Www.theccfl.ca A division of FINANCIAL LITERACY. A division of Introduction-Facilitator CONTACT...

www.theccfl.ca

A division of

FINANCIAL LITERACY

www.theccfl.ca

A division of

Introduction-Facilitator

CONTACT INFO:

www.theccfl.ca

A division of

Introduction

• What is your name?• What would you like to learn from this program?

www.theccfl.ca

A division of

Overview

$ MONEY - What is it? What do we do with it?

Budgeting -How do we use it? How do we find more money?

Save it (Money in) Spend it (Money out)

•Savings•Investing basics•Educated Consumer•Banking

•Credit & Credit cards•Debt & Financial Woes•Credit Bureau, Ratings, Scores & Reports•Income Tax basics

www.theccfl.ca

A division of

Module One: Exploring Your Relationship with

Money

www.theccfl.ca

A division of

Money

What is Money?

Discussion/Activity

www.theccfl.ca

A division of

Money Messages

“ Our feelings about money today almost always can be traced back to an incident from our past, our first experience or message about money” - Suze Orman

www.theccfl.ca

A division of

Money

What is your first memory of money?

Discussion/Activity

www.theccfl.ca

A division of

Money

If I give you $1,000,000What would you do with it?

Handout/Activity

www.theccfl.ca

A division of

Money

If I give you $10,000What would you do with it?

Handout/Activity

www.theccfl.ca

A division of

Activity – 5 mins

Rate yourself from 1-10 on your current financial knowledge

1= Very Low10 = Very High

Handout/activity

www.theccfl.ca

A division of

Money

In groups, make a list of what would happen if you do not know how to manage your money.

Handout/Activity

www.theccfl.ca

A division of

Goal Setting

• Important to set goals• Write them down• Start with the end result in mind• Build a plan to reach your goals• Goals should be SMART

www.theccfl.ca

A division of

Goal SettingSet goals to apply what you learned today.Remember, goals should be SMART• Specific• Measurable• Achievable• Realistic• Timeframe Attached

Handout

www.theccfl.ca

A division of

Module Two: Budgeting – Developing a Money

Action Plan

www.theccfl.ca

A division of

Budgeting – Module 2

• What is budgeting?• Budgeting exercise • Budgeting tips• Goal setting

www.theccfl.ca

A division of

What is Budgeting?

www.theccfl.ca

A division of

Spending Money

What do you spend money on?

How do you make sure you don’t spend too much?

BUDGETING!

www.theccfl.ca

A division of

What is a Budget?• A plan for your money• Detailed or simple to use – your choice!• A big picture of where your money comes from – and

where it goes• A way to identify spending or saving that you may

want to change• A way to work towards your future financial

goals…..and more!

www.theccfl.ca

A division of

Steps to Making a Budget

• List your income• List your expenses• Determine if you have any money left over• List your debts • Decide how much money you can put

towards your debt• Make short and long term goals• Be sure to include savings in your budget

www.theccfl.ca

A division of

Budgeting Activity

As a group of 3 or 4 complete the budgeting sheet based on a scenario.

www.theccfl.ca

A division of

Activity – Create a budget! (10min)• Scenario 1

Single motherOn social assistanceNon-smokerMonthly income (~$1200)

• Scenario 2Single guyMakes minimum wageSmoker Wants a carMonthly income (~1280)

Activity

www.theccfl.ca

A division of

Activity – Create a budget! (10min)

• Scenario 3Married father of 2Works full-time for $15/hrHas credit card debt of $5,000Monthly income ($2400)

• Scenario 4 Married, no kidsBoth work full timeAnnual income of $60,000Monthly income ($5000)

Activity

www.theccfl.ca

A division of

Practice Makes Perfect!

• What did you learn from this exercise?• Were you realistic?• Did anyone include savings in their budget?

www.theccfl.ca

A division of

Benefits of Budgeting• You have a plan for your money• Less stress• Compare one month to another• See how your spending habits affect your

budget• Find ways to save money• Use last month’s budget to plan for the next

www.theccfl.ca

A division of

Budgeting Tips• Keep your budget flexible• Keep your budget simple• Be honest and realistic• Try keeping track of every dollar you spend for a month…

it may surprise you!• Requires some trade-offs and sacrifices • Budget for the unexpected• Budget for large items that occur once a year• Keep accurate records

www.theccfl.ca

A division of

Do you know where these things are?

