Money and Youth 2018 Financial Literacy Guide PDF

A GUIDE TO Fi n a nci a l Li tera cy Gary Rabbior Canadian Foundation for Economic Education ONE CANADA CENTRE, 447 PORTAGE AVENUE, WINNIPEG, MANITOBA R3B 3H5 Welcome! You’ve opened a very valuable book. Whether you are a student, a teacher, or...

A GUIDE TO Fi n a nci a l Li tera cy Gary Rabbior Canadian Foundation for Economic Education ONE CANADA CENTRE, 447 PORTAGE AVENUE, WINNIPEG, MANITOBA R3B 3H5 Welcome! You’ve opened a very valuable book. Whether you are a student, a teacher, or a parent – you’re here because you are interested in a topic important to us all – savings and how to use money wisely. Financial literacy means having the knowledge, skills, and confidence to make responsible financial decisions throughout your life – from how to spend your allowance – to saving for school, travel, or a home – to ultimately retire in comfort. Learning how to manage your finances when you are young helps to become independent and gives you the building blocks to get the most out of life. If you’re a teen looking for some solid money basics, this is a great place to start. Students have told us that, thanks to Money & Youth, they have learned to think about finances differently and feel they can make better financial decisions. If you are a teacher or parent – thank you for helping to empower the next generation. You are making a difference by sharing this resource and starting a conversation that can be life-changing. Finally, thank you to CFEE for their expertise and care in creating this resource. We are proud to support their efforts. Jeff Carney President and Chief Executive Officer IG Wealth Management  A GUIDE TO Fi n a nci a l Li tera cy Gary Rabbior Canadian Foundation for Economic Education Sponsored By Please visit www.moneyandyouth.cfee.org for more resources and to download a free eBook version of Money and Youth. MONEY AND YOUTH by Gary Rabbior The Canadian Foundation for Economic Education (CFEE) wishes to express our sincere thanks to IG Wealth Management for their generous support for the production and distribution of Money and Youth across Canada for over 18 years – and over 500,000 copies. CFEE also wishes to extend our appreciation to Power Corporation of Canada and the Investment Funds Institute of Canada (IFIC) for providing support towards the printing of this new edition of Money and Youth. The Canadian Foundation for Economic Education wishes to thank those who have given their permission to reproduce copyrighted material in this publication. Statistics Canada information is used with the permission of the Minister of Innovation, Science and Economic Development, as Minister responsible for Statistics Canada. Information on a wide range of data is available from Statistics Canada and can be obtained from Statistics Canada’s Regional Offices, its web site at http://www.statcan.gc.ca, and its toll-free access number 1-800-263-1136. Design & Production: Article Copyright© Canadian Foundation for Economic Education 1997, 2002, 2006, 2012, 2015, 2016, 2018 110 Eglinton Avenue West, Suite 201, Toronto, Ontario M4R 1A3 Tel: 416-968-2236; Fax: 416-968-0488; Toll-free: 1-888-570-7610 E-mail: [email protected]; Web site: www.cfee.org Est également publié en francais sous le titre : LES JEUNES ET L’ARGENT Also available as an e-book – download this free kobo eBook at https://store.kobobooks.com/en-ca/ebook/money-and-youth ii Contents Preface....................................................................................................................... v Acknowledgments...................................................................................................... vi Part 1: Goals, Values and Decision-making Module 1: Your Money Decisions: Who's in Control............................................... 3 Module 2: Your Goals and Your Values.................................................................. 11 Module 3: Your Goals: Some Things To Consider.................................................. 25 Module 4: Decision-making................................................................................. 39 Part 2: Getting and Earning Money Module 5: Sources Of Income............................................................................. 47 Module 6: Career Under Construction: Investing In You.......................................... 65 Module 7: Are You an Entrepreneur?.................................................................... 81 Part 3: Spending Money and Taking Control Module 8: Money Basics..................................................................................... 97 Module 9: Taking Control Of Your Money.............................................................. 111 Module 10: Spending On Major Purchases.......................................................... 125 Part 4: Borrowing Money And Using Credit Module 11: Borrowing Money.............................................................................. 