Future of Financial Education Report Released

Quote from Julie Hauser of the FCAC

If you recall, back in May of 2011 I attended a conference called Partnering to Turn Financial Literacy Into Action in Toronto. Sponsored by the Financial Consumer Agency of Canada (FCAC) and the Organization for Economic Co-operation and Development (OECD), the conference brought together hundreds of experts from around the world who are involved in financial education through government, business and non-profits.

During our two learning-packed days, I had the chance to meet researchers like Jonah Lehrer and financial celebrities and authors like Alison Griffiths (who is going to appear on my TV show Money Moment this season and whom I will meet for coffee when she rolls into town on January 28th for a book signing at Chapters - her new book is called Count on Your$elf). Yes, it was a great conference that boosted my faith in the financial literacy movement. Things are moving and the hard work of creating financially savvy citizens continues. In fact, just this morning, the FCAC and the OECD jointly released a report from that conference called The Future of Financial Education.

According to a FCAC news release which I received this morning, the report "highlights the growing recognition, in Canada and internationally, of the importance of financial literacy." The report does a good job distilling the main themes of the conference keynotes and seminars. Some of these include: leadership and national strategies, financial literacy studies that are going on worldwide, the use of technology in financial education and in marketing financial products, the rise of government-sanctioned choice architecture, and information on the long term effects of financial illiteracy.

Like I said, things are moving. Let's keep it that way by having a glance at this report and sharing its contents with our social networks.Click here to read it online. But if you don't have time to read or share it because you are too busy working to pay off those holiday bills, just keep in mind the overarching theme: the world would be a happier place if we all had a little more control over our finances.

Copyright 2012. Laura Thomas. All Rights Reserved.
For reprint permission contact moneyme at telus dot net.

Money Moment - Fraser Elliot

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.

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.

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.

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.

Money Moment - Dear Piggy Bank

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.

South Delta Leader - Local flavour: Money talk

South Delta Leader - Local flavour: Money talk

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.