource documents to weave money topics into art, drama, music, health and physical education, math, language arts, science and technology and social studies.

    Perhaps some of those students will graduate with a deeper understanding of the economy and personal finance and then go into politics. Though whether or not we will get enough financially fluent faces to do something about governmental fiscal irresponsibility, only time and our municipal, provincial and national bottom lines will tell.

    Second, financial education will become mandatory in schools when we are no longer afraid of money or the powers that wield it.

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

    Monday, July 18, 2011

    An Investigation of Financial Education in B.C. Public Schools

    Part 1: What's happening in the middle years, grades 4-6?

    How many B.C. high-school grads
    are financially literate?
    I've been trying for a while to get a comment from B.C.'s Minister of Education on where we are going with financial literacy in the public school curriculum. Is there a move to make financial education a mandatory part of the grade four to 12 curriculum like Ontario is doing this fall? Or are we sticking with the status quo? Are B.C. high-school grads financially literate? Are we testing for that?

    I was recently told by someone in the Ministry of Education's media department that not only is financial education woven throughout the existing curriculum, the twenty hours of instruction that students get in the finance unit of Planning 10 is "significant."

    Is that so? As a parent with a child going into grade three this really matters to me. So, I've decided to comb through the curriculum to find out just how much financial education B.C. students are getting right now. I have gone through the subject areas for grades four through six which seem most likely to contain personal finance concepts: Health and Career Education, Math and Social Studies.

    The following is an overview of what I found in the Prescribed Learning Outcomes (PLOs) for grades four through six that are made available by the Ministry of Education. PLOs, by the way, are government policy that establish "the learning standards for the provincial K to 12 education system and form the prescribed curriculum for British Columbia. They are statements of what students are expected to know and do at the end of an indicated grade or course."

    Grade 4
    In Health and Career grade-four students learn to identify the steps in a decision-making model, to inventory their skills and about the importance of developing effective work habits and how those habits can lead to success. These topics are not obviously related to personal finance but there is a connection to career and consumer choices.

    In grade-four Math, students become literate with numbers up to 10,000, patterns, variables and equations, shape and space, 3D objects and 2-D shapes, statistics and probability and the concept of chance. How often money is used in examples and exercises seems to be up to the teacher. Nowhere in the PLOs does it specify that financial concepts be taught. Social Studies, however is more promising. In the unit of study called "Economy and Technology," students compare bartering and monetary systems of exchange in the context of exploration and how European explorers traded with Aboriginal people.

    Grade 5
    In Health and Career grade-five students start to learn how media can influence decision-making, how to identify types of work that appeal to them and continue to learn more about the benefit of having effective work habits. In Math, students work with numbers up to 1,000,000 and go deeper into the other topics covered in grade four. As is the case in grade four there are no money concepts specified on the PLOs for grade five. In Social Studies, however, students learn about supply and demand using specific resource examples such as the boom and bust in Barkerville and how fashion trends in Europe drove the fur trade. But that's it for money concepts.

    Grade 6
    In Health and Career, students build on the grade-five PLO's but go deeper into planning, goal setting and goal attainment including the consideration of "costs and resources." They talk about the word "budget" and do some exercises to practice creating a budget for a project or to achieve a goal. In Math, grade-six students learn to work with numbers greater than 1,000,000 and continue to build on the other mathematical concepts they have been working on since grade four. Again there are no money concepts in the Math PLOs for this grade.

    In the "Economy and Technology" unit of Social Studies, grade-six students learn about trade between regions and countries including what imports and exports are. They also compare Canada's economy, technology and quality of life with those of other countries (suggested for comparison are the Horn of Africa countries). Here they learn terminology such as: industrialized, developed, developing and least developed, non-profit organizations and fundraising.

    Not mandatory means it's up to teachers
    From grades four through six, B.C.-students learn about decision making, effective work habits, career choices, goal setting, and do some budgeting in Health and Career. They also study Math, which is great and foundational for financial literacy. And in Social Studies they learn about bartering, monetary systems, trade, supply and demand, imports and exports, non-profits and fundraising. That's not bad...or is it?