145 Module 12: Getting And Managing Credit............................................................ 159 Part 5: Saving and Investing Money Module 13: Putting Your Money To Work – Saving And Investing............................. 171 Part 6: Protecting Assets And Planning For The Future Module 14: Protecting Assets – And Planning For Financial Independence............... 193 Conclusion Module 15: That's All Folks!................................................................................. 209 Glossary Of Terms....................................................................................................... 214 iii  A GUIDE TO Financi a l Li tera cy iv Preface Today’s world is full of opportunities. As changes occur and our society evolves, those who are well prepared will be able to take advantage of them. There are opportunities to do new things, generate new ideas, accomplish new tasks, and set new goals. Although change creates stress for many, for those prepared to take control of their lives, the future can hold much promise. Taking control of one’s life can mean many things – pursuing a good and relevant education, building personal and family relationships, setting prioritygoals and objectives, developing skills related to areas of personal passion (the things we love to do), and so on. Taking control of one’s life helps to instill confidence, determination, and commitment. These, in turn, can lead to accomplishment, personal success, and happiness. If we don’t take control of our own lives, we are more vulnerable to outside influences. The goals and objectives of others may lead us to where they want us to go – not necessarily where we want to go. Knowledge and skills can help people take more control. The world of money is one area where many people often feel they lack control. They may even feel they are out of control. Many, if not most, Canadians never had much in the way of financial education – at school or from parents. We hope to change that for the next generation. Schools are now starting to include financial education in the curric- ulum. Equipped with knowledge, skills, and experience, young people will be able to plan for, and take more control over, their money and financial affairs. The Canadian Foundation for Economic Education, in partnership with IG Wealth Management, has produced this publication to provide youth with information that we believe will help them to better under- stand the world of money. We believe it will help enable them to begin to take more control over their financial future – and improve their chance of achieving success. CFEE’s primary goal is to support improved economic and financial literacy and the development of enterprising skills. In doing so, we hope to help young people be better able to undertake their economic roles, responsibilities, and decisions, with confidence and competence. It is our hope that Money and Youth will make a significant contribution toward achieving that goal. v Acknowledgments A number of individuals have contributed to the production of this publication over the years and through a number of revisions and updates. For their counsel and advice, I would like to thank them. Note that the positions shown are those of each person at the time he/she reviewed the book. Alison Bowie, Department Head of Home Sandra Mahr, Educator, Bishop Strachan School Economics, Daniel McIntyre Collegiate Institute (Toronto, Ont.) (Winnipeg, Man.) Armand Martin, Director, Social Sciences Unit, Rod Campbell, Executive Director, New Brunswick Saskatchewan Education (Regina, Sask.) Centre for Educational Administration (Fredericton, David Mike, Educator, Fundy High School (St. N.B.) George, N.B.) Maria Cho and Breda Casey-Walls, Teachers, Dermot Mulrooney, Partnership Secretariat, Adult George Vanier Secondary School (Toronto, Ont.) Learning and Innovation, Nova Scotia Department Lori Cranson, Program Director, The Learning of Education and Culture (Halifax, N.S.) Partnership (Toronto, Ont.) Ron Munro, Educator, River East Collegiate Marg Daniel, Program Department Level 2, (Winnipeg, Man.) Scarborough Board of Education (Scarborough, Jean Patterson, Head of Business Studies, Emery Ont.) Collegiate Institute (North York, Ont.) Clarence De Schiffart, Career Services, Nova Rick Perkins, Educator, King City Secondary Scotia Department of Education and Culture School (King City, Ont.) (Halifax, N.S.) Tom Prins, Consultant, Manitoba Education Jan Haskings-Winner, Teacher, Birchmount Park CI (Toronto, Ont.) Wayne Roswell, Assistant Head of Business Department, Albert Campbell Collegiate Institute Richard Jarco, Educator, Senior High Academic (Scarborough, Ont.) Re-entry Program (S.H.A.R.P.), River East School Division (Winnipeg, Man.) Barbara Smith-Graham, Sir James Dunn Academy (St. Andrews, N.B.) Bill Jennings, Educator, Frontenac Secondary School (Kingston, Ont.) Patti Stouffer, Teacher, Dr. George Johnson