• Birth certificates/other ID /Social Insurance Card• Lease / Mortgage documents• Tax papers / Receipts for taxes• Banking / Investment statements• Insurance documents• Warranties/guarantees for items purchased• Receipts for major purchases• Final will and testament

Handout

www.theccfl.ca

A division of

Module Three: Savings

www.theccfl.ca

A division of

Savings – Module 3

• Needs vs. Wants• “Finding Money” activity• Paying Yourself First!• Compound Interest• Goal Setting and Resources

www.theccfl.ca

A division of

Introduction to Saving

FACT: An adult who invests $1,000 a year for 7 years between the ages of 19 and 26 and then invests nothing more will have more money at 65 than one who waits until he turns 26 to invest $1,000 a year, every year, for the following 40 years!

www.theccfl.ca

A division of

Finding Money

• Write down how oftenyou buy the item

Daily? Multiply by 30 Weekly? Multiply by 4

www.theccfl.ca

A division of

How often do you buy the item…

If Amount Is: Then:Weekly Multiply by 4.33Every Two Weeks Multiply by 26; Divide by 12Twice a Month Multiply by 2Four Times a Year Divide by 3Twice a Year Divide by 6Once a Year Divide by 12

Handout/Activity

www.theccfl.ca

A division of

Finding Money Activity!!Write a list of things you buy oftenFor example:• parking..• Coffee..• Convenience purchases..• Magazines/newspapers..• Gas..• Cigarettes/alcohol..• Renting movies..• Downloading songs, videos, texting messages

Handout/Activity

www.theccfl.ca

A division of

Finding money…

What can you do with this money?

•Spend it•Save it

www.theccfl.ca

A division of

Look at this!

Save this week: At % interest: In 10 years you’ll have:

$7.00 3% $4,234

$14.00 3% $8,468

$21.00 3% $12,702

$28.00 3% $14,560

$35.00 3% $18,200

www.theccfl.ca

A division of

What is the Golden Rule of Saving?

www.theccfl.ca

A division of

Pay Yourself First!!!

www.theccfl.ca

A division of

The Magic of Compound Interest

www.theccfl.ca

A division of

Compound Interest• Interest paid on original amount PLUS any

interest earned

Example: $100 paying 6% compounded annually

Year 1 $100 x 1.06 = $106Year 2 $106 x 1.06 = $112.36Year 3 $112.36 x 1.06 = $119.10Year 4 $119.10 x 1.06 = $126.25Year 5 $126.25 x 1.06 = $133.83

www.theccfl.ca

A division of

Are they needs or wants?

www.theccfl.ca

A division of

Activity

• List as many things as you can think of that you need to buy

• List the things you want to buy

Handout/Activity

www.theccfl.ca

A division of

Needs vs. Wants

What’s the difference between a “need” and a “want”?

Discussion/activity

www.theccfl.ca

A division of

Needs vs. WantsA need is something you must have to live

your daily life. Food,clothing, and shelter are the usual needs.

www.theccfl.ca

A division of

Needs vs. Wants

A want is a way to meet these needs with more style, comfort, or ease.

www.theccfl.ca

A division of

Why Save Money?

• To buy large items (vehicle/house)• Surprise Bills or Emergencies• More Choices (vacations, new wardrobe)• Retirement• Help family• Children’s Education • Less Stress

www.theccfl.ca

A division of

Saving is a Habit

• Start small• Don’t dip into savings• Try forced savings technique

www.theccfl.ca

A division of

Saving EarlyAs an example….

MR. START EARLY saves $3600 per year for 7 years in an investment earning 8% interest

MR. WAIT LONGER starts saving $3600 per year for 17 years in an investment earning 8% interest, 7 years LATER than Mr. Start Early.

www.theccfl.ca

A division of

Saving EarlyMr. Start Early Mr. Wait Longer

Age Yearly Contribution Total Accumulation Age Yearly Contribution Total Accumulation

25 $3600 $3888 25 0

26 $3600 $8087 26 0

27 $3600 $12622 27 0

28 $3600 $17520 28 0

29 $3600 $22809 29 0

30 $3600 $28522 30 0

31 $3600 $34692 31 0

32 $37467 32 $3600 $3888

33 $40465 33 $3600 $8087

34 $43702 34 $3600 $12622

35 $47198 35 $3600 $17520

36 $50974 36 $3600 $22809

37 $55052 37 $3600 $28522

38 $59456 38 $3600 $34692

39 $64212 39 $3600 $41355

40 $69349 40 $3600 $48552

41 $74897 41 $3600 $56324

42 $80889 42 $3600 $64718

43 $87360 43 $3600 $73783

44 $94349 44 $3600 $83574

45 $101897 45 $3600 $94148

46 $110048 46 $3600 $105567

47 $118852 47 $3600 $117901

48 $128,361 48 $3600 $131,221

Total Contribution Total Contribution

$25,200 $61,200

www.theccfl.ca

A division of

Small Changes = Big Money

What if you can make small changes in your spending habits and start saving X amount of money per day or per week?

