Financial Literacy Newsletter - February 2018
Melt your debts away!
A word from the Leader
Welcome to the February 2018 edition of the Financial Literacy Newsletter! Since this is our first newsletter of the year, I’d like to take a moment to recognize how far we’ve come, and look ahead to what’s next as we continue to build Canadians’ financial literacy.
Since I was first appointed in 2014, we have made great strides in developing and implementing our National Strategy for Financial Literacy, Count me in, Canada, which many of you have contributed to. The strategy has three priorities, which are to help Canadians:
- Manage money and debt wisely
- Plan and saving for the future
- Prevent and protect against fraud and financial abuse
We’ve broken these goals down to focus on behaviours we hope to influence in the short term: budgeting, saving for an emergency, and helping Canadians better understand their rights and responsibilities as financial consumers.
My second National Steering Committee was named in February 2017 to continue to help me implement this plan. Its 15 members have already identified 113 initiatives they are working on in support of the strategy. This number alone shows how much work is underway. This committee plays a critical role in moving those projects forward.
We also saw tremendous growth in financial literacy networks last year. There are now 13 networks across Canada, representing more than 500 organizations who are working to achieve our financial literacy goals.
As well, we can measure our progress through an international study whose results were released last year. Canadian youth ranked second in the world, tied with Belgium, out of 15 countries and economies that participated in a renowned OECD study of financial literacy assessment: the Programme for International Student Assessment, or PISA for short. Specifically, we learned from this study that the Canadian youth who performed well talked about money at home, had experience with earning money through part-time work or receiving gifts of money, and were banked.
It’s clear we have lots to be proud of, but there is still much work left to do.
Under the Steering Committee, there are two work streams which are now underway. The first is focused on Indigenous Peoples. We are working with Indigenous communities across Canada to gain stronger insight into their financial literacy requirements so that we can address these together.
The second work stream is focused on strengthening the financial literacy of adults in the workplace. Just as schools allow us to reach kids, the workplace is a great place to reach adults.
So, at FCAC we have developed a pilot project for workplace financial literacy using our popular program Your Financial Toolkit. In addition, we’ve collaborated with a company called BestLifeRewarded Innovations to create the MoneyFit Challenge. It’s a free, educational initiative to help Canadians learn more about money matters and take important small steps to improve their own personal financial well-being. Participants can earn points toward prizes when they complete learning activities about budgeting, saving, borrowing, debt and their rights and responsibilities as financial consumers.
Of course, underpinning all the work of the national steering committee, and its work streams, is the research sub-committee. Last year, its members launched a National Research Plan, which acts as a clear road map for the broad network of researchers in the field of financial literacy. I’m pleased to announce the research sub-committee will soon release a progress report on how that plan is being fulfilled.
The National Conference on Financial Literacy was a great success, as was Financial Literacy Month 2017. We’ll share the conference report in the next issue. Stay tuned!
As always, at FCAC we continue to conduct our own research on emerging issues and trends. I’m looking forward to this year’s developments in the field of financial literacy research, and in front-line initiatives to implement the findings.
This issue of our newsletter has some great articles on topics including accessing help to file taxes, how to cure a debt hangover, and talking with our kids about money. If there is something in this newsletter that you like, please share it with others.
Financial Literacy Leader
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- Regional Financial Literacy Networks across the country are meeting (some, like those in Prince Edward Island and Newfoundland and Labrador for the first time!) to discuss financial literacy in their communities
- FuturFund, a student-run organization that aims to make financial literacy engaging for youth people, is launching its newest initiative: Financial Literacy Youth Network, which unites the voices of fellow passionate organizations
- You Can Benefit, a website developed by the city of Edmonton, provides easy web access to information about a range of financial benefits and subsidies
- The Small Change app pilot project report presents the results of the Small Change mobile application pilot project launched by United Way Ottawa in collaboration with FCAC
- FCAC Resources:
- On November 2, 2017, FCAC launched its new and improved Account and Credit Card Comparison Tools that were redesigned to allow consumers to quickly and easily shop around in an unbiased environment to choose a banking package or credit card that best suits their needs
- FCAC has just released a new publication entitled What to do when you get an income tax refund
- In January, FCAC relaunched the “Take charge of your finances” advertising campaign to continue raising awareness of the importance of managing and reducing debt
- Mark your calendar:
- March is Fraud Prevention Month
- Find events the financial literacy community is participating in across Canada in the Canadian Financial Literacy Database (or submit your own!)
The Community Volunteer Income Tax Program (CVITP)
Tax season is rolling around again, which means that it's time to bring some attention to a program that's run as a collaboration between community organizations and the Canada Revenue Agency.
The Community Volunteer Income Tax Program (CVITP) is a program designed for individuals and families who have modest income and a simple tax situation. It pairs them up with volunteers in their community who can help them file their taxes. The CVITP aims to provide assistance to people who are unable to complete their tax returns by themselves and who do not have the means to pay a tax professional to do so. It also helps them to claim the benefits and credits to which they are entitled.
