Saturday, November 27, 2010
Friday, November 19, 2010
Teaching Kids the How & Why of Advertising
I'm just about finished shooting the footage for episode seven of Money&Me with Agent Story and I have to say that it's been the most difficult video to make so far. Writing catchy poems and silly stories about money words like job, stock, sales tax, donation, credit card, and entrepreneur has been easy. Writing about the word "advertisement" has been more of a challenge.
How do you make a compelling ad? What are the components of an effective commercial? What is some of the important marketing lingo that goes along with the word "advertisement"? How do companies make sure that advertisements are worthwhile? Unlike the other concepts I've tackled so far in my show, I didn't know much about advertising when I sat down to write the script.
But, after more than a little online research, I can now answer all of those questions and more. And, to put it all together for the kids who watch Money&Me, I not only wrote a poem explaining the how and why of advertising, I also made my very first commercial. It's for my CD, Agent Story: Tales from the Briefcase. And, it's going to be part of the episode.
You know, I made my CD way back in 2009. It's a collection of the most popular stories and poems from my live shows. Funny how I never thought to make a commercial for it until I started telling stories about money. Isn't financial literacy a powerful thing?
Copyright 2010. Laura Thomas. All Rights Reserved.
How do you make a compelling ad? What are the components of an effective commercial? What is some of the important marketing lingo that goes along with the word "advertisement"? How do companies make sure that advertisements are worthwhile? Unlike the other concepts I've tackled so far in my show, I didn't know much about advertising when I sat down to write the script.
You know, I made my CD way back in 2009. It's a collection of the most popular stories and poems from my live shows. Funny how I never thought to make a commercial for it until I started telling stories about money. Isn't financial literacy a powerful thing?
And, by the way, this is a real commercial. I do have a two-for-one sale on now until Christmas day. Click here to get yours.
Copyright 2010. Laura Thomas. All Rights Reserved.
Wednesday, November 17, 2010
Fearless! Robert Herjavec on Talking to Kids About Money
Meet a Fearless Dragon
He's a self-made millionaire. He's a reality TV star north and south of the border. He's a best-selling author and marathon runner. He has more than one mansion and has chatted with Oprah about fiscal responsibility while giving her a ride in his golf cart. But what really impressed me during our brief phone call last week is that he is absolutely fearless when it comes to financial literacy, both his own and that of his three kids.
Do you come from a family in which talking about money can get you expelled from the dinner table? Robert does. Add that to the fact that he didn't take business courses in high school and that eight months into university he dropped out of Commerce to take English and Political Science and you have to wonder how he has become so fluent in the language of money. As Robert told me, it comes down to this:
There is no such thing as a dumb question. But once you have asked the question, you have to listen and learn.
Robert has taught himself just about everything he knows about money and, apparently, it's a never-ending journey. Just before we spoke he was having lunch with an important investor who mentioned a financial term that Robert was unfamiliar with. Instead of skipping over it and muddling through (like I have done way too many times at the bank), he stopped the conversation and unabashedly asked that scary and often avoided question: what does that mean?
I was actually quite surprised that he told me this story knowing that I would probably put it in my article. Clearly his pursuit of financial knowledge trumps any sense of embarrassment he may have at exposing the limits of his understanding. It's about learning the facts, not about protecting your ego which, as we all know, can really get in the way when it comes to talking about what we know (and don't know) about money. After all, money is not a taboo subject anymore. Or is it?
"Money Just Is"Growing up, Robert learned that it's rude to talk about money. But he doesn't buy that line of thinking anymore. "Money is not a bad word," he said. "It's a resource. Money just is." And so when his teenage son said that he would like to study whales for a living and wanted to know how much marine biologists make, Robert did some research and found out that they make about forty thousand dollars a year.
Armed with this information, Robert told his son the facts: you can study whales or you can live in a mansion, but you probably can't do both. "The choices we make in life have a price." What a great three-part lesson:
A Helping Hand for Capitalism
These are exciting times. Flaherty's Task Force on Financial Literacy is due to release its recommendations next month. In Manitoba and Ontario, curriculum writers are hunched over their computers furiously writing brand new financial literacy lesson plans that will be introduced in September 2011. When I asked Robert what he thinks about all this he brought up an interesting point: capitalism sometimes needs a helping hand.
Robert believes that our governments do a good job supporting capitalism by funding initiatives that build our economy. He mentioned the new Business Plan Competition that is on right now at Queen's University. The federal government will provide three $150,000 interest free loans to students, or faculty, who start a business. "This is a great use of public resources," he said.
Robert also thinks that including financial education in schools is another good use of public resources and he has a wish-list for the new curriculum that includes teaching kids about spending wisely and about entrepreneurship. He hopes that kids will learn that "when you spend a dollar on this, you can't spend it on that." He also hopes that kids will be introduced to the possibility of earning a living as an entrepreneur because, as he's read, eighty percent of entrepreneurs have a family member that is already an entrepreneur.