Can you cut down on the following?Sodas, Cigarettes, Lattes, Cable TV, Cell phone bill, Games,

Bottled Water, Sweets, New Gadgets, Shopping, Driving a big car, Eating out…

$497,107 $994,215

www.theccfl.ca

A division of

BUT….What if you are the one paying the interest?

Guess how much a $200 guitar bought on a credit card with 28% interest cost after 4 years?

www.theccfl.ca

A division of

What that guitar really cost !!!

$536.87

Year 1 $200 x 1.28 = $256Year 2 $256 x 1.28 = $327.68Year 3 $327.68 x 1.28 = $419.43Year 4 $419.43 x 1.28 = $536.87

www.theccfl.ca

A division of

Set Goals and Make Plans

Think about a timeline for your savings goals…. For this week….for next month…AND…

• Short Term 1-5 years• Mid Term 5-10 years• Long Term 10-20 years

www.theccfl.ca

A division of

Goal SettingSet goals to apply what you learned today.Remember, goals should be SMART• Specific• Measurable• Achievable• Realistic• Timeframe Attached

Handout/Activity

www.theccfl.ca

A division of

Banking and Alternative Financial Services

www.theccfl.ca

A division of

Banking – Module 4• Introduction to Banking • The “Unbanked”• Alternative Financial Sector• Opening a Bank Account• Comparison of Bank Accounts• Banking Tips• Goal setting and Resources

www.theccfl.ca

A division of

Introduction to Banking

• Safe place to keep money• Won’t lose your money accidently• No one can steal your money.

www.theccfl.ca

A division of

Introduction to Banking

Why do you bank where you do?Reasons:

handout

www.theccfl.ca

A division of

Introduction to Banking

• How many people have a bank account?• Why do you bank where you do?

www.theccfl.ca

A division of

Introduction to Banking

• The Canadian government insures the accounts in trust companies and most banks up to $100,000.

• The provincial governments insure the accounts in credit unions (from $100,000 to all the money).

www.theccfl.ca

A division of

Introduction to Banking

• There are also a variety of financial services available outside of banks and formal financial institutions.

• These services are often referred to as the Alternative Banking Sector.

www.theccfl.ca

A division of

Introduction to Banking

• If the bank has a problem and it closes, then you get your money back.

• Canadian branches of foreign banks and a few Canadian banks are not covered by Canadian government insurance.

• The bank must tell you if it is not covered by government insurance.

www.theccfl.ca

A division of

The Alternative Financial Sector

www.theccfl.ca

A division of

Alternative Financial Sector

What are some examples of Alternative Financial Services?

www.theccfl.ca

A division of

Cheque-Cashing Outlets• Cash pay cheque or government cheque• High interest plus a fee • Examples….

www.theccfl.ca

A division of

Cheque-Deferral Services• Cash advance on next paycheque• Short term loan (2 weeks)• Very high interest rate ( for example: 470%)

• Example…. $300 for two week loan= $54 interest

www.theccfl.ca

A division of

Rapid-Refund Tax Services

• Provides instant refund• Could be 20% – 30% of your refund

Example…Preparation Fees………………….$100Electronic Filing Fee……………...$ 40Refund Loan Charge……………..$ 125Padded Loan Fees………………..$ 35Cheque-Cashing Fee ………up to $200Total…………………………………$500

www.theccfl.ca

A division of

Pawn Shops• Charge high interest for loans based on value

of an asset• When you repay the loan plus the interest,

you get your collateral back• Don’t pay back = Lose collateral• Interest paid e.g. 264%

www.theccfl.ca

A division of

Pros and Cons of Banks and AFS

• Why do some people choose not to have a bank account?

• What are the PROS to having a bank account?• Why are some people “unbanked” How can

this negatively affect them?

www.theccfl.ca

A division of

What kind of Bank Account is for me?

What is the feature you like best about your bank?

www.theccfl.ca

A division of

What Kind of Bank Account is for Me?

• Convenience• Low fees• ATM, phone, internet or in-branch• Monthly transaction limit• Cheques• Statements or passbooks• Interest• Youth or Senior• No fees for maintaining monthly balance

www.theccfl.ca

A division of

Other Banking Features• Hold• Direct Deposit• Direct Payment• Cheques

• Post dated cheque• NSF (penalty fees)• Blank cheque• Certified cheque• Stop payment

www.theccfl.ca

A division of

To open a bank account: • Don’t need to have a job• Open an account at a bank, a trust

company, or a credit union.