    The bottom line is that personal finance concepts are not specified in the PLOs in the intermediate grades. How many of these concepts each student is exposed to depends entirely on the school and the teacher. As the Ministry states, "Schools have the responsibility to ensure that all PLOs...are met; however, schools have flexibility in determining how delivery of the prescribed learning outcomes can best take place....Evaluation, reporting, and student placement with respect to these outcomes are dependent on the professional judgment and experience of teachers, guided by provincial policy."

    Can most teachers teach money concepts?
    In May, I asked a group of 42 elementary school teachers to complete a financial literacy questionnaire.When asked this question, "If you were given a list of 100 money-related words, how many do you think you would know?" exactly 50 per cent said they would know less than half of the words. I also asked the respondents "How often do you talk about money issues in your classroom?" While 12 of the 42 teachers responded that they talk about money at least once a week, 17 responded "hardly ever" and 13 said "maybe once a month." That means 71 per cent of the teachers in my survey don't generally talk about money to their students.

    It's becoming clear to me that the answer to the question, "What are kids in grades 4 through six learning about money in B.C. schools?" is far from clear and certainly not universal. I can imagine that a small percentage of teachers with a personal interest in investing or entrepreneurship may bring a host of financial language to the PLOs, while those who are financially illiterate likely shy away from talking about money and do just enough to meet the requirements.

    Who is responsible?
    Unlike the commitment to financial literacy that the Ontario Ministry of Education has made by making personal financial education a mandatory part of the grade four through twelve curriculum (complete with teacher training), B.C. is leaving it up to individual teachers, many of whom are not financially literate themselves.

    My hope is that by the time she finishes grade six, my daughter will be fluent in the basics of earning income, credit and debit, cash flow and investment. After all, she already has amassed quite a nest egg and if she makes smart money decisions now that will surely pay big dividends as she gets older. The sooner she is saving and investing her money, the longer she has for that money to grow. Raising fiscally responsible citizens is central to the economic future of Canada. Funny how our "underfunded" school system and "underpaid" teachers in B.C. don't seem to be striving to meet that goal, at least not that I can see from the PLOs that I've been reading.

    By the way...there is still room in the Money & Me camp for ages 9-13 that I'm teaching next week in North Delta from 1:30-3:30 pm. Call 604-940-5550.

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

    Friday, July 15, 2011

    Dialoguing to create a-ha money moments

    Ideally, a "money moment" is going to be an "a-ha" moment. What's an a-ha moment? According the World English Dictionary, an a-ha moment is "an instant in which the solution to a problem becomes clear." Am I going to be able to create a-ah moments for my money moments? I hope so but I don't think I can do it alone.

    Creating 10 a-ha moments
    Now that my stint of teaching youth writing camps and guest blogging for the Vancouver Sun are almost behind me (today is my last day of teaching a week-long short story camp), I can turn my attention to the pre-production work that needs to be done for my new 10-episode TV show. The show is called Money Moment with Laura Thomas and it's entirely up to me to create the a-ha moments that I believe should be central to each episode.

    No pressure right? We start filming in two weeks and I'm already losing sleep.

    Earlier this year when I sat down with one of the producers at Delta TV (a community arm of Eastlink in Delta, British Columbia) and made my pitch for a series of short fillers that would boost the financial literacy of viewers in my community, I was blissfully unaware that months later I would be setting the bar really high for myself by feeling the need to deliver an a-ha moment to as many viewers as possible in every episode. I knew that I wanted to educate, but I hadn't fully envisioned what it would mean to not just educate but help viewers actually figure out how to solve at least some of their money problems. That's a big goal and I've decided that I can't achieve it alone.

    It's a synergy thing
    This blog is not even a year old yet, but in the course of the interviews I've done--even with celebrities like Arlene Dickinson and Robert Herjavec--the biggest insights have come organically out of the conversations, not purely out of the questions I have asked or the answers that my interviewees have given me. Synergy is what I'd call it: the working together of two or more entities to produce an effect greater than the sum of their individual effects. Which is why I've been on the phone this week looking for people in my community to co-star with me in each Money Moment. Rather than deliver a monologue, I am going to set up a dialogue for each episode.