Robert's father was a factory worker. His mother was a secretary. "It's tough to take a chance when you don't see others doing it." Wow. Imagine an education system that teaches kids (every kid, not just the ones who take high school business courses) the difference between being an employee and an entrepreneur? That would be a great use of public funds. But enough wishful thinking...back to Robert.
A Fearless Learner
Robert is immensely successful in business and in life but what struck me the most during our short conversation is how much he cares about financial literacy. He is completely open and honest about money with his kids. He doesn't shut down or "fake it" when the limits of his financial knowledge are reached. He is fearless when it comes to learning the language of money. Isn't that just as impressive as owning mansions and knowing Oprah? I think so.
Not only am I going to keep talking to my daughter about money, I am going to talk to her about all the stuff I don't know about money. That way we can explore and acquire the language together. And, the next time I'm at the bank, I'm going to speak up when I don't know what a word means. I mean, seriously, if Robert Herjavec can admit when he doesn't know something about money, so can I.
Copyright 2010. Laura Thomas. All Rights Reserved.
For reprint permission please contact Laura at money@agentstory.net.
Do you come from a family in which talking about money can get you expelled from the dinner table? Robert does. Add that to the fact that he didn't take business courses in high school and that eight months into university he dropped out of Commerce to take English and Political Science and you have to wonder how he has become so fluent in the language of money. As Robert told me, it comes down to this:
There is no such thing as a dumb question. But once you have asked the question, you have to listen and learn.
Robert has taught himself just about everything he knows about money and, apparently, it's a never-ending journey. Just before we spoke he was having lunch with an important investor who mentioned a financial term that Robert was unfamiliar with. Instead of skipping over it and muddling through (like I have done way too many times at the bank), he stopped the conversation and unabashedly asked that scary and often avoided question: what does that mean?
I was actually quite surprised that he told me this story knowing that I would probably put it in my article. Clearly his pursuit of financial knowledge trumps any sense of embarrassment he may have at exposing the limits of his understanding. It's about learning the facts, not about protecting your ego which, as we all know, can really get in the way when it comes to talking about what we know (and don't know) about money. After all, money is not a taboo subject anymore. Or is it?
"Money Just Is"
Armed with this information, Robert told his son the facts: you can study whales or you can live in a mansion, but you probably can't do both. "The choices we make in life have a price." What a great three-part lesson:
- When you don't know something about money ask.
- Sometimes the truth about money is not always what you want to hear but you still need to hear it.
- Our choices come with a price tag.
A Helping Hand for Capitalism
These are exciting times. Flaherty's Task Force on Financial Literacy is due to release its recommendations next month. In Manitoba and Ontario, curriculum writers are hunched over their computers furiously writing brand new financial literacy lesson plans that will be introduced in September 2011. When I asked Robert what he thinks about all this he brought up an interesting point: capitalism sometimes needs a helping hand.
Robert also thinks that including financial education in schools is another good use of public resources and he has a wish-list for the new curriculum that includes teaching kids about spending wisely and about entrepreneurship. He hopes that kids will learn that "when you spend a dollar on this, you can't spend it on that." He also hopes that kids will be introduced to the possibility of earning a living as an entrepreneur because, as he's read, eighty percent of entrepreneurs have a family member that is already an entrepreneur.
Robert's father was a factory worker. His mother was a secretary. "It's tough to take a chance when you don't see others doing it." Wow. Imagine an education system that teaches kids (every kid, not just the ones who take high school business courses) the difference between being an employee and an entrepreneur? That would be a great use of public funds. But enough wishful thinking...back to Robert.
A Fearless Learner
Robert is immensely successful in business and in life but what struck me the most during our short conversation is how much he cares about financial literacy. He is completely open and honest about money with his kids. He doesn't shut down or "fake it" when the limits of his financial knowledge are reached. He is fearless when it comes to learning the language of money. Isn't that just as impressive as owning mansions and knowing Oprah? I think so.
Not only am I going to keep talking to my daughter about money, I am going to talk to her about all the stuff I don't know about money. That way we can explore and acquire the language together. And, the next time I'm at the bank, I'm going to speak up when I don't know what a word means. I mean, seriously, if Robert Herjavec can admit when he doesn't know something about money, so can I.
Copyright 2010. Laura Thomas. All Rights Reserved.
For reprint permission please contact Laura at money@agentstory.net.
Wednesday, November 10, 2010
Wants, Needs & Parenting for Fulfillment
Wants & Needs
How often do you find yourself buying stuff that your kids want but don't need? I was doing it all the time, quite unconsicously, I confess. But ever since my lively discussion with investment counselor and father of two, Al Tynan, I have found myself saying "no" to my daughter's wants more often. This has not only been good for my family's bottom line, it's been great for my daughter's self-esteem and sense of fulfillment. But let me introduce you to Al first.
