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.

Financial Education Impacts Economy

It's official. Financial education is good for the economy. The Boston Consulting Group has just released the results of an independent study on the impact of Canada's non-profit Junior Achievement Program (JA) on the Canadian economy. It turns out that teaching students in grades five through twelve about business and finance pays big dividends. Here are just a few of the tangible results.

• For every $1 spent, JA Canada returns $45 to Canadian society.
• $425 million dollars per year of economic activity can be attributed to JA alumni.
• JA alumni are 50% more likely to start a business.
• JA alumni on average earn 50% more than those who do not participate in the program.
• JA programs reach 250,000 students per year and are delivered free of charge.

What is Junior Achievement?
I spoke with Chris Hindle, Marketing and Communications Manager for Junior Achievement BC, to find out what this largely volunteer organization is all about and how their activities fit into the financial literacy movement. Chris began by expressing one of JA's central messages: to build financially literate citizens you need to start with youth.

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

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

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

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


Financial Literacy News

• Money Moment with Laura Thomas starts airing daily on Sunday, October 16th on Delta TV channel four. Money Moment now has a Facebook page.
• Deadline for Credit Conquest Story Contest contest is October 21.
• In early November, 60,000 Toronto-area families (reaching 79,000 eligible children) will be receiving a special notice from the Federal Government inviting them to claim their Canada Learning Bond - free money for their children's post-secondary education. From www.smartsaver.org.
• November is Financial Literacy month. Brought to you by the Financial Consumer Agency of Canada. Visit financialliteracymonth.ca for more info.

 

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

Getting Real About Personal Finance with a Money-smart Dad

My interview with Som Seif, President of Guggenheim/Claymore Investments Inc.

Som Seif
A money-smart dad

Som hit my radar this summer when he filled in a few times for Kevin O'Leary on CBC's The Lang & O'Leary Exchange. I was impressed by his analysis of the business news particularly because he focused on how blips and pitches in the economy impact the budgets of ordinary Canadians (by ordinary, I mean those of us who do not call Bay Street "home"). As it turns out, this Toronto-based investment banker and father of two is passionate about financial education.

According to Som, being financially literate means having the ability to understand:

1. your personal finances and balance your income and expenses.
2. how much money you will need in retirement.
3. how to invest to meet your future needs.

These skills, he believes, are lacking today. "I don’t believe that families in Canada have the financial literacy they need to balance their own budgets," said Som, pointing to recent reports that personal debt and spending are out of control and that many Canadians do not realistically prepare for retirement. 

Though he believes that families are responsible for their children's financial education, Som acknowledges that this may be a problem for parents and caregivers who are not financially literate or disciplined when it comes to spending. I agree.We need to get real about the state of our household finances as well as the state of financial literacy in Canada, especially when it comes to raising the next generation.

Kids & Money
Beyond "getting money to buy stuff you want," Som didn't learn a lot about budgeting and investing until after high school. It wasn't until university, and then later at his first job, that he learned the importance of having a balanced budget and investing for retirement. Som's hope is that Canadian high school students will start being taught the details of investment and retirement, particularly the benefits of investing early. For younger students, he believes that the fundamentals of balancing a budget should be part of the elementary curriculum as soon as possible.

One of Som's contributions to the "talking to kids about money early" movement involves teaching his two-and-a-half year old daughter about saving. Som shared a story about the time he took her to the bank to set up her RESP account. In the advisor's office, they emptied her piggy bank (which had about $500 in it) and counted out the money. Then they gave the money to the advisor. His daughter was not happy about this. She had been diligently putting money in her piggy bank a couple of times a week for a long time. She cried for hours after they left the bank leaving he and his wife wondering, jokingly, if his daughter had picked up on some mysterious reason we shouldn't give our money blindly to the bank.

Talk about getting real about money! Som's daughter freaked out because she was blind in that situation. She didn't understand why her money was going to the bank or what would happen to it there. We adults face that all too often when it comes to financial products. When I asked Som what word he wishes that we all understood better, he said, "fees." 

Not surprising coming from an ETF guy, but he has a point. We have to get real about borrowing, spending and investing for retirement. And we need to get real about the fees we are paying as we do. The sooner we (and our kids) get money-smart, the less likely we will find ourselves crying for hours when we leave the bank...something that's not hard to do these days with all the blips and pitches.

***

Watch for Som on my new financial literacy show Money Moment with Laura Thomas. And if you have a personal story to tell about dealing with debt or credit, check out the Credit Education Week website. There is an essay contest for Grade 12 students (maximum 1000 words) and one for adults (maximum 300 words). The deadline for both is October 21, 2011.

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