This program’s strength is truly in the communities that come together, and the thousands of volunteers who donate their time and effort.
- Over 2,500 organizations partnered with the CVITP
- Over 16,500 volunteers gave of their time
- Over 765,000 returns assessed through the CVITP
- Over $1.5B in refund and benefit entitlements were calculated as a result of CVITP prepared returns.
But these aren’t just numbers on the page. The program makes a real difference in peoples’ lives, as this anecdote from an organization in Atlantic Canada illustrates:
“One of our volunteers was doing a return for a couple who had previously prepared their returns themselves. They were surprised when the volunteer showed them the amount of their refund. Turns out that they qualified for the Working income tax benefit! The volunteer then helped them make adjustments to previous years. They were so happy and appreciative of the volunteer’s help!”
Looking to get involved?
Those who qualify can find help filing their taxes at a local clinic.
Learn more about getting involved as a volunteer with the CVITP.
Learn more about getting involved as a resident of Quebec.
Credit Canada’s Debt Hangover Campaign
Has your debt from the holidays got you down? With holiday spending up a reported 8% in 2017—the average Canadian planned to spend $643 on gifts and another $300+ on entertaining and décor—it isn’t surprising to learn that a “debt-hangover” is a very real issue for many Canadians.
A national survey commissioned by Financial Planning Standards Council (FPSC) and Credit Canada was conducted January 2-5, which asked Canadians: When it comes to your finances, what makes you blue this time of year?
Some of the answers included:
- 25% do not have funds to escape the winter doldrums through a vacation
- 21% overspent during the holidays
- 20% have a credit card balance larger than their savings account
- 6% have already broken their financial New Year’s resolutions
- Younger adults aged 18-44 are especially blue about finances this time of year (68% versus 41% for those 45 and older)
This is why Credit Canada’s Debt Hangover Campaign, complete with their 5-Step Cure, is so timely. Let’s take a look at it in more detail to see if it might be a good fit for you or someone you know:
Credit Canada’s Debt Hangover “5-Step Cure”
Step 1 – Admit You Have a Hangover
Sometimes it can be hard to look at your credit card statements and bank account after the holidays, only to realize that you’ve spent beyond your budget. We understand it’s easy to get carried away during the holidays, but unfortunately for many, it’s not always as easy to recuperate. Know that you are not alone and you can get back on track, even if you might be feeling pretty down about it right now.
Step 2 – Determine What’s Hurting You the Most
Determine which debts are hurting you the most by taking a long, hard look at your full financial situation. Grab that stack of credit card bills off your kitchen counter, take a seat (and a deep breath), and start going through them to determine which ones are the most problematic for you. These are probably the ones that keep you up at night. Make a list starting with the most worrying to the less worrisome.
Step 3 – Stop, Put Down the Credit Cards, and Back Away
The idea behind this step is to stop using your credit cards while you pay off that extra debt and use cash or your debit card instead. By not using credit, you’re limiting yourself only to the funds that you currently have available. In other words, you’re controlling your spending so that you’re not digging yourself deeper into debt while you pay off your extra holiday expenses. That usually means changing your spending habits, which can be hard but it’s totally worth the effort.
Step 4 – Treat the Symptoms with a Budget
Now for the fun part... determining how much money you have available in your budget to start paying down your debt. Understanding how much money you bring in versus how much you spend on various expenses each month is a must if you want to know how much money you have to start putting towards paying off your debt. That’s why it’s important to create and implement a budget. If you’re looking for a good place to start, here’s some information on “How to Create a Monthly Budget”. You should also check out FCAC’s comprehensive Budget Calculator – all you need is the numbers (your income and expenses, etc.), and the calculator does the math for you!
Step 5 – Pay It Off (Because, Unfortunately, You Can’t Sleep It Off)
Getting rid of your debt-hangover means getting rid of your debt. It’s important to pay more than the minimum payment on your credit card bills whenever possible, and you can make multiple payments a month—not just one. Credit Canada recommends two approaches you can take here:
The snowball method: Focus on paying off smaller loans or debts first, and then apply those payments towards the next smallest card balance, and so on, all while still making your minimum monthly payments on all of your other debts. This strategy builds up momentum and “snowball” your payments as you start paying off smaller debts and then applying those payments to other debt. So if you have five credit cards, begin by paying the one with the lowest balance first and move up from there. Repeat this process until you have paid off your largest debt load.
The avalanche method: Identify the debt with the highest interest rate and begin paying off that debt first—again, all while you continue to make the minimum payments on your other debt. Once it’s paid off, you move onto the next highest-interest rate debt balance. This strategy slows down the rate at which your current outstanding debt grows due to the interest saved.
There are pros and cons to both methods, so it is important for you to figure out which approach works best for you and your financial situation.