A former national-level rugby player and UBC Human Kinetics major and Commerce minor, Al joked about the fact the he was the only person in HK with a subscription to the National Post. Currently, Al holds a Chartered Financial Analyst designation and is an investment counselor at RBC Phillips, Hager & North. His clients have to have at least a million free and clear to invest before they can sit down and pick his brain. Not to mention his office is on the twentieth floor of a stunning waterfront building in downtown Vancouver. From the conference room window, I could just about touch Grouse Mountain's snow-bare ski runs.
So what was I doing in that multimillion-dollar setting talking to a rugby player turned financial advisor who deals in the millions of dollars? Well, I wasn't there on investment business. No, I dropped by to find out what a guy like Al teaches his kids about money. A lot of useful things, it turns out, and it all hinges on this idea:
The other powerful lesson that came out of his family's unique financial situation was what Al calls the "get rich slowly scheme" or the power of owning stocks that pay dividends. As early as he can remember, Al got a nine-dollar dividend cheque in the mail every three months from Imperial Oil. This is something his father set up for him and something that Al would like to set up for his kids too but, these days, companies don't send dividend cheques in the mail. For a kid, looking at numbers on a computer screen just isn't the same thing as getting a cheque with your name on it in the mail.
Fulfillment 101
As much as getting a dividend cheque in the mail is a thing of the past, Al worries that the concept of working hard for what you get is going that way too. He brought up the point that when parents constantly buy full-priced "stuff" for their kids, such as pricey electronics and other luxury consumer goods, they run the risk of hurting their kids' satisfaction down the road. That made me think.
What if my daughter decides to pursue a noble job that only pays a modest income? What if she wants to be a pre-school teacher...or even a children's storyteller? If I buy her every expensive gadget that she asks for while she's living at home, this could lead to a decreased sense of satisfaction when she leaves the nest and starts living on a pre-school teacher's (or storyteller's) salary. I was impressed by Al's insight and asked him how he teaches his girls (ages six and eight) about the difference between needs and wants.
When Al's eight-year-old wants a new luxury gadget, he explains to her that it's not a "need" and therefore that it's not his job to buy it for her. He then encourages her to earn money to cover half the cost (he will pay the other half). When she has saved up the money, Al suggests that they shop around for the best sale price or even check Craig's List for a used one. That way she can save and grow some of the money that she has worked so hard to earn.
This is a practical idea that holds three great life and money lessons for our kids:
Fulfillment. That's the word that I'm going to stand on the next time I say, "Sorry, sweet-pea, I'm not buying you that pink Nintendo DS-I. If you want it, you'll have to pay for it yourself. Let me show you how."
How often do you find yourself buying stuff that your kids want but don't need? I was doing it all the time, quite unconsicously, I confess. But ever since my lively discussion with investment counselor and father of two, Al Tynan, I have found myself saying "no" to my daughter's wants more often. This has not only been good for my family's bottom line, it's been great for my daughter's self-esteem and sense of fulfillment. But let me introduce you to Al first.
So what was I doing in that multimillion-dollar setting talking to a rugby player turned financial advisor who deals in the millions of dollars? Well, I wasn't there on investment business. No, I dropped by to find out what a guy like Al teaches his kids about money. A lot of useful things, it turns out, and it all hinges on this idea:
Our job as parents is to take care of all of our kids' needs but not all of their wants.Al learned this lesson early. His father, a lawyer, retired when he was just 40 years old. As it turns out, he had saved a portion of his employment earnings and had invested in stocks. Essentially, the family of five lived on the dividend income generated by those stocks. In his early years, there were months where Al and his brothers had their needs taken care of but not all of their wants. Al was okay with that because he saw that while finances weren't always easy for his parents, they truly enjoyed family life.
The other powerful lesson that came out of his family's unique financial situation was what Al calls the "get rich slowly scheme" or the power of owning stocks that pay dividends. As early as he can remember, Al got a nine-dollar dividend cheque in the mail every three months from Imperial Oil. This is something his father set up for him and something that Al would like to set up for his kids too but, these days, companies don't send dividend cheques in the mail. For a kid, looking at numbers on a computer screen just isn't the same thing as getting a cheque with your name on it in the mail.
Fulfillment 101
As much as getting a dividend cheque in the mail is a thing of the past, Al worries that the concept of working hard for what you get is going that way too. He brought up the point that when parents constantly buy full-priced "stuff" for their kids, such as pricey electronics and other luxury consumer goods, they run the risk of hurting their kids' satisfaction down the road. That made me think.