Opening a Bank Account

www.theccfl.ca

A division of

You will need 2 pieces of identification• Drivers license issued in Canada• Canadian passport• Certificate of Canadian Citizenship• Certification of Naturalization• Permanent Resident card• Citizenship and Immigration Canada Form IMM 1000 or IMM 1442• Birth certificate issued in Canada• Social Insurance Number• Old Age Security card• Certificate of Indian Status• Provincial health insurance card

handout

www.theccfl.ca

A division of

Reasons Why a Person May Be Declined a Bank Account…

• Possible illegal or fraudulent purposes• History of illegal or fraudulent financial

activity in past 7 years• Believes you made false statements• Believes employees would be subjected to

harm• Refuse to consent to bank verifying

identification

www.theccfl.ca

A division of

Banking Tips!

Things to think about…

handout

www.theccfl.ca

A division of

• What are the PROS and CONS of internet banking?

Internet Banking

www.theccfl.ca

A division of

Sending Money Abroad

How do you send money abroad?

www.theccfl.ca

A division of

Goal SettingSet goals to apply what you learned today.Remember, goals should be SMART• Specific• Measurable• Achievable• Realistic• Timeframe Attached

www.theccfl.ca

A division of

Educated Consumer

www.theccfl.ca

A division of

Consumerism - Module 5

• Introduction • Sales Techniques• Frauds and Scams• How to Handle a Consumer Problem• Goal setting and Resources

www.theccfl.ca

A division of

Educated Consumer

Can you find an ad that has made you want to buy a

product?

Handout Flyers/Activity

www.theccfl.ca

A division of

Surrounded by Messages

www.theccfl.ca

A division of

Surrounded by Messages

www.theccfl.ca

A division of

www.theccfl.ca

A division of

www.theccfl.ca

A division of

www.theccfl.ca

A division of

www.theccfl.ca

A division of

www.theccfl.ca

A division of

Recognizing The Tricks of the Trade

1. What promises are they making?2. Is the advertising misleading at all? 3. Would you buy the previous advertised item

based on the information provided?

Activity-Flyers

www.theccfl.ca

A division of

Sales Techniques

What is the difference between advertising and a sales technique?

Handout

www.theccfl.ca

A division of

Sales Techniques• Guarantees• Scarcity• Contrast & Compare• Scientific/Numerical Claims• Negative option

www.theccfl.ca

A division of

Frauds& Scams

What are some common types of FRAUD?

handout

www.theccfl.ca

A division of

How to Handle a Consumer Problem

If you get ripped off or scammed…

What should or can you do?

Where can you go for help?

handout

www.theccfl.ca

A division of

Goal Setting

• As a consumer, is there something you can do to make better choices?

• Is there a situation you would like to resolve using some of the smart consumer strategies?

• Write it down!

Handout activity

www.theccfl.ca

A division of

Goal Setting

Goals should be SMART

• Specific• Measurable• Achievable• Realistic• Timeframe Attached

www.theccfl.ca

A division of

CREDIT & CREDIT CARDS

www.theccfl.ca

A division of

Credit/Credit Cards – Module 6

•Credit 101: Types of Credit•Good & Bad things about credit•Consequences of Misuse•Interest Rates•How much can you afford?•Credit cards•Goal setting and Resources

www.theccfl.ca

A division of

Types of Credit/Debt

Credit cards Charge accounts Consumer loans Mortgage loans Business loans Installment buying

www.theccfl.ca

A division of

Sources of Credit

Family and friends Financial institutions Mortgage and loan companies Retailers Yourself Credit unions

www.theccfl.ca

A division of

Building Credit History

In small groups discuss:How can someone build a credit

history?

Handout/activity

www.theccfl.ca

A division of

The Good Things about Credit…

Handout/activity

www.theccfl.ca

A division of

The Bad Things about Credit…

Handout/activity

www.theccfl.ca

A division of

Credit

How can credit use turn ‘ugly’ or get out of control etc?

How do you know when you are “in over your head’?

www.theccfl.ca

A division of

Before… and AFTER!

www.theccfl.ca

A division of

“over your head…”

• Collection agencies• Repossession of Goods• Garnishment of Wages• Bankruptcy

www.theccfl.ca

A division of

Bad Credit Rating

Negative credit rating at the credit bureau will affect your ability to be approved for the following:– credit card– personal loan– small business start-up loan – lease or rent to own a product– buy a house/get a mortgage. – landlord can do a credit check and deny your residence. – can affect your chances of getting certain jobs if your prospective

employer does a credit check.

www.theccfl.ca

A division of

Interest Rates

- rate which is charged or paid for the use of money.

- annual percentage of the principal (which is the amount of a debt on which interest is calculated).

