Friday, February 25, 2011

CGA Alberta Invests in Financial Literacy maybe it's not a huge surprise that accountants care about kids and money, but there's a big difference between caring about the financial literacy of high school students and taking action to improve it! The Certified General Accountants of Alberta have done just that by launching a brand new campaign this month called My Money $ My Future.

The goal of the campaign is to improve high school students' ability to manage their finances. Their initial focus is on grade twelve students in public and Catholic schools in Calgary and Edmonton. But, if all goes well, according to Jeff O'Rourke (CGA and My Money My Future task force member) this is only the beginning. Down the road there will be more resources made available that will reach students of different ages. That said, here is a quick summary of the resources that are available today.

My Money $ My Future Resources
Student Handbook. The Financial Literacy Student Handbook is 43 pages of straight financial talk aimed at teens who are on the verge of making financial decisions that could have hefty implications if not made wisely.

After a brief introduction to goal setting and the consequences of accumulating too much debt early in life, the book covers the following topics: budgeting, wealth building through saving, earning extra money and spending less, the cost of moving out, debt management, and paying for higher education. The print copy is available to teachers and school boards across Canada at $10 per copy. The book is also available in a web edition.

Online. Further reading and resources that cover the same topics as the handbook are available at the My Money $ My Future web site. There is also a Facebook page which you can find on the left side of the landing page of the main web site.

Guest Speakers. For Alberta schools, there is a team of CGA speakers available to do school visits and talk about the topics in the handbook. Contact information for bookings is provided at the end of this article.

My Money, My Future (My Economy)
When I spoke with Jeff O'Rourke about the outcomes that his organization is hoping for, he replied that helping students make informed decisions about their future and manage their debt can have a stabilizing effect on Canada's economy. I agree. I have often wondered if the financial crisis may have played out differently if the average person managed their lives from a higher level of financial literacy. And though higher financial literacy levels may not have prevented the 2008 crash, we may have gone into it with an even stronger Canadian economy.

We went on to talk about the impact that low financial literacy can have on young people as they set out to build their lives from scratch. Jeff, a former student finance manager who has seen first-hand the terrible financial situation that many university students get themselves into, said that sometimes a poorly managed student loan can mean that a graduate's dream of owning a home will be deferred for many years.

Another pitfall for students is credit. Credit card companies are famous for setting up booths in student union buildings. More than once, Jeff has seen students get their card and head to pub to treat their friends to an expensive night out only to realize later that the interest rate on that balance can be well over 20%. As he said, "It takes two seconds to spend but years to pay back."

I closed the interview by asking Jeff my now famous O'Leary question: What three things do you think we should teach Canadian kids about money? Here are Jeff's answers:
  1. Control your money. Don't let it control you.
  2. It takes a second to spend but years to pay back.
  3. It's not how much you make that matters; it's how much you spend.
For more information about the My Money $ My Future campaign or the CGA of Alberta or to order copies of the student handbook or book a speaker, please contact Magdalena Matracki at

Copyright 2011. Laura Thomas. All Rights Reserved.
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Sunday, February 20, 2011

Free Money for University

Executive Director of The Omega Foundation in Toronto, May Wong, told me via Skype last week, "The exciting challenge for philanthropy is figuring out how to invest in people's self-sufficiency." Their new financial literacy initiative called SmartSAVER aims to do just that in 14 languages.

The SmartSAVER initiative has one purpose: to let Canadians know that the federal government is offering free money for post-secondary education through RESPs (Registered Education Savings Plan) and has been doing so since 2004. The problem, says May, is that hardly anyone knows about it.

How to Get the Free Money

1. Check your eligibility. Your child must be born in 2004 or later AND your household income must be below a certain level. If you receive the National Child Benefit Supplement your family will likely qualify.

Get a Social Insurance Number. Your child must have a Social Insurance Number. So must the child's parent or guardian.

3. Make an appointment. Choose an RESP provider and set up an appointment to open an RESP. You do not need to have any money to put in that RESP. Note that some providers charge an RESP set up fee but this will be reimbursed to you up to $25 by the federal government. These banks will set up your RESP for free: Bank of Montreal, TD Bank, Royal Bank, and Scotiabank.

4. Do the paperwork. At the bank you will fill out the paperwork to open an RESP, plus you will need to complete the application for the Canada Learning Bond and the "matching grant." With the matching grant, families that qualify for the Canada Learning Bond will also get  the benefit of having up to 40% of their RESP contributions matched by the government. (If your family doesn't qualify for the CLB, the RESP matching grant is to a maximum of 20%).
5. Wait. After the paperwork is done, it will take up to 9 weeks for a deposit of $500 (plus the $25 to offset the cost of setting up the RESP) to show up in your RESP account. Every year, another $100 will be put in that account until your child turns 15. If you are starting today, your first deposit will be bigger because the government will contribute an additional $100 per year going back to 2004.

6. Contribute. When you can, contribute a little bit of your own money to your child's RESP. The government will match what you put in up to 40%. So for every $10 you contribute, the government will add $4. You've got to love free money! Just remember that this money has to go towards your child's post-secondary education.

For more information about the Smart SAVER program or to make a tax-free donation to The Omega Foundation and help them spread the word about this free money for university, please contact May Wong at


Copyright 2011. Laura Thomas. All Rights Reserved.
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Wednesday, February 9, 2011

National Report on Canadians and Their Money: Canada's Task Force on Financial Literacy Finally Releases Recommendations

I first blogged about Flaherty's twelve-member Task Force on Financial Literacy shortly after they released their preliminary report in September. I have been anxiously waiting for the final draft ever since. How will the federal government "make" schools weave financial literacy into the curriculum when education is under provincial jurisdiction? All the recommendations in the world for "financial literacy education from K-12" won't mean a thing without the power (and resources) to make it happen.