    In the episode on realistic budgeting, I'm going to be in conversation with Rob Wright of Cap's South Shore Cycle. In the episode about the theory of financial bubbles and how to get ahead on your mortgage, I'll have realtor and entrepreneur Fraser Elliot on the show.  And Delta City Councillor Heather King has agreed to hit the streets with me so that we can talk to people about the their financial successes and failures. Financial blogger and finance guru Preet Banerjee will also drop in for an episode, if he's in town at the right time.

    I'm still looking for a few more chatty folks to come on the show and dialogue with me about new mobile banking technologies, credit cards, the gender gap in financial literacy and other money topics. I'd also like to do a budget-wise home makeover for two single dads and need some help with that.

    So if you know someone from the Delta area (or who can get to Delta during the first week of August) who loves to explore ideas, talk about money and be in front of the camera, have him or her contact me as soon as possible. Or if you or your company would like to sponsor this community-based financial literacy project please email me for a rate sheet.

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

    Tuesday, July 12, 2011

    Will B.C. voters keep or kill the HST?

    On Friday I wrapped up my two-week assignment writing for for the Vancouver Sun "Your Money" blog with what I thought was a neutral overview of the debate. Reading over the comments I can see that there is no such thing as neutral when it comes to the HST referendum. It really is keep or kill, with a very vocal emphasis on kill. And, the folks who seek to kill the HST seem to be zeroing in on a single major complaint: the HST favours businesses over consumers.

    Business v. Consumer
    At the root of the "business over consumer" complaint is skepticism about whether or not businesses are truly passing on their savings to consumers. Under the old sales tax system, businesses paid PST on their operating expenses such as power, heat, rent and anything else that goes into making a product or service. Under the new system, many businesses are reimbursed that seven per cent with the idea that they will pass that savings on at the till or use that cash to re-invest in equipment or on improving productivity. Either way, the theory is that when businesses pay less tax the economy grows.

    Has B.C.'s economy grown since the HST was introduced last July? According to the Business Council of B.C., the province's economy (according to their "economic index") has expanded, but only marginally. The economy dipped into negative territory in the third quarter of 2010, rose slightly in the fourth quarter and then dropped slightly to a 0.6% gain in the first quarter of 2011.

    On the other hand, what has grown with more gusto is the tax burden paid by households. It has been estimated that in 2011/2012 households will pay 1.33 per cent or $1.33 billion more in sales tax while businesses will pay 0.73 per cent or about $730 million less in taxes. 

    Business v. Business, Consumer v. Consumer
    When you look deeper at the "business versus consumer" complaint, the issue gets even more divisive for each camp. While the "average" B.C. household with an income between $40,000 and $60,000 is paying about $350 more in sales tax, 40 per cent of the HST has been collected from families with a household income of more than $100,000. These higher-earning households have seen a net increase in tax of more than $1,000.

    There are inequities in the business camp as well. Businesses that under the old system only had to collect five per cent GST on their services are now forced to charge their customers twelve per cent. This means that restaurants, recreation and entertainment businesses, builders and people who offer creative services (such as myself) have been negatively impacted by the HST.

    Speaking with a home renovations contractor recently, it seems that the extra seven per cent has created a slow down in new business as customers now have to factor that extra expense into their budgets. Undoubtedly, the slowdown is likely to continue through the upcoming months until the tax issue is resolved and consumers know exactly what they are going to have to pay if they want to remodel their kitchen.

    Financial institutions, insurance companies, doctors and landlords are also negatively impacted by the HST because they do not qualify for the seven per cent rebate that is given to other companies on their operating expenses.

    Us v. Them
    So what's the bottom line? On the surface, under the HST regime consumers are paying more tax while businesses are paying less but how that plays out depends on household income and the type of business. This is part of what makes the outcome of the referendum impossible to call at this point.

    The other part is that it's just weird (I could even say fiscally irresponsible) that our elected officials are giving voters the chance to decide, especially when we know that not every voter is financially literate or fiscally responsible. I do worry that we may keep or kill the HST based on divisiveness and defensiveness rather than on sound financial principles and a clear understanding that whatever happens, we are in this economy together. There really is no us versus them.

