Thursday, March 24, 2011

The Harper Budget & Financial Literacy

In the midst of the kerfuffle over the federal budget that was tabled on Tuesday (a kerfuffle that may dissolve parliament and turn the 352-page budget into a door-stop) it may seem fruitless to worry over the contents of those 352 pages. And for the most part it may be, except for one thing that really matters to people who are determined to help Canadians get smarter about money: does the federal government have the desire to spend money on financial literacy in 2011-2012?

You already know that I'm one of those "people" and so it will be no surprise that as soon as the budget was available online that I poured through the table of contents looking for anything to do with financial literacy, particularly the thirty recommendations made by the Task Force for Financial Literacy in their report, Canadians and Their Money, published on February 9, 2011.

I found what I was looking for in the first chapter, "Supporting Job Creation," under the subheading "Maintaining Canada's Financial Sector Advantage." On page 87 you will find the following statement under the title, "Enhancing Financial Literacy."
With the growing use of financial services by consumers, the importance of ensuring that Canadians have the tools and knowledge to be confident in their financial decisions cannot be overstated. The Government has received the recommendations of the Task Force on Financial Literacy, and it commends the important work that was done in support of this goal. As a first step, the Government is announcing that a Financial Literacy Leader will soon be appointed to promote national efforts, and is providing funding to advance financial literacy initiatives.

Budget 2011 proposes to provide $3 million per year, in addition to the $2 million per year already provided to the Financial Consumer Agency of Canada, to undertake financial literacy initiatives. Improving financial literacy is a long-term goal and a shared responsibility that requires all partners to work collaboratively to leverage the excellent efforts now underway across the country.
I realize that it's the Children's Arts Tax Credit that's supposed to get me all excited as a parent, however I find these two little paragraphs on page 87 much more stimulating as I do believe that by investing in the financial literacy of children and families today, we can improve the economic well-being of future generations.

While politicking is going to dominate budget news in the coming weeks, take a moment to do a little happy dance with me about the government's desire to appointment of a Financial Literacy Leader and to spend an additional $3 million per year on financial literacy. Whatever happens in Ottawa, it is a positive first step towards a more economically fit Canada.

Copyright 2011. Laura Thomas. All Rights Reserved.
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Tuesday, March 15, 2011

Happy Consumer Rights Day!

I'm in the final week of preparations for my city's first World Storytelling Day community celebration. Under my guidance, twelve amazing young writers in grades four through twelve are going to be taking the stage this Sunday to tell (not read) their stories to a theatre full of families. So what does this have to do with World Consumer Rights Day?

Nothing. Or so I thought until I received an email yesterday from Julie Hauser, Communications Manager at the Financial Consumer Agency of Canada (FCAC) about World Consumer Rights Day, which, like World Storytelling day is an interesting and educational yet largely unknown celebration.

CI Logo
World Consumer Rights Day
World Consumer Rights Day is a project of Consumers International (CI), an aggregate of 220 member organizations operating in 115 countries that was founded in 1960. The CI is a watch-dog group whose purpose is to "protect and empower consumers everywhere."

According to their website, WCRD was founded on a speech that President J.F. Kennedy gave to the US Congress on March 15, 1963. In this speech, Kennedy addressed the issue of consumer rights, which, according to the site, made him the first world leader to do so.

The eight rights included in Kennedy's speech were: access to basic needs, safety, information and choice, plus the right to be heard and the right to redress as well as rights to consumer education and a healthy environment. World Consumer Rights Day, which first took place in 1983, is a day in which groups organize to celebrate and show global solidarity around Kennedy's eight points.

Especially since the market meltdown in 2008 (and the last few days!) consumer rights in the financial services industry have become an increasingly important part of the celebration.

Your Rights as a Canadian Consumer
Did you know that you have the following rights as a consumer of financial products?
  1. The right to open a bank account even if you don't have a job, do not have any money to put in the account or have been bankrupt.
  2. The right to cash Government of Canada cheques up to $1,500 at any federally regulated financial institution without having to pay a service fee, even if you are not a client of that institution.
  3. The right to know the terms of any loan that you take out at a federally regulated financial institution.
You can find more information online about your financial consumer rights in Canada at the FCAC website. And if, like me, you would like to know exactly what qualifies as a "federally regulated financial institution," you can find an overview of the obligations and voluntary codes of conduct on the FCAC website as well.  

And as you consider how your family might mark these little-known celebrations, here's a suggestion. This Sunday, on World Storytelling Day (March 20th), tell a child a story about money. Or, even better, tell a story about Consumer Rights Day which is today, March 15th.

Copyright 2011. Laura Thomas. All Rights Reserved. 
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Monday, March 7, 2011

Money Smarts for Low-income Canadians

With the tabling of a new federal budget just around the corner, I've been trying to find out if any of the 30 recommendations made by the Task Force for Financial Literacy last month will be addressed.

Casey Cosgrove, CCFL Director
Though I haven't been able to find anyone who can give me the inside scoop, it gave a me good excuse to contact people who are deeply invested in financial literacy, perhaps none more so than Casey Cosgrove, Director of the Canadian Centre for Financial Literacy (CCFL).

The Canadian Centre for Financial Literacy
The CCFL is a division of a registered Canadian charity called SEDI (Social and Enterprise Development Innovations which, by the way, was the organization that advocated for the creation of a national financial literacy task force in the first place.) Its purpose is to deliver financial education to youth, newcomers, Aboriginal Peoples, women and families with children.