And finally, for those who are looking for a more aggressive approach, there are plenty of options, including:
- Get an additional job
- Sell things you have lying around your house that you no longer need or use
- Join the gig economy (Uber, Airbnb, etc.)
- Look into debt consolidation and debt management programs
No matter what your debt-hangover looks like, you’ll feel better once you have a plan in place and start chipping away at the debt that is causing you to feel this way. Take control today!
Some more helpful tips to get you in better financial shape: Laurie Campbell and Credit Canada's Tips to Combat Financial Blues.
See the full results of the Financial Blues survey.
Talk with our kids about money
The first step in improving financial literacy, they say, is to talk about money. While any day is a good day to talk with kids about money, once a year, the Canadian Foundation for Economic Education (CFEE) calls on Canadian teachers and parents to declare the third Wednesday in April Talk With Our Kids About Money Day – this year, it’s April 18 – to “get conversations started”. The intent is to bring attention to the importance of talking with our kids about money – starting at a young age.
“We wanted this program to be a catalyst to get conversations started with kids about money,” says Gary Rabbior, President of the Canadian Foundation for Economic Education. “We didn’t want to have a big ask. We wanted to show that you can do this, that you can start easily, see how engaged the kids get, and then open the door for other good programs out there.”
Now in its sixth year, CFEE’s Talk With Our Kids About Money program is expanding into the North and now covers the entire country. There are over 6000 schools registered to date (with more expected to join) for this year’s activities.
Providing English and French programing tailored to complement each province’s curriculum, CFEE started producing materials for grade 7 classrooms. They have an eye to expanding it to all age groups from grades 3 to 10 in the near future, as well as creating specially tailored programming for Indigenous communities across the country.
“We’re trying to build comfort, confidence, and capability with money matters,” says Rabbior. “Starting the conversation can be easy and natural with young people. And, once the discussion is started, they ask questions, and in doing so they learn about money, and how to take and stay in control of their money so that they can make money decisions in their own best interests going forward.”
We’ve all heard of Science Fairs, but what about Money Fairs? Money Fairs were a grassroots initiative that grew out of the Talk With Our Kids About Money Day programming. They operate in much the same way that Science Fairs do, with kids picking a topic about money that interests them, such as comparing the costs of eating out or in, TFSAs and ways to save money, protecting your identity, or the cost of a pet – or prom, and then putting together their research into a presentation or creative display. In addition to helping kids become better informed about these important topics, Money Fairs now often engage parents and, when run as competitions, bring in judges from the wider community, and raise awareness about the importance of young people learning about money – and how they can learn.
CFEE’s programming is not just restricted to schools either. Recognizing that it’s important to have discussions about money at home too, and that the relationship between a parent and a child is different than that between teachers and students, they have created a home program to complement the school program, using everyday situations that are natural within a parent-child relationship to trigger a discussion about money, which often results in both parents and their children learning new things.
As the Talk With Our Kids About Money program shows, it doesn’t have to be hard to start these discussions with the kids in your life, and it’s never too late to get involved!
Parents and teachers can register for the “Talk With Our Kids About Money” program here to receive free tools and resources designed/geared to help them have relevant/age appropriate conversations about money.
The “Talk With Our Kids About Money” website is up and active all year long to support any and all who wish to help our youth by talking with them about money – and helping to prepare them for their financial future.
The Moneyfit Challenge: A step towards financial well-being
Last fall, the Financial Consumer Agency of Canada (FCAC) collaborated with BestLifeRewarded Innovations and the Economic Club of Canada to launch the MoneyFit Challenge, a free, educational endeavor to help Canadians learn more about money matters and take important small steps to improve their own personal financial well-being.
The challenge is offered free of charge and is targeted to workplace, individuals, students and universities/colleges. Employees, individuals and students can earn points for prizes by completing learning activities about budgeting, saving, borrowing and debt and about their rights and responsibilities when it comes to money matters. The challenge is available in both English and French. The material is presented in an engaging format, which includes videos, tools and written materials and is supplemented by more information should users wish to learn more about a topic. Participants can use the points they earn to bid on chances to win prizes.
The initiative provides organizations with the opportunity to offer financial education to their employees at no cost and with little effort from a resources perspective since the challenge offers turnkey promotional resources. In addition, when an organization registers, they are listed on a viewable trailblazer board on the home page and earn points by administering the challenge and doing certain activities such as promoting the challenge to their participants.
The challenge’s objective is to strengthen the financial knowledge, skills and confidence of participants. The challenge will track and collect aggregate data as well as apply pre- and postevaluation surveys. This survey will assess any changes in knowledge, confidence and attitudes toward money management as a result of participating in the challenge.
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The Financial Consumer Agency of Canada's newsletter showcases financial literacy initiatives taking place across Canada, in order to promote best practices and spark new initiatives or partnerships that will bring us closer to a more financially literate Canada.
If you would like to share a financial literacy success story with FCAC, please contact email@example.com
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