When Al's eight-year-old wants a new luxury gadget, he explains to her that it's not a "need" and therefore that it's not his job to buy it for her. He then encourages her to earn money to cover half the cost (he will pay the other half). When she has saved up the money, Al suggests that they shop around for the best sale price or even check Craig's List for a used one. That way she can save and grow some of the money that she has worked so hard to earn.
This is a practical idea that holds three great life and money lessons for our kids:
- Wants and needs are not the same thing.
- Needs are more important than wants.
- Getting everything you want won't necessarily make you happy.
Fulfillment. That's the word that I'm going to stand on the next time I say, "Sorry, sweet-pea, I'm not buying you that pink Nintendo DS-I. If you want it, you'll have to pay for it yourself. Let me show you how."
Copyright 2010. Laura Thomas. All Rights Reserved.
For reprint permission please contact Laura at money@agentstory.net
Thursday, November 4, 2010
Dragons' Den & Our Unofficial National Financial Literacy Grade
Ever since I started pouring my writing and storytelling skills into the world of financial literacy I have been wondering how I might find out how financially literate we are as a country. I haven't found an official statistic on this yet, but I may have an unofficial one.
I had the opportunity last week to chat by email with Sean Wise, Assistant Professor of Entrepreneurship and Innovation at Ryerson's School of Management and industry consultant to Dragons' Den. I couldn't resist asking Professor Wise what grade he would give Dragons' Den pitchers when it comes to their ability to talk money.
Professor Wise said, "I would give a C to most going into the Den, while they often know basic financial matters, that isn't enough when it comes to investment."
His comment inspired me to do a little research so as I watched last night's episode I made a list of all the financial and/or business vocabulary used in the Den. I noted who used that vocabulary and what the outcome was for the pitcher. And then, just for fun, I gave each of the pitchers a financial literacy letter grade.
Number of financial/business words used by pitchers: 7
Number of financial/business words used by Dragons: 11
Outcome: No deal
Financial Literacy grade: C+
Pitcher: 17 words
Dragons: 17 words
Outcome: $100,000 deal with Brett for 50% of his business
Financial Literacy grade: A+
Pitchers: 8 words
Dragons: 12 words
Outcome: No deal
Financial Literacy grade: C
Pitchers: 3 words
Dragons: 9 words
Outcome: No deal
Financial Literacy grade: F
Beba Bean Designs Baby Clothes
$315,000 for 15% of their business
Pitchers: 10 words
Dragons: 11 words
Outcome: $315,000 deal with Arlene and Robert for 40% of their business
Financial Literacy grade: A
What this says about us...
My sofa-side research pretty much confirms Professor Wise's C grade for the pitchers. So what does this mean for my quest to find out our national literacy score?
Think about the fact that Dragons' Den is one of the most-watched TV shows in the country. According to the show's marketing fact sheet: Dragons' Den is the number one reality show in Canada; the show's website had over three million hits in 2009; and it's the most popular show in its time slot. Match these stats with the fact that as of this moment the show's Facebook page has 35,455 fans. These are big numbers in our small country. Do you see where I'm going with this?
Canada's "Unofficial" Financial Literacy grade: C
You can find out more about these pitchers and watch the show by visiting the Dragons' Den CBC website.
Copyright 2010. Laura Thomas. All Rights Reserved.
For reprint permission please email Laura at money@agentstory.net
I had the opportunity last week to chat by email with Sean Wise, Assistant Professor of Entrepreneurship and Innovation at Ryerson's School of Management and industry consultant to Dragons' Den. I couldn't resist asking Professor Wise what grade he would give Dragons' Den pitchers when it comes to their ability to talk money.
Professor Wise said, "I would give a C to most going into the Den, while they often know basic financial matters, that isn't enough when it comes to investment."
His comment inspired me to do a little research so as I watched last night's episode I made a list of all the financial and/or business vocabulary used in the Den. I noted who used that vocabulary and what the outcome was for the pitcher. And then, just for fun, I gave each of the pitchers a financial literacy letter grade.
Elite Living International
Ask: $100,000 for 10% of their businessNumber of financial/business words used by pitchers: 7
Number of financial/business words used by Dragons: 11
Outcome: No deal
Financial Literacy grade: C+
Innovative Solutions Handy Tray
Ask: $100,000 for 1.5% royalty on tray sales Pitcher: 17 words
Dragons: 17 words
Outcome: $100,000 deal with Brett for 50% of his business
Financial Literacy grade: A+
AgriConnect Farm-sitting Web Site
Ask: $72,000 for 40% of their businessPitchers: 8 words
Dragons: 12 words
Outcome: No deal
Financial Literacy grade: C
Professional Weight Loss Services
Ask: $250,000 for 25% of their businessPitchers: 3 words
Dragons: 9 words
Outcome: No deal
Financial Literacy grade: F
Beba Bean Designs Baby Clothes
$315,000 for 15% of their business
Pitchers: 10 words
Dragons: 11 words
Outcome: $315,000 deal with Arlene and Robert for 40% of their business
Financial Literacy grade: A
What this says about us...