Recently, I was lucky to have a good long chat with Casey Cosgrove about his role as director of the CCFL. What I found particularly interesting about his organization is that partnership is central to their approach to financial literacy.

While the CCFL's goal is to "improve the financial knowledge and skills of  over 230,000 people by 2013," it does not send its staff out to inner-city streets to find at risk Canadians one by one. Instead, the CCFL sends its staff to train front-line workers at a wide variety of social service organizations that are already serving vulnerable groups. CCFL workshops equip front-line workers to empower their clients in the area of personal finance by teaching them how to integrate financial literacy into their day-to-day operations.

Let me tell you a fictional story based on an example that Casey gave me during our discussion.

Fighting the Payday Loan Syndrome
Imagine a twenty-year-old dropout living on Vancouver's Downtown Eastside. Let's call him Zane. Zane is mostly unemployed but he's recently landed a construction job through his connections at a downtown service organization. Because of this upturn in cash flow, Zane is now able to rent a room. But the landlord needs a three hundred dollar deposit and it's a week until Zane gets his first pay cheque.

There's a payday loan store just around the corner from the service organization where Zane often eats dinner. He decides to go to the payday loan store and get his three hundred dollars after he eats.

He eats his meal and as he's about to head out to get his payday loan there is an announcement that there is a money talk starting in five minutes. Zane decides to stay because the talk is being done by one of the organization's front-line workers. In fact, it's the same worker who  helped Zane get the construction job.

At the talk, Zane finds out that a payday loan will end up costing him a lot more than $300. He also finds out that the organization has a new "loan" program whereby he can get a $300 advance without paying interest. Zane chooses to take advantage of that advance and gets his room. He also begins to talk to his worker about money. He wants to learn about opening a bank account.

All of this happened because a month earlier the organization had a CCFL trainer come on site to run the front-line staff through their financial literacy workshop.

Meet Casey
Like I said, Casey, and his work in financial literacy and community market testing,  is at the heart of the CCFL. Prior its formation in 2008, Casey put his business background to good use by traveling across Canada to encourage entrepreneurship in vulnerable youth. He estimates that he taught his program "Dollars and Sense" to more than 15,000 young people. Then about six years ago, Casey began training trainers to deliver his curriculum, which a year and a half ago (with SEDI and the TD Bank as a funding partners) blossomed into the CCFL.

As a side note, Casey did tell me that when it comes to training trainers, that it's sometimes easier to work with people who do not have a background in finance. They seem to be more "flexible." And when I asked him the O'Leary question (what three things would you teach a Canadian kid about money) this is what he said:
  1. Don't be afraid of money.
  2. No matter what you do for a living you have to deal with money.
  3. It's okay to talk about money.
If you belong to an organization that serves vulnerable groups and would like have the CCFL help you incorporate financial literacy into your services, please contact the CCFL at or phone 416-665-2828.

In the meantime, cross your fingers and say a prayer that there will be something in the March 22nd federal budget to address the recommendations made by the Task Force for Financial Literacy. And if you hear me!

Copyright 2011. Laura Thomas. All Rights Reserved.
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Tuesday, March 1, 2011

Moola Lingo: Budget

The Evolution of a Money Word

It was financial blogger Preet Banerjee who told me in a recent interview that if there is one money word every Canadian should understand thoroughly it's "budgeting." I had a hunch that the word "budget" has been around for a long time so I headed to the Koerner Library at my alma mater, UBC, and hefted a copy of the Oxford English Dictionary off the shelf. It turns out I was right...and what a history the word has. From leather pouches dangling around men's hips to proclamations of governmental accountability in British Parliament to womanly advice from Good Housekeeping magazine, "budget," and its meaning, has been around the block.

1432 A budget refers to a pouch, bag or wallet made of leather.

1618 Budget becomes a verb that describes the act of storing up money or another resource for a particular purpose or result.

1773 Budget (as a noun) is used in the British House of Commons to denote projected government expenses and revenues.

1945 The verb "budgeting" is used to describe the process of creating a budget for the purposes of personal financial planning. First recorded use was in an article that appeared in an issue of Women & Work, "Budgeting and shopping on a small income..."

Good Housekeeping 1955
1951 Good Housekeeping tells its readers, "The first essentials for budgeting are to keep weekly or monthly accounts."

1958 The word "budget" is used to describe something that is cheap for the first time in the November issue of Woman magazine. "This is just the drink to give party guests a glow -- at a budget price." In that same issue you find an article on, "Budget-wise dishes. Family recipes...that are easy on the purse."

1969 A "budget account" is a new noun that describes a type of credit account that customers can open at a department store.

2011 A budget is an estimate of the income (money in) and expenses (money out) that will flow in and out of a certain account over a set period of time.

My Take on the Word
If  you asked me yesterday whether or not I do a budget for my family, I would have said yes. But now that I understand that the word implies forecasting cash flow in the future, then the truth is I don't do a budget. I do something else.

At the end of this month I will sit down and look through all of my receipts, bills and invoices and do a tally (in Excel) so that I know exactly how much money came in, how much money went out and what's left over. I use that information to see how I'm doing and where I should reign in or relax my spending next month. I never say things to myself like: I have $175 to spend on entertainment or I have $210 to spend on gas. That's what you do when you write up a budget...which I don't, apparently!

I have no idea what to call the "month end tally" that I do for my family but I'm sure there's name for it. If you know the answer, please post it!

Copyright 2011. Laura Thomas. All Rights Reserved.
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