- calculated by dividing the amount of interest by the amount of principal.

www.theccfl.ca

A division of

Interest Rates

• For example, if a lender (such as a bank) charges a customer $90 in a year on a loan of $1000,

• 90 divided by 1000 = .09• .09 x 100 = 9%

www.theccfl.ca

A division of

Before taking a loan…consider:

• make sure your debts and the interest you pay do not get out of control.

• Find out how much total interest you will pay • How much will the item cost you over time

once you add interest and fees and charges.• Ask what the interest rate is.

www.theccfl.ca

A division of

What else affects the costs of credit?

• The amount of money you put down on a purchase affects how much money it costs you to borrow money

www.theccfl.ca

A division of

For Example:• purchase a $3,000 car • $1,200 as a down payment• borrow $1,800 ( pay interest on the $1,800). • The cost to repay the loan will be $1,800 plus

the cost of credit.• The higher your down payment, the less you

will need to borrow and the less your total cost will be.

www.theccfl.ca

A division of

Tips For Smart Credit Use

• Once you get credit, you still need to think about how to best make it work for you. Consider credit a tool to help you reach your goals. Here are some tips around credit use:

www.theccfl.ca

A division of

Credit Cards

• Watch impulse buying. • Compare price and value• Don’t use too many credit cards. • Keep track of all credit card purchases• Pay off your credit card balance in full

every month.

www.theccfl.ca

A division of

Loans/Lines of Credit

• Pay attention to loan prices• Make large down payment • Be careful of co-signing or guaranteeing a

loan on behalf of others.

www.theccfl.ca

A division of

SHOPPING FOR A CREDIT CARD

• What are the key considerations you should look for when shopping for a credit card?

Handout/activity

www.theccfl.ca

A division of

Tips - Credit Card Do’s and Don’ts

• Shop around• Look at various sources, such as banks, credit

unions, retailers• Read the contract carefully; understand the

terms and the fine print• Don’t rush into signing anything• Once signed, get a copy of the contract and

keep for your records

www.theccfl.ca

A division of

Tips - Credit Card Do’s and Don’ts• Know the penalties for missed payments• Figure out the total price when paying with

credit• Make the largest payments you comfortably can• Buy on installment credit only after evaluating

all other possibilities• Don’t be misled into thinking small payments

will be easy

www.theccfl.ca

A division of

www.theccfl.ca

A division of

Goal Setting

Goals should be SMART

• Specific• Measurable• Achievable• Realistic• Timeframe Attached

www.theccfl.ca

A division of

Debt & Financial Woes

www.theccfl.ca

A division of

Debt/Financial Woes - Module 7•Warning signs of trouble•Activity: Turn it Around/Get out of Debt•Do’s and Don’ts: Debt Strategies•Dealing with Creditors•Collection Agencies•Goal setting and Resources

www.theccfl.ca

A division of

Warning Signs of Trouble

Who knows exactly how much money they owe?

www.theccfl.ca

A division of

Turn it Around: Paired Activity

In pairs or groups, make a list of things that you can do to improve your financial situation………not personal stuff please!

As a large group, share answers and creative ideas

www.theccfl.ca

A division of

Do’s and Don’ts: Smart Debt Strategies

• Do take steps towards improvement• Don’t feel you are alone – get help• Do focus on spending less, saving more• Don’t let others make you feel bad• Do focus on what you can do to improve• Do pay attention to your spending habits• Do keep a money journal• Do spend 10 minutes per day reviewing finances

www.theccfl.ca

A division of

Do’s and Don’ts: Smart Debt Strategies

• Do contact your creditors if you will miss a payment – be proactive

• Do be honest with creditors• Don’t borrow anymore money • Do consider a consolidation loan• Do consider a second job• Do consider cashing in some investments or savings

to cover high debtMore……..

www.theccfl.ca

A division of

Tips for Dealing with CreditorsOn the Phone:

• Talk to someone in charge supervisor/manager• Keep accurate record of the person you talked with,

company name, date, time, phone number, and what was said and how it was said.

• Keep in touch with the person you talk with until the problem is solved.

www.theccfl.ca

A division of

Tips for Dealing with CreditorsOn the Phone:

• Avoid making promises you can’t keep. • An agreement over the phone is not a

legitimate contract. Put it in writing!• Keep your temper and be polite. Ask for your

creditor’s help, rather than telling them what to do.

www.theccfl.ca

A division of

Tips for Dealing with Creditors By Mail:

Write a letter outlining any of the following: – Your reason for the letter..– Your employment status..– Your intentions on the debt..– Your reduced repayment terms..– Your request for interest relief..– Your offer on a settlement amount..– Your condition as to why you cannot make payment..– Your request for the termination of the debt (e.g. medical

reasons)– Your request for the creditor to pull the account back from

collections

www.theccfl.ca

A division of

Tips for Dealing with CreditorsBy Mail:

• Never mail cash• Keep a receipt/copy of all your

cheques/money orders/letters.• Photocopy what income you are receiving

(pay stub/slip)• Create a monthly expense sheet (to be

included in the package to creditors)

www.theccfl.ca

A division of

Collection Agencies- Know Your Rights

What are your rights when dealing with Collection Agencies and what do they have the right to do?