My sofa-side research pretty much confirms Professor Wise's C grade for the pitchers. So what does this mean for my quest to find out our national literacy score?
Think about the fact that Dragons' Den is one of the most-watched TV shows in the country. According to the show's marketing fact sheet: Dragons' Den is the number one reality show in Canada; the show's website had over three million hits in 2009; and it's the most popular show in its time slot. Match these stats with the fact that as of this moment the show's Facebook page has 35,455 fans. These are big numbers in our small country. Do you see where I'm going with this?
Canada's "Unofficial" Financial Literacy grade: C
You can find out more about these pitchers and watch the show by visiting the Dragons' Den CBC website.
Copyright 2010. Laura Thomas. All Rights Reserved.
For reprint permission please email Laura at money@agentstory.net
Thursday, October 28, 2010
Meet a Money-Savvy Dad & Soulful "Inventor-preneur"
 |
| Kevin Royes at CBC after his success on Dragons' Den Image from MSN Money.com |
Though he has money now, that wasn't always the case for Kevin. He grew up in a rough area of Toronto in a single parent family (something I can relate to as a sole parent). Financial literacy was not part of his upbringing during his elementary school years, but his inventor's spirit was alive and well.
Early in Kevin's grade eleven year at a Mississauga high school, Prez visited both his marketing and accounting classes to deliver a fifteen-minute presentation about Junior Achievement of Canada, an entrepreneurial program that provides hands-on business training for students. Hearing Prez's spiel, not once but twice, hooked him.
Kevin eagerly participated in the Junior Achievement Program and by age 20 he had invented a locking device for snowboards that two years later was picked up by Burton, a major snowboard manufacturer. This allowed him to quit his mail room job at Kimberly Clark and go into business. I'm pretty sure that he has never looked back.
"I never really was a good employee," he told me with a smile. And when I asked him what the main difference is between being an employee and an entrepreneur, he said, "As an entrepreneur you get to follow your dream. As an employee you have to follow a dream that belongs to someone else." What could I say to that? I nodded my head and we moved on to talk about his teen boys, ages 13 and 15, and how he is getting them ready to deal with money.
At first, Kevin was pretty sure that he didn't have anything useful to share with me on the topic of kids and money. But as we got talking, he spilled this little gem of parenting wisdom. As his boys are getting older, he is consciously pulling back on the amount of stuff he buys for them. That way the kids will have to figure out how to earn money themselves and then manage it so that they can afford buy the things that Dad won't buy them any more. And that wasn't the only little gem that came out of our conversation.
When I asked him the same question that I had asked the Dragons' Den stars--If you had just three things that you could teach a Canadian five-year old about money what would they be?--Kevin said:
- Follow your soul and money will follow.
- Make as much money as you can "before you die" (a nod to Kevin O'Leary's response) because it allows you to express yourself in the world.
- Enjoy it.
Consider these other bits of wisdom that Kevin shared during our talk: "the more I tried to squeeze money, the more it would squeeze through my fingers;" and "there is no soul or satisfaction in the pursuit of money." This is powerful stuff coming from a powerful guy who, ironically, in the first minute of our conversation told me that he is not a role model for kids when it comes to money. Not true.
 |
| Photo by Michael Kalus |
It's not surprising that just as we were to end our Skype call, Kevin shared yet another creative and soulful idea with me: the idea that I am a "soul" parent, and not just a "sole" parent. Wow! Not a role model? Not money-savvy? I don't think so.
Copyright 2010. Laura Thomas. All rights reserved.
For reprint permission please contact money@agentstory.net
Tuesday, October 26, 2010
Asset & Liability: Take these Words to the Toy Store
Last night, after the "tucking in," I put my feet up on the sofa and read Robert Kiyosaki's 2004 financial literacy book Rich Dad, Poor Dad for Teens. It's an easy read, an hour or two tops, and worth going through with your kids even though it was written for an American audience. And be prepared. The book will inspire some lively debate with your kids about the stuff in your lives: what is an asset and what is not.
Assets & Liabilities
As Kiyosaki points out in his book, the difference between an asset and a liability is this: an asset puts money in your pocket, while a liability takes money out of it. It's all about balance, or should I say imbalance. Ideally, we want to have way more assets than liabilities and getting there starts with understanding the difference between the two words.
What is an asset?
An asset puts money in your pocket. It pays you to own it. For example, your investment portfolio should be an asset that pays you income in the form of interest, capital gains or dividends (and if it's not an asset, get help!). A rental property is an asset when the renters pay their rent. And, your home can be an asset too, assuming that you don't lose money when you sell it. Collector's items and artwork can be can assets if their value goes up. Assets pay you. They generate income.