So, of course the first page in the 106-page report that I turned to was the one talking about their recommendations for financial literacy in the formal education system, recommendation number three out of a total of thirty that states:
The Task Force recommends that the Government of Canada include financial literacy as an essential skill in its Essential Skills Framework.
The Essential Skills Framework consists of nine workplace skills that are "officially recognized" by the federal government including: reading, document use, numeracy, writing, thinking and continuous learning, interpersonal skills (oral communication and working with others), and applied skills like computer use. Apparently, this framework is used by educational organizations (from K-12 through post-secondary) as a curriculum guide so adding financial literacy as an essential skill may indeed be a catalyst for integrating financial literacy in elementary and high schools, which is part of recommendation number three.
We commend those authorities who are taking steps to address financial literacy, and urge all provinces and territories to move expeditiously to make financial literacy a part of their formal education system.
What I found interesting, and a little scary, is that BC was held up as an example of a province that has already done this by making financial education mandatory. But, the truth is that in BC our kids (the ones who don't take business or accounting courses in high school) get just four weeks of financial education in Planning 10 which is a course that is mandatory for graduation. I'm pretty sure that four weeks of education does not qualify as integration. Or, at least, it should not.

I would rather see my province follow in the footsteps of Manitoba where financial literacy is currently being integrated into the K-12 curriculum or in Ontario where they are weaving it into grades 4 -12.

Our finance minister, Jim Flaherty, will be making an announcement about these findings today. I'll be watching and wondering where we go from here and whether or the conversation will continue on a national level.

Further Reading
The chair and vice chair of the Task Force summarize the "five keys" of financial literacy in the Globe & Mail (Feb. 10, 2011 edition).

Rob Carrick warns the financial industry that a more financially literate population means more questions for the industry about disclosure of fees in the Globe & Mail (Feb. 10, 2011 edition).

"Guardian of the Chicken Coop stands firm," in National Post (March 2, 2011).

"New Book Helps Ontario Teachers Improve Financial Literacy and Personal Finances" Canadian News Wire press release, March 8, 2011.

Copyright 2010. Laura Thomas. All Rights Reserved.
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Tuesday, February 1, 2011

Preet Banerjee: A Penny Worth Picking Up

Find a Penny
As I was walking home, after dropping off my daughter at school this morning, I did something unusual. I stopped to pick up a penny. Normally, I don't stop to pick up anything smaller than a Loonie and I actually walked three driveways down the road before I decided to go back for it. So what changed my mind?

It didn't have anything to do with the old adage, "Find a penny pick it up and all day long you'll have good-luck." I don't believe all that much in luck. The thought that made me stop in my tracks was this: we live in world that is so crammed with good stuff that it's really easy to walk right by something that is seriously valuable.  

My latest interviewee, financial blogger Preet Banerjee, is kind of like that penny I picked up this morning. Here's why.

Meet Preet
I really can't do a better job describing this thirty-something Torontonian's background than he does himself in a bio on his blog, Where Does All My Money Go, that features a photo of himself potty training. In a nutshell, Preet has a wonderfully diverse background that's one part neuroscience, one part car racing and more than a few parts finance.

We first met through the camera lens on CBC. I was the poor soul in need of retirement advice while Preet played the wise "young" man on The Lang and O'Leary Exchange. That nine minutes on air was fun but not as fun as meeting Preet last week while he was in Vancouver.

Over orange-scented water at Giovane (one of my favourite downtown coffee spots) we spent a half hour talking about his blog, his new TV show on the W Network called "The Money Pit" and financial literacy.

Preet starting developing his financial literacy skills in his youth when his father gently suggested that he read a couple of books on personal finance. As a result, Preet started saving for retirement when he was fifteen, using income from his job at McDonald's to kick-start his nest-egg. He also recalled that when he was fourteen, he sat down and worked out just how long it would take savings and compound interest to make him a millionaire.

Another milestone in Preet's acquisition of money language came even earlier in a grade eight economics class where students had to fill out an entire income tax return from scratch. "I think every kid should do this exercise," he said. When I asked him about his thoughts on financial education in the school system, Preet said flat out, "There's not enough."

Financial Advisors as "Translators"
I asked Preet about the years he spent as a financial advisor. What's it like, I asked, for an advisor to talk to a client who does not really understand the language he is speaking? Preet laughed out loud and said that some advisors are good at translating and some are not and that the happiest clients are usually those who understand the jargon.

Having said that, Preet suggested that there is a broad spectrum when it comes to the client-financial advisor relationship. On one extreme there are clients who say "take care of everything" and walk away, while at the other end there are clients who are on top of every aspect of their portfolio and only use their advisor as an order-taker.

When I asked Preet about the secret of success in personal finance, he said that it comes down to the basics.
  1. Disaster-proof your life (make sure you are covered).
  2. Run a surplus (spend less than you make).
  3. Aggressively pay down high interest debt.
Before we headed over to the Olympic torch where a cooperative construction worker snapped this pic for us, I asked Preet what money word he thinks every Canadian should understand. He said "budgeting." If you cannot save, you cannot be an investor. Financial well-being comes down to paying attention to money in and money out and it's better to have more of the former.

And now back to my thought that Preet is like the penny I picked up this morning. There are a ton of money blogs out there, so many that it's easy to cruise right by them like I almost did with that penny this morning. But you should stop and read Preet's stuff. Like today, he wrote a piece for the Globe and Mail about the benefit of spending $1000 for 10 minutes in a Lamborghini rather than buying one for $299,000.

Preet Banerjee's writing (like his background and personality) is lively, intelligent and worth at least a penny if you stop and pick it up.

Copyright 2011. Laura Thomas. All Rights Reserved.
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