Handout/activity

www.theccfl.ca

A division of

Tips for dealing with Collection Agencies

• Remember: Dealing with your debt may reduce your stress! This is good for BOTH your personal and financial health!!!

www.theccfl.ca

A division of

Goal Setting

Goals should be SMART

• Specific• Measurable• Achievable• Realistic• Timeframe Attached

www.theccfl.ca

A division of

Exploring Credit Bureaus, Ratings, Scores and Reports

www.theccfl.ca

A division of

Credit Report / Credit Rating- Module 8

•The Credit Bureau•Credit Ratings•Credit Score •Your Credit Report – How to get it; what it means•Common errors and how to resolve them•Goal Setting and resources

www.theccfl.ca

A division of

The Credit Bureau

• “Houses” and collects the information about an individual

• Collects “activity” or “transactions” and translates them into a personal score, called a credit score

• A lender may look at this score before considering extending someone credit

www.theccfl.ca

A division of

The Credit Bureau

• The transactions and information collected by the Credit Bureau is recorded on a credit report

• This report also evaluates the details of your credit transactions and gives you a credit rating (R0 to R9)

www.theccfl.ca

A division of

The Credit Bureau• Provides a credit profile of consumers based

on their repayment record of outstanding debts

• Monitors information provided by credit card and other lenders whether consumers repay loans regularly and on time

• Provides information to lenders to make decisions on loans

www.theccfl.ca

A division of

The Credit Bureau

In Canada, there are two major credit bureaus: • Equifax Canada • TransUnion Canada

www.theccfl.ca

A division of

Credit Bureau Facts• They are private, not public institutions• Errors do happen• Obtain a copy of your credit report from both credit agencies • Suggested that you check the report once a year and ensure

accuracy• Credit history is used to predict how you might manage credit

in the future • Responsible credit practices over time can improve a poor

credit history• After disputing an inaccuracy, you have the right to make a

personal statement and have it included in your credit report

www.theccfl.ca

A division of

Credit Ratings

• If you were to purchase something from a store on a credit card

• not pay the charges on the card (or late)• institution will notify the credit bureau• credit bureau will record that information and

make it available to other creditors that contact the bureau.

www.theccfl.ca

A division of

Credit Rating

• R0 -Too new to rate: approved but not used• R1 -Pays within 30 days of billing, or pays as agreed• R2 -Pays in more than 30 days but less than 60 or one payment past due• R3 -Pays in more than 60 days but less than 90 or two payments pas• R4 -Pays in more than 90 days but less than 120 or three or more

payments past due• R5 -Account is at least 120 days past due but is not yet rated R9• R6 -No rating exists• R7 -Paid through a consolidation order, consumer proposal or credit

counseling debt management program• R8 -Repossession• R9 -Bad debt or placed for collection or bankruptcy

www.theccfl.ca

A division of

Credit Ratings

• What are some benefits of having good credit rating?

• What happens if you have poor credit rating?

Activity

www.theccfl.ca

A division of

Credit Score

• What is a credit score?• What kind of information do you think is used

to calculate your score?

www.theccfl.ca

A division of

Credit Score

• A calculation based on personal information from your credit report

• Scores range from 300 to 900• This score indicates how likely you are to

pay your creditors• Called FICO or Beacon Score

www.theccfl.ca

A division of

Calculating your Credit Score

• Payment history (35%)• Amounts owed (30%)• Length of time in file (15%)• New credit (10%)• Type of credit (10%)

www.theccfl.ca

A division of

Improve your Credit Score

• Pay all of your bills on time. • Try not to run your balances up to your

credit limit. • Avoid applying for credit unless you

really need a new account.

www.theccfl.ca

A division of

Your Credit Report

Credit reports have 6 main sections:1. Personal Identification 2. Inquiries3. Public Record Information4. Third-party Collection Agency5. Trade Information 6. Consumer Statement

www.theccfl.ca

A division of

Your Credit Report

Who can access my credit report?

• A company or individual may only obtain a copy of your credit report with your consent or after informing you that they will be reviewing your report.

www.theccfl.ca

A division of

Your Credit Report

When you apply for a loan or credit card you are usually asked to complete and sign an application form.

An application normally includes written consent giving permission to the credit grantor to check your credit report when you first apply and throughout the life of the account.

www.theccfl.ca

A division of

Common Errors

• The same account appears on your credit report more than once.