    As you witness the fallout of the HST versus GST/PST debate feel free to use this coupon for Turbo Tax to save a few dollars on software that will help you deal with those pesky taxes.

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

    Friday, July 1, 2011

    Your Brain on Credit Cards

    Impromptu dinners out at posh water-side restaurants, spontaneous shopping sprees for over-priced camping gear and all that good but crazy-expensive festival fare are just some of the ways we might blow our budgets this Canada Day long weekend. But it doesn’t have to be that way. Even with all those little financial decisions looming large this weekend, there is no reason to jeopardize the household budget. Try practicing metacognition—thinking about thinking—and leave the credit card at home.

    When I was at the FCAC-OECD international financial literacy conference in Toronto last month I was fortunate to attend a keynote presentation on consumer choices by neuroscientist and writer, Jonah Lehrer, author of How We Decide. Our consumer decisions, explained Lehrer, begin and end with a tug of war between two tiny but highly emotional parts of our brains—the nucleus accumbens and the insula.

    A Tug of War
    The nucleus accumbens is part of the dopamine reward pathway, which basically means that it plays a big role in the experience of pleasure and is generally associated with the “good feelings” that lead to addiction. The insula, on the other hand, is the part of the brain that registers nausea, disgust and pain.

    Lehrer talked about a neuroscience experiment in which undergraduates were given two hundred dollars spending money, put in a brain scanner and then given the option to buy a variety of goods that would appeal to the average twenty-year-old such as George Forman Grills, Harry Potter books, DVDs and a variety of snack foods. While in the scanner, students were shown a picture of one of these desirable items.

    The researchers found that when the consumer product was desirable to the student the nucleus accumbens would “light up and get very excited.” Lehrer said, “The possibility of getting something we want seems to drive consumer desire and the scientists could, in fact, use the relative activation of the nucleus accumbens to predict which items people actually wanted.”

    In the second part of the experiment, after they were shown a picture of a desirable item, students were shown the price of that item. When the price was shown, the insula became very excited causing an emotional tug of war between itself and the nucleus accumbens. According to Lehrer, “Scientists could predict with 90 percent accuracy which items people would actually buy by simply looking at the relative activation of the pleasure of the nucleus accumbens and the pain of the insula.”

    Credit Cards as "Anesthetic" for the Insula
    Back to credit cards. In one of the conditions in this experiment students were allowed to pay by credit card. What the scientists found was that when paying with plastic the negative emotional activity of the insula was greatly reduced as opposed to when students had to pay with cash. The insula was “anesthetized” in the credit card condition as opposed to the cash condition in which the insula seemed to register the pain of giving something up more forcefully.

    Commenting on credit cards and the forthcoming pay-with-your-smartphone technology Lehrer said, “The end result is that because we don’t fully experience the pain of spending money, we spend money that we don’t have.”

    Lehrer concluded his talk by suggesting that our brains aren't really equipped to handle the modern economy. He encouraged us to use the new science coming out of behavourial economics to analyze our daily financial decisions—to think about how we are thinking about money—so that our household budgets have a better shot at staying in the black, especially on holiday weekends.

    A similar version of this article ran in yesterday's Vancouver Sun where I'm guest blogging for Your Money guy James Kwantes while he's on holiday from June 27 to July 8.

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

    Wednesday, June 22, 2011

    Hard Knocks and Spare Change: Arlene Dickinson on Financial Literacy

    Part 2 of my interview with Arlene Dickinson, Dragons' Den Star

    Watch Arlene on Dragons' Den
    Wednesdays at 8pm on CBC
    When you watch her on Dragons' Den, you make all kinds of assumptions. She must have come from a rich family. She must have grown up surrounded by entrepreneurs. She must have an MBA. Indeed she is a smart, powerful woman with a talent for communication, building connections and negotiating a good deal, but the truth is Arlene's roots are far more humble. Maybe that is one of the secrets of her success.

    Hard Knocks Graduate
    Arlene grew up in a relatively poor home. She never felt entitled to money and understood that if she wanted it she would have to earn it. She learned about money "through the school of hard knocks." There was no one to turn to when things were tight because no one in the family had any money. There were times when she had money and times when she didn't. She had to figure out how to manage it through the ups and downs on her own. And she did.