I have pointed out to my six-year old that "silly bands" (the latest trading craze for kids) are not, by definition an asset unless she saves them until she's my age and they become collector's items. I'm not optimistic that silly bands will be worth anything in 2046, but she, who owns 78 of these cheap rubber bands that sell at the insane price of 24 for $4.99, disagrees. "They're NOT a liability, MOM!" she told me while headfirst in a bin of silly bands at Toys R Us madly searching for a Western-themed package to go with her Halloween cowgirl costume.
What is a liability?
A liability is something that takes money out of your pocket. The truth is, almost all the stuff that we own is a liability. For example, my computer, my new TV, my car, my clothes, my books, my kitchen appliances, my daughter's Littlest Pet Shop collection and those silly bands, of course, none of these things can be sold today for a profit (not even on Craig's List). Debt is a liability too, although like your home it can be an asset if that money is being saved and invested to build wealth such as in an RRSP. But, in general, any money you own is a liability. And don't forget taxes. Talk about a personal liability; the 12% HST is killing me.
Getting back to Kiyosaki's Rich Dad Poor Dad, the bottom line is imbalance. You want to have more assets than liabilities in your financial life. I also appreciate his observation that the rich and poor speak differently about money. Kiyosaki says that the "rich dad" mentor in his early years taught him to spend his money on assets, while his real "poor dad" seemed to unconsciously focus on acquiring liabilities and then complain about them. It was "rich dad" who spoke about and taught him the difference between an asset and a liability. That is powerful vocabulary to pass on to our kids.
So while I'm not happy about my daughter squandering her pocket money on silly bands, I am happy that she is beginning to understand the difference between an asset and a liability. In the end, all I want her to learn from these early spending experiences is the vocabulary, this powerful, life-shaping vocabulary.
Copyright 2010. Laura Thomas. All Rights Reserved.
For reprint permission contact money@agentstory.net
As Kiyosaki points out in his book, the difference between an asset and a liability is this: an asset puts money in your pocket, while a liability takes money out of it. It's all about balance, or should I say imbalance. Ideally, we want to have way more assets than liabilities and getting there starts with understanding the difference between the two words.
What is an asset?
An asset puts money in your pocket. It pays you to own it. For example, your investment portfolio should be an asset that pays you income in the form of interest, capital gains or dividends (and if it's not an asset, get help!). A rental property is an asset when the renters pay their rent. And, your home can be an asset too, assuming that you don't lose money when you sell it. Collector's items and artwork can be can assets if their value goes up. Assets pay you. They generate income.
I have pointed out to my six-year old that "silly bands" (the latest trading craze for kids) are not, by definition an asset unless she saves them until she's my age and they become collector's items. I'm not optimistic that silly bands will be worth anything in 2046, but she, who owns 78 of these cheap rubber bands that sell at the insane price of 24 for $4.99, disagrees. "They're NOT a liability, MOM!" she told me while headfirst in a bin of silly bands at Toys R Us madly searching for a Western-themed package to go with her Halloween cowgirl costume.
What is a liability?
A liability is something that takes money out of your pocket. The truth is, almost all the stuff that we own is a liability. For example, my computer, my new TV, my car, my clothes, my books, my kitchen appliances, my daughter's Littlest Pet Shop collection and those silly bands, of course, none of these things can be sold today for a profit (not even on Craig's List). Debt is a liability too, although like your home it can be an asset if that money is being saved and invested to build wealth such as in an RRSP. But, in general, any money you own is a liability. And don't forget taxes. Talk about a personal liability; the 12% HST is killing me.
Getting back to Kiyosaki's Rich Dad Poor Dad, the bottom line is imbalance. You want to have more assets than liabilities in your financial life. I also appreciate his observation that the rich and poor speak differently about money. Kiyosaki says that the "rich dad" mentor in his early years taught him to spend his money on assets, while his real "poor dad" seemed to unconsciously focus on acquiring liabilities and then complain about them. It was "rich dad" who spoke about and taught him the difference between an asset and a liability. That is powerful vocabulary to pass on to our kids.
So while I'm not happy about my daughter squandering her pocket money on silly bands, I am happy that she is beginning to understand the difference between an asset and a liability. In the end, all I want her to learn from these early spending experiences is the vocabulary, this powerful, life-shaping vocabulary.
Copyright 2010. Laura Thomas. All Rights Reserved.
For reprint permission contact money@agentstory.net
Thursday, October 21, 2010
Valuation, Dragons' Den & The Wealthy Barber Returns
Though I write a blog about money and do a children's You Tube show about money, and though I'm self-employed and entrepreneurial, what I really am is a writer, an artsy-fartsy writer. But as a writer who, these days, is equally passionate about money and manuscripts, I seem to be making some strange connections between the economic arts and the literary ones.