• Uninvited inquiries.• Items that should no longer be listed • Inquiries older than 2 years should be removed• Delinquencies, garnishees, repossessions, court orders,

unpaid child support stay on your credit report for 7 years.

• Bankruptcy stays on your report for 6 - 10 years depending on the credit bureau. A second bankruptcy stays on for 14 years.

www.theccfl.ca

A division of

Correcting Errors

• Copy your credit report • Highlight the error• Write a letter of dispute that includes an explanation of the error• Locate and copy any additional information that can help establish

that the item is an error• Send the highlighted copy of your credit report, the dispute letter

and the copy of additional information to the credit bureau.• If you are correct, the credit bureau will remove the error. If the

creditor does not believe there is a mistake you will need to address the issue with the creditor

• BE SURE TO FOLLOW UP WITH THE CREDIT BUREAU.

www.theccfl.ca

A division of

Tips to Build Good Credit Record

• Pay your bills promptly, especially credit cards• Borrow only what you need and what you can afford• Try to pay off loans on time and as quickly as possible• Get reference letters from landlords and creditors and

add them to your file.• Make sure incorrect information is removed quickly• If you are having difficulty paying a bill, contact the

creditor immediately.

www.theccfl.ca

A division of

Tips to Build Good Credit Record

• If you are ill or disabled, find out if you have insurance on the loan or credit card that will make the payments when you can’t.

• Establish a steady work record• Open a chequeing account and don’t bounce cheques• Open a savings account and make regular deposits• Apply for a local store credit card and make regular monthly

payments.• Apply for a small loan using your savings account as collateral.• Get a co-signer on a loan and pay back the loan as agreed.

www.theccfl.ca

A division of

Goal Setting

Goals should be SMART

• Specific• Measurable• Achievable• Realistic• Timeframe Attached

www.theccfl.ca

A division of

Investing Basics

www.theccfl.ca

A division of

Investing Basics – Module 9•BASIC overview•Topics:

-Stocks, Bonds, TFSA-Mutual Funds-RRSPs, RESPs

•Tips to Avoiding Investment Fraud•Goal Setting and Resources

www.theccfl.ca

A division of

Investing Basics

How do you grow your money?

1.You work for your money2.Your money works for you

-examples?

Activity

www.theccfl.ca

A division of

Types of Investments

• Term Deposits• GICs• Bonds• Mutual Funds• Real Estate• Stocks

www.theccfl.ca

A division of

Term Deposit

• Fixed amount of money, fixed amount of time, fixed amount of interest

• Very low risk, simple, no fees• Higher interest rate than savings account but

less than GIC.• Locked in for fixed term (usually less than

year)• Penalty if cashed out early

www.theccfl.ca

A division of

Term Deposit

Example:

Conditions: 1 year Term, 0.15% interestDeposit: $1,000

How much will your money earn after one year?

Activity

www.theccfl.ca

A division of

Term Deposit

After one year, your money will earn you $1.50

www.theccfl.ca

A division of

GIC (Guaranteed Investment Certificate)

• Your original deposit (principle) is guaranteed• Fixed amount of time, fixed amount of interest (or variable)• Most common – Between 1 – 5 years• Minimum deposit (e.g. $500 at most banks)• Very low risk, no fees, simple.• Higher interest rate than savings account or term deposit.• Locked in for fixed term• Penalty if cashed out early

www.theccfl.ca

A division of

GIC (Guaranteed Investment Certificate)

Example:

Conditions: 3 year Term, 2% interestDeposit $1000

How much will your money earn after 3 years?

Activity

www.theccfl.ca

A division of

GIC (Guaranteed Investment Certificate)

After 3 years, your money earned

$20.00

www.theccfl.ca

A division of

Bonds

• Fixed amount of time, fixed amount of interest• Some have floating interest rates and variable terms• Buyer may purchase a bond at a discount or a premium. • Buyer may redeem the bond at face value when matured• Investing in bonds can be complicated. Many people use

an advisor to help them.

www.theccfl.ca

A division of

Types of Bonds

• Government• Corporate• Canada Savings Bonds (Very Low Risk)

www.theccfl.ca

A division of

Mutual Funds• A group of stocks or other investments picked

and managed by a professional investor.• Offers a wider range of investments than you

would be able to buy on your own.• Based on buying units of a fund. The price of

your units will go up or down – not guaranteed• Choose investments based on risk tolerance

www.theccfl.ca

A division of

Real Estate

Ways to buy real estate1. Buy a house, live in it, and sell it later at a profit. IF the

market is good. (You can also lose money in real estate.)2. Buy income property (such as an apartment house or a

commercial building) and rent it.3. Buy land and hold it until it rises in value. (Again, some risk if

property value decreases.)

www.theccfl.ca

A division of

Stocks

• Stock represents ownership of a corporation.• Company profits may be divided among shareholders in

the form of dividends. • Many investors buy and sell stocks through a stockbroker• If the market value goes up, gain can be considerable.• If market value goes down, loss can be considerable.• Selecting and managing stock often requires study and the

help of a good brokerage firm.

www.theccfl.ca

A division of

Making Money

Now you know WHAT investments you can buy…

WHERE can you put your investments?

www.theccfl.ca

A division of

Where can you put your Investments?