    I was surprised to learn that Arlene didn't get to go to university. She's entirely self-taught. And if that's not impressive enough, she did a lot of this self-educating while raising four kids as a single mom. That led me to ask her what she does when she's in a business meeting and a money-word comes up that she might not know. Arlene's strategy is very practical: if it's appropriate she will interject with a question; if it's not a good time to interject she will make a note of it on her Blackberry and research the word later.

    Spare Change Matters
    Arlene seemed to enjoy telling me about a financial education ritual that she started with her nine-year-old grandson a few years ago. When he comes to visit she lets him go through her purse and collect all the spare change that is rolling around at the bottom. As he's happily rooting around, Arlene examines the change and tries to recall the purchases associated with it and then tells those stories to her grandson.

    Once he has found every last penny they put the money in a decorate vase and keep it there. At the end of the year, Arlene and her grandson do a tally, roll it up and deposit it into his bank account. According to Arlene he is learning a lot about the value of money, especially about the power of small amounts adding up over time. "He is learning that spare change adds up to significant dollars," said Arlene, after admitting that last year her purse produced $700-worth of spare change.

    Aside from helping him get a head start on the habit of saving, Arlene explained that this ritual has created a context in which she can talk to her grandson, and the rest of the family, about how money needs to be treated with respect. Over the years she has encouraged her now-adult children to start an RRSP early and put money in it regularly, even small amounts, so that it can compound over time. In fact, when I asked Arlene what money-word she wishes every Canadian understood, she said "interest."

    The Bigger Picture
    Our conversation then turned to financial literacy education and business culture in Canada. I asked her who she thinks is ultimately responsible for making sure that every high-school graduate is financially literate: families or schools? Even though she wanted to say "both" I made her choose one and she picked "families." Arlene said, "Economies are driven by individuals not governments. Financial literacy needs to start with understanding how to take care of yourself."

    Arlene on the Cover of Alberta Venture's
    Women and Power Issue in 2009
    Given that Arlene is the only female Dragon, I had to ask her about gender in business. Does it still matter? Arlene's answer was insightful and challenging.

    She believes that men and women have different approaches in business. We notice this more now, she said, because more women are running small businesses and looking after themselves financially. She thinks we need to accept that there is a gender difference that will always be there and she takes issue with the bad rap that emotion gets in the business world.

    Arlene told me that emotion matters because without it you cannot create passion for your product or service. "Emotions belong in business because we collaborate better with others when we are emotionally connected," she said.

    Speaking of passion and connection, before I hung up the phone, I told Arlene about the Federal Government's mandate to appoint a national leader in financial literacy and asked her if she might apply. Her answer was, "That's a role that I would love to do because I think the whole idea of finances and how we think about money needs to be simplified."

    She went on to say that we need to stop perpetuating the myth that you need to be a highly educated and highly informed individual to be able to manage your own money. "That's not true," she said. "You don't have to hand your money over to someone else to be successful."

    Wow. Great answer and a potent reminder that to be successful in life and in finances you don't have to come from a rich family.

    Here is part one of my interview with Arlene: "Ordinary People, Fundraising and the Art of Persuasion."

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

    Monday, June 20, 2011

    Ordinary People, Fundraising and the Art of Persuasion

    Part 1 of my interview with Arlene Dickinson, Dragons' Den Star

    Arlene Dickinson has a new book coming
    out this fall called Persuasion
    When I sat down this morning to blog my interview with this amazing mom, grandmother, TV-star, inspirational speaker, and self-made CEO, I thought it would be easy. I would just dive into our financial literacy discussion and have it written in about an hour. Wrong. We only spoke for about twenty minutes but Arlene shared so much wisdom that I simply can't cover it all in one blog post or you'd be reading this for a week.

    So I decided to begin at the end of the interview, the part where Arlene shared some of the details about her new book that is coming out this fall with Harper Collins called Persuasion. Why? Because the subject connects with the recent passing of fundraising-icon Betty Fox and with some cancer fundraisers that have been going on in my community this past weekend.