Like this one.
Is creating a company similar to creating a piece of writing? I think it might be and I write this with Dave Chilton, author of The Wealthy Barber, in mind. But more about Dave in a moment.
I taught four writing classes this week. And, whether I was working with adults or kids, teaching live or in my virtual classroom, I wanted my students to be super clear about one thing: the writing process and at what stage they should be asking for feedback.
When should a writer go begging for someone to read and evaluate his manuscript? The answer is: absolutely not until he has draft number one finished. As I said to my students over and over this week, "How can you possibly evaluate any part of a story, poem or article until you get to the end? You need to make your lump of clay before you can decide how to sculpt it!"
Could there be a connection between writing a manuscript and starting a company? How can you evaluate or assign value to a business that is not finished, that is not yet a lump of clay? It was last night's episode of Dragons' Den that helped me make this connection between evaluating a piece of writing and valuing a company.
Two pitchers from a company called Flu Goo (hand sanitizers for kids) came on the show asking for $113,000 in exchange for 40% of their company, which was strange because they had not sold one bottle of their product. Not one. The Dragons pointed out that there is huge difference between saying you need $113,000 to finish building your company and saying that your company is worth $282,500 ($113,000 x 2.5) even though it's not "finished" because it has no sales.
Without sales, a company is incomplete and of no value to anyone; the same is true of a manuscript that has no ending. You have to have all the parts of something before you can assign value to it. Which brings me back to Dave Chilton who is at this moment sequestered in his office and madly typing away at the long-awaited sequel to The Wealthy Barber, The Wealthy Barber Returns. I have some advice but it may be too late for him to take it: don't release any excerpts or early chapters until the first draft of your manuscript is done; make your lump of clay before you send it out into the world for evaluation.
But my advice may be too late. On the homepage of his website, Dave writes, "I'm hoping a number of published excerpts and the book's Introduction, below, will whet your appetite." I can only hope that unlike the Flu Goo people and their still-to-be-done sales, that Dave already has all of his chapters written, including the last one, which is always the hardest one to write, especially because you know that when it's done you are going to have to go back to the beginning and truly evaluate your creation...and get out the sharp tools. Sales are the same.
It's easier to do just about everything than get out there and make cold calls. But without sales, as the Flu Goo pitchers learned in the Den, you don't have a lump of clay that can be valued. A start-up company with no sales is like a manuscript with no ending, assigning value is impossible. There is still a lot of hard work to be done.
By the way, the Flu Goo people don't even have a website. I know that I'm just an artsy-fartsy writer, but it seems like the stuff that shakes loose and the focusing that happens during the process of creating a website is an essential part of building a new company, right up there with sales and making your business "manuscript" complete and ready for e-valuation.
Copyright 2010. Laura Thomas. All Rights Reserved.
For reprint permission contact money@agentstory.net
Like this one.
Is creating a company similar to creating a piece of writing? I think it might be and I write this with Dave Chilton, author of The Wealthy Barber, in mind. But more about Dave in a moment.
I taught four writing classes this week. And, whether I was working with adults or kids, teaching live or in my virtual classroom, I wanted my students to be super clear about one thing: the writing process and at what stage they should be asking for feedback.
When should a writer go begging for someone to read and evaluate his manuscript? The answer is: absolutely not until he has draft number one finished. As I said to my students over and over this week, "How can you possibly evaluate any part of a story, poem or article until you get to the end? You need to make your lump of clay before you can decide how to sculpt it!"
Could there be a connection between writing a manuscript and starting a company? How can you evaluate or assign value to a business that is not finished, that is not yet a lump of clay? It was last night's episode of Dragons' Den that helped me make this connection between evaluating a piece of writing and valuing a company.
Two pitchers from a company called Flu Goo (hand sanitizers for kids) came on the show asking for $113,000 in exchange for 40% of their company, which was strange because they had not sold one bottle of their product. Not one. The Dragons pointed out that there is huge difference between saying you need $113,000 to finish building your company and saying that your company is worth $282,500 ($113,000 x 2.5) even though it's not "finished" because it has no sales.
Without sales, a company is incomplete and of no value to anyone; the same is true of a manuscript that has no ending. You have to have all the parts of something before you can assign value to it. Which brings me back to Dave Chilton who is at this moment sequestered in his office and madly typing away at the long-awaited sequel to The Wealthy Barber, The Wealthy Barber Returns. I have some advice but it may be too late for him to take it: don't release any excerpts or early chapters until the first draft of your manuscript is done; make your lump of clay before you send it out into the world for evaluation.