Some places where you can put your investments to grow for you:

• Non Registered• RRSP – Registered Retirement Savings Plan• RESP – Registered Education Savings Plan• TFSA – Tax Free Savings Account

www.theccfl.ca

A division of

Non Registered RRSP RESP TFSA

Save for Anything Retirement, FTHB, LLLP Education only Save for Anything

Fairly Liquid Not so Liquid Not so Liquid Fairly Liquid

Short, Mid, Long Term Mid and Long Term Mid Term Short, Mid, Long Term

Tax deduction Tax deduction Tax deduction Tax deduction

Contribution limit Contribution limit Contribution limit $ government match

Contribution limit $5000

Grows tax advantage, only taxed on portions that are sold

Grows Tax Free Grows Tax Free Grows Tax Free

Taxation based on Gains only: Depends on type of investment (Interest, or Capital Gains)

Taxation: Every penny is taxed at Marginal Tax Rate

Taxation: Child is taxed on the interest earned and grant money at their MTR when they use it for Education

Taxation:No Tax

Handout

www.theccfl.ca

A division of

Scenarios

• Single mother of 1 child• Makes $55,000/year• Taxed at 30% MTR• Rents but would like to own a place one day• Wants to pay less tax• Save for child’s education• Have an emergency fund

Activity

www.theccfl.ca

A division of

Scenarios• 19 year old student• Makes under $20,000/year• Taxed at 20% MTR• Wants to save for a car one day• Can afford to save $200/m

Activity

www.theccfl.ca

A division of

Scenarios

• Husband & Wife – no children• Make $200,000 combined• Taxed at 40% MTR• Have their own home• Don’t have much saved for retirement• Would like to pay less tax• Have an emergency fund

Activity

www.theccfl.ca

A division of

Canada Learning BondEligibility:

must be receiving the National Child Benefit Supplement (usually for families with a net income less than $38,882)

Child born in 2004 or after

www.theccfl.ca

A division of

Canada Learning Bond

Here’s how it works…• You open an RESP• Government deposits $500 into the RESP• And $100 each year that family remains eligible

until the child is 15 years old

www.theccfl.ca

A division of

Canada Education Savings Grant

Every plan gets a 20% match…But depending on the net family income:

40% match if income is $38,832 or less on the first $500 saved each year

30% match if income is 38,832 - $77,664 on the first $500 saved each year.

www.theccfl.ca

A division of

Opening an RESPAny bank or credit unionGroup plan dealers

Before you open an RESP you will need to:Have a birth certificate or PR card for your childGet a SIN # for your childHave your ID and SIN# for yourselfKnow what you need/want in an RESP

www.theccfl.ca

A division of

Educate yourself• Learn the basics of investing for yourself • Have a clear goal what you want your money

to do for you• Understand and manage your risks• The more informed you are the better

decisions you make

www.theccfl.ca

A division of

Investment Fraud• Illegal pyramids, insider trading, and unlicensed investment

brokers• High-risk “penny” stocks and fraudulent opportunities.• Internet services, 900-numbers, and high-tech investments

promising high profits and minimal risk• Opportunities to invest in movie deals and other

entertainment ventures with promises of guaranteed profits and failure to disclose risk

www.theccfl.ca

A division of

Tips to Avoiding Investment Fraud

• Be informed – investigate and research!• Talk with others who have made similar

investments• Obtain information from provincial and

federal regulatory agencies• Never buy over the phone• Avoid “to good to be true” deals!

www.theccfl.ca

A division of

Warning Signs

• You hear about it from a stranger• You can’t check that the information is right or they

won’t give you the info in writing• A promise that you can make lots of money fast with

no risk• It’s a “hot tip” that you are not supposed to tell

anybody about• You feel pressured

www.theccfl.ca

A division of

Goal Setting

Set goals to apply what you learned today.Remember, goals should be SMART• Specific• Measurable• Achievable• Realistic• Timeframe Attached

www.theccfl.ca

A division of

Questions?

CONTACT INFO:

www.theccfl.ca

A division of

Thank You!