    On Saturday, I participated in a Jail N'Bail fundraiser to raise money to support a local Cops for Cancer cycle tour. That same day, a group of 90 ordinary people cycled 400 km from Kelowna to Delta, B.C. in 19 hours for Ride2Survive, raising over a quarter of a million dollars for cancer research. From my Jail N'Bail "cell" by the liquor store at the mall I began to wonder just what it takes to convince people to open up their wallets and give away their hard-earned cash for a cause.

    Interestingly, most of the persuading that I have been seeing lately is being done by ordinary people, not by marketers or professional fundraisers. How do they do it? That got me thinking about Arlene's new book.

    Genuine - Authentic - Reciprocal
    Often associated with stealthy marketing strategies that suck us into buying stuff we don't need, the word persuasion gets a bad rap. Arlene hopes to change that with her book. Her definition of persuasion has three aspects: being genuine; being authentic or honest about who you are and what your motive is; and reciprocity or having a win-win attitude. For Arlene, persuasion not about getting what you want from someone else at all costs, it's about connecting in way that benefits everyone involved. This is something that Arlene thinks most of us ordinary folk (I mean non-business types) already know. I think she's right.

    Jail N'Bail for Cops for Cancer
    When Arlene first tweeted about her book a few weeks ago, I assumed that it was aimed at professional marketers and salespeople. But it's not. It's for everyone. As Arlene said, "The audience is an individual who is trying to ensure that their voice is being heard and who wants their opinion to be championed." According to Arlene, that includes anyone who is trying to convince anyone else to do something they might not want to do. That could be getting a child to go to bed or asking a complete stranger to donate money to spring you out of jail for cancer research.

    Not only did Arlene talk about the idea that we are all involved in the art of persuasion on a daily basis, she also brought up this interesting point: life and business are interconnected. "We need to take our life lessons into business and vice versa," she said. "If you can manage a household budget, you can manage a business budget. If you can persuade your kids to do things they don't want to do then you can persuade your work-mates to champion your idea." can convince friends, family and strangers to donate cash for cancer research.

    I suppose that is what is behind all this money (and it's BIG money) being raised for cancer research by people who don't have degrees in marketing and sales but who do seem to have an instinctive understanding of Arlene's definition of persuasion. I suppose on some level many of us know that the secret of successful fundraising is to be yourself, be honest and aim for a win-win situation. For those of us ordinary people who may be unaware that our life-skills toolkit is already loaded with persuasion tools, Arlene's book will help us sharpen those tools so that we can raise even more money for the causes we believe in.

    On the Radio & Blogging for the Sun
    Part 2 of my interview with Arlene will be published in the coming week. In the meantime, please tune in tomorrow, June 21, 2011, to Fiscal Literacy Radio to hear me talk about kids and money at 1 pm EST. And note that I will be blogging daily for the Vancouver Sun "Your Money" section for two weeks starting June 27 so be sure to follow along there too. And, if this article has put you in a giving mood, Cops for Cancer Tour de Valley is still taking donations. Ride2Survive 2011 is still taking donations and registration is now open for the 2012 ride.

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

    Thursday, June 16, 2011

    Financial Illiteracy Contributed to Stanley Cup Riot

    Would a small business owner smash a store window? Would a self-employed person flip over a car? Would an entrepreneur set a garbage can on fire? Not likely and it may come down to financial education and the lack of it in BC schools. 

    It's About Money, Not Hockey
    What do entrepreneurial types have in common? They understand money. They know how difficult it is to raise it, save it and grow it. They respect it. They get it. Entrepreneurs tend to understand that an NHL team is a business and the aim of every successful business is to make money. Hockey is secondary to profit. This isn't amateur sports.

    Entrepreneurial-types understand that it doesn't really matter who won last night. The teams put on a good show, made lots of money and, riot aside, everybody won. The rioters, apparently, didn't grasp this fact. For this group of young adults, who appear from media images to be primarily in their twenties, it's all about "my team has to win" and so losing is personal. The business aspect, the fact that money is at the heart of professional sports, didn't seem to be part of the individual rioter's thought process. Those who rioted clearly don't understand money nor do they have any respect for it.