But my advice may be too late. On the homepage of his website, Dave writes, "I'm hoping a number of published excerpts and the book's Introduction, below, will whet your appetite." I can only hope that unlike the Flu Goo people and their still-to-be-done sales, that Dave already has all of his chapters written, including the last one, which is always the hardest one to write, especially because you know that when it's done you are going to have to go back to the beginning and truly evaluate your creation...and get out the sharp tools. Sales are the same.
It's easier to do just about everything than get out there and make cold calls. But without sales, as the Flu Goo pitchers learned in the Den, you don't have a lump of clay that can be valued. A start-up company with no sales is like a manuscript with no ending, assigning value is impossible. There is still a lot of hard work to be done.
By the way, the Flu Goo people don't even have a website. I know that I'm just an artsy-fartsy writer, but it seems like the stuff that shakes loose and the focusing that happens during the process of creating a website is an essential part of building a new company, right up there with sales and making your business "manuscript" complete and ready for e-valuation.
Copyright 2010. Laura Thomas. All Rights Reserved.
For reprint permission contact money@agentstory.net
Monday, October 18, 2010
Wednesday, October 13, 2010
Savings Accounts for Kids: A Ranking of the Big 5 Banks
Before I suggest where you might open an account for your kids, take a look at what the Big 5 banks offer:
#1 CIBC Advantage for Youth
0.50% interest
Almost no transaction fees
#2 TD Bank Youth Account
0.05% interest / 0.25% on balances $5,000+
Almost no transaction fees
#3 Bank of Nova Scotia Getting There Savings Program for Youth
0.05% interest / 0.10% on balances $500+
Some transaction fees
#4 RBC Leo's Young Savers Account
0.01% interest rate
Some transaction fees
#5 Bank of Montreal - does not have an account for kids
Interest rates that don't crack a full percent and no bonus for signing up? I'm surprised at how little interest (no pun intended) the Big 5 banks have in courting the next generation of consumers. So are there any banks in Canada that do want to have our kids as future borrowers and investors? Yes. There's one, that I know of, and that's INGDirect.
That 2% interest rate is not a typo, nor is the bonus. "How can that be?" you might ask.
I had the opportunity of interviewing Meena Sandhu, the Regional Retail Manager at the downtown Vancouver ING Cafe, about their stand-out children's savings account. Essentially, she informed me by phone, this account is driven by two areas of the company: marketing, of course, but also their philanthropy mandate.
This savings program for kids helps ING meet its mission statement of improving financial literacy through education and tools. "ING," said Sandhu, "is a very hands on bank." She went on to add that it's important for Canada's economic future that we "empower through knowledge." The ING children's account, hand-in-hand with their online financial literacy website for young children called Planet Orange, helps the bank meet their philanthropic goals.
Philanthropy aside, I love the bottom line in this story. My daughter will earn 2% interest plus be rewarded with that $25 bonus for opening her first bank account. Correction, she has earned and has already been rewarded. Thank you ING, see you later Big 5.
Copyright 2010. Laura Thomas. All Rights Reserved.
For reprint permission contact money@agentstory.net
#1 CIBC Advantage for Youth
0.50% interest
Almost no transaction fees
#2 TD Bank Youth Account
0.05% interest / 0.25% on balances $5,000+
Almost no transaction fees
#3 Bank of Nova Scotia Getting There Savings Program for Youth
0.05% interest / 0.10% on balances $500+
Some transaction fees
#4 RBC Leo's Young Savers Account
0.01% interest rate
Some transaction fees
#5 Bank of Montreal - does not have an account for kids
Interest rates that don't crack a full percent and no bonus for signing up? I'm surprised at how little interest (no pun intended) the Big 5 banks have in courting the next generation of consumers. So are there any banks in Canada that do want to have our kids as future borrowers and investors? Yes. There's one, that I know of, and that's INGDirect.
2.0% interest
$25 bonus when you sign up with a $100 balance
No transaction fees
No transaction fees
That 2% interest rate is not a typo, nor is the bonus. "How can that be?" you might ask.
I had the opportunity of interviewing Meena Sandhu, the Regional Retail Manager at the downtown Vancouver ING Cafe, about their stand-out children's savings account. Essentially, she informed me by phone, this account is driven by two areas of the company: marketing, of course, but also their philanthropy mandate.
This savings program for kids helps ING meet its mission statement of improving financial literacy through education and tools. "ING," said Sandhu, "is a very hands on bank." She went on to add that it's important for Canada's economic future that we "empower through knowledge." The ING children's account, hand-in-hand with their online financial literacy website for young children called Planet Orange, helps the bank meet their philanthropic goals.
Philanthropy aside, I love the bottom line in this story. My daughter will earn 2% interest plus be rewarded with that $25 bonus for opening her first bank account. Correction, she has earned and has already been rewarded. Thank you ING, see you later Big 5.
Copyright 2010. Laura Thomas. All Rights Reserved.
For reprint permission contact money@agentstory.net
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