    Which may be why smashing windows, flipping cars and setting public and private property on fire was an appropriate response for them. There is no consideration of the expense, no cost-benefit analysis, no awareness that everyone who participates in the Vancouver economy will be paying for this outburst in both the short and long term. And why is the average twenty-something Stanley Cup rioter so unaware when it comes to money? It could very well be the lack of financial education in BC schools.

    Not Enough Financial Education
    Since, 2008 every student in BC has had to take a "life skills" course called Planning 10. In that course there is a four week, twenty-hour unit on personal finances. There are four prescribed learning outcomes for this unit: budgeting, planning for life after graduation, understanding credit and debt and how to report personal income. It has been argued that this is better than nothing. But is twenty hours of instruction enough to make students financially literate, especially when most of those students arrive in Planning 10 with little or no familiarity with the vocabulary and concepts of personal finance? Not likely.

    Only a small portion of high school students in BC take business courses. That means most graduates don't get more financial education that what they receive in Planning 10. You cannot create a money-savvy citizenry with twenty hours of instruction over thirteen years, which is why the Ministry of Education in Ontario, starting this fall, is making personal finance education a mandatory part of the curriculum in grades four through twelve.

    Imagine those Ontario students who are starting grade four this year. Every year for the next nine years they are going to be learning the language of money. They are going to be introduced to the realities of earning, spending and saving. Core concepts are going to be repeated and reinforced, deepening their understanding of how their personal financial choices shape the world we live in.

    In Toronto in 2020, there will probably be a record number of high-school graduates who go on to start small businesses or choose to be self-employed. The city's economy will benefit from this upswing in entrepreneurial spirit, self-driven productivity and healthy respect for money. And if, by chance, the Leafs happen to lose game seven of the Stanley Cup finals in 2025, you can bet that with its financially aware and economically responsible citizenry that there won't likely be any window smashing, car flipping or random burning in downtown Toronto. 

    Financial literacy is a powerful force. So is financial illiteracy, as we saw in Vancouver last night.

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

    Monday, June 13, 2011

    A Word on Financial Literacy from the Dragons' Den

    Alex Kenjeev
    President of O'Leary Ventures
    What could be more rewarding for a Dragons' Den fan than talking to a Dragon? How about talking to one of the Dragons' business associates like Alex Kenjeev, President of O'Leary Ventures, a private company owned by Kevin O'Leary? Speaking to me from the set of season six, Alex and I had a a lively conversation which began with a discussion about the connection between the financial literacy level of the average Canadian and the country's economic wellbeing.

    Alex shares my view that individual financial literacy is critically important to the economy and agrees that poor financial literacy skills contributed in part to the US mortgage crisis. He talked about how too many Americans got themselves into mortgages that they could never pay off and then suggested that a country would be better off if everyone followed this O'Leary rule of thumb: save one-third of every pay cheque and put it to work for you earning interest or in investments.

    Alex explained that Kevin frequently reminds people who aim to build wealth to focus on the big picture when it comes to personal finances, which often means avoiding spending hard-earned money on consumption expenses such as daily cups of specialty coffee. "One of Kevin's mantras is to invest first and then spend only the interest, never the principal," said Alex. "When you have enough interest for your daily latte, then go for it, but not before that."

    Disparity in Financial Literacy
    When I asked him what letter grade he would give Canadians for financial literacy, Alex pointed out that the more important issue is the disparity between those who are financially literate and those who are not. Alex gave the example of two people with identical jobs and salaries but who have vastly different financial literacy skills. The person with the higher level would do better financially in his or her lifetime, while the other would be more at risk of financial ruin. "This disparity would be amplified over time," said Alex.

    When I asked him about the financial literacy level of the average would-be entrepreneur pitching a business plan, his answer was similar: there is a huge disparity between pitchers when it comes to financial literacy. He said that successful pitchers always have someone along who can talk money and articulate how investors can make money by investing in the business. As a fan of Dragons' Den, I've certainly noticed that pitchers who fumble for the right money word or who don't know their numbers rarely get deals, especially from Kevin.

    As we talked a bit more about how the show has helped improve the financial literacy level of it's viewers, Alex made this insightful comment: "There is no real reason why more Canadians can't be wealthy."

    He's right. There's no cap on the number of rich people there can be in this country. Dragons' Den keeps that fact in our faces. Every time we watch an episode, my daughter and I are reminded that it is possible to go out into the world and be an entrepreneur and make more money, with the caveat that in order to have a decent shot you need to be financially literate. That is a powerful lesson.

    Speaking of powerful lessons, we wrapped up the conversation talking about Alex's (and Kevin's) philosophy of money. Of course, I had to ask him my O'Leary question: What three things should we teach five-year-olds about money? By his own admission, Alex's answer could have come directly from Kevin's mouth:
    1. Be honest about money.
    2. Pay attention to money.
    3. Don't confuse money with feelings.
    It's About Freedom
    Before I let him go, I asked Alex how he would explain the term "venture capital" to someone who might not be familiar with it. He explained that venture capital is like a "dating service for money." It brings together a business that is looking to grow to the next level with an individual who has cash to invest. Hopefully, it's a good relationship that turns into a serious romance.

    I can just imagine that in O'Leary terms a "good" relationship means that everyone is making money or there's going to be a nasty break up. After all, according to Alex's boss, "nothing matters more than money." And, when I asked Alex what he thinks about Kevin's statement he said, "Money is about freedom. It lets you do what is important to you. Just look at Kevin. He can do what he wants, when he wants, however he wants to do it."

    Alex's comment made me realize that as a wealthy nation, we truly have the freedom to choose whether or not we want to spend our tax dollars on financial literacy education and getting personal finance basics into our schools. I believe there is money at the provincial and federal levels than can be spent narrowing the disparity between those Canadians who would get an A+ in financial literacy and those would would get an F. Just imagine a country in which every high school graduate was financially literate. It could happen here in Canada. As I wrote in an article for the Vancouver Sun last week, the Ontario Ministry of Education is leading the way.

    As Alex said, money gives you the freedom to do what is important to you. Do we understand that more of us could be wealthy if more of us were financially literate? Do we get that individual financial literacy is worth investing because it will build our economy? Is raising money-wise kids important to Canadians in every province and territory? I hope so.

    Stay tuned for more words from the Den on financial literacy...I will be talking to Dragon Arlene Dickinson later this week.

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

    Tuesday, June 7, 2011

    What's stopping you from talking to your kids about money?

    You don't know where to start.
    Sure you do. While watching the NHL playoff game last night my daughter and I talked about how the Vancouver Canuck's horrific loss translates into huge financial gains for the owners, players and collateral businesses. This morning on our way to school, we talked about our summer budget. There is an opportunity for my daughter to go to a horseback riding camp but I explained that the $150 required to pay for it would have to come out of our Europe vacation budget. She got it. We can't afford both.

    You are embarrassed because your finances are mess.
    Chances are that if your finances are a mess, your kids already know it. They eavesdrop on our conversations and see the lines of worry on our faces. They know when we are stuck in our heads and floundering in a sea of negative thoughts. They know because they see that while we are in the room with them, we really aren't all there at all. Is hiding the mess really better than talking about it and modeling recovery? I don't think so.

    You think that money is the root of all evil.
    Think about your tongue. Do you use it to encourage and build up those around you? Or do you natter, criticize and tear down? Your tongue isn't inherently evil, neither is money. What matters is how you use it.

    You assume they are learning about money in school.
    Don't assume. Ontario is the only province in Canada that has made financial education a mandatory part of the curriculum. That's just getting underway in September and will include grades 4 to 12. So if you're in Ontario you can breathe a bit easier. As for the rest of us, we have to do the teaching at home if we want our kids to be financially literate.

    You think that kids should figure it out for themselves, like you did.
    I had to figure out the basics of personal finance on my own, but that's not how I want to parent. So about a year ago, I decided to begin debt-proofing my daughter by making her aware of the decision-making and self-control aspects of finance. I hope this awareness will help prevent her from developing habits that could lead to financial self-harm down the road. It seems to be paying off. After our conversation this morning about our summer vacation budget, she turned to me and said that maybe we shouldn't spend the $150 at all. "We could save it, Mom," she said.

    Copyright 2011. Laura Thomas. All Rights Reserved.
    For reprint permission contact