Middle School (Gimili, Man.) Paul Johnston, Provincial Coordinator, Nova Scotia Links, Nova Scotia Department of Education and Dr. Otto Toews, Assistant Superintendent of Curriculum, River East School Division 9 Culture (Halifax, N.S.) (Winnipeg, Man.) Smita Joshi, Economic/Enterprise Education Consultant, Newfoundland Department of Education (St. John’s, Nfld.) I also wish to thank the always dedicated staff of CFEE who assisted with the production of this book – Susan Lennox, Lucy Travisano, and Bonnie Wood. I would also like to thank Tim Casgrain for providing support for the initial production of Money and Youth to give the book its start. Finally, I want to extend thanks to my family – Carolyn, Kristin, Caileigh, and Clark for their support – and many life lessons learned about money. vi Part 1 GOALS, VALUES AND DECISION-MAKING 1 2 Modul e 1 YOUR MONEY DECISIONS: WHO’S IN CONTROL? Let 's Dis cuss... $$ Factors Affecting Money Decisions $$ Taking Control: Setting Goals and Finding a Balance $$ Tips for Making Good Money Decisions in Your Life Thi nk About I t M ost people make decisions about how to use money every day. It may be to take a bus, or to buy something for lunch, or to put money in a parking meter, or buy a new “app”, or go to a movie, or… Like it or not, we need money to get and do a lot of things. Try and think of the last day when Do you feel different when you didn’t spend money – or make a decision about how to use you pay for something with money – either yours or someone else’s. your own money than when You probably make many such decisions involving money – others buy things for you? and you have choices. But what things influence the decisions that you make? Factors Affecting Money Decisions Think about the last item of clothing that you bought. What factors affected your decision? 1. Emotions: Was it how you felt looking at the item – 5. Latest Styles and Fads: Was it because of any that is, your emotional response? latest style or fad – that is, trying to stay current and 2. Friends and Peers: Was it your friends – and what with current trends? you thought they would think about your choice 6. Advertising: Was it because of any commercial, – that is, some kind of “peer pressure” affecting ad, promotion, or celebrity endorsement that you your decision? saw that had an impact on you – that is, some form 3. Customs, Traditions, and Habits: Was it because of advertising? it was the style of clothes that you have always 7. Incentives: Was it because of a “sale” that was on tended to wear in the past – that is, your custom, tra- or a discount coupon that you had – that is, some dition, habit, or just falling in line with past choices? kind of incentive provided by the store to make you 4. Family Members: Did your parents, siblings, or buy that product? other family members have any influence on your 8. Your Values and Confidence: Was it because choice – that is, what they would think and how they of what you thought – and what you wanted – and would react? your own sense of values, style, and knowing what you want? How About You? Which of the above factors do you think have the most influence on your money decisions? MODULE 1 3 $ Ti p When you make decisions about money, take a moment to think about factors that could be affecting your decision. Are you in control of your decisions – or are other affecting what you do? Try and be in control of your own decision. Impact Can Be Intentional or Unintentional Looking Back on Past Decisions All of these factors influence the decisions and Once a decision is made, you can look back and choices you make about spending. Some may even think about whether or not it was a good one for influence you without really trying. Can you think of a you. If it was, why? If it wasn’t, why not? Sometimes decision you made recently that you think may have we make good decisions – and sometimes not been influenced by a movie you saw – or a sporting so good. The important thing is to learn from the event or sports celebrity – or someone you met? In decisions that weren’t so good. In the end, though, the end, you will make the decision – but it is always each of us strives to make the best decisions we good to consider the factors that might be having an can about money – and that is one of our goals with impact on you. “Money and Youth.” Can You Afford It? Thi nk About I t Another factor that is important – and often gets too little consideration – is whether or not you can afford it. With so many factors influencing us, and Can you think of something you bought affecting our decisions about money and spending, that you never used – or didn’t use much we may buy something we don’t really need or want, at all? If so, think about why you bought it. and may not use – or won’t use for long. What can you learn from that decision? Making Good Decisions is a Skill In a later chapter, we will actually look at a series of steps that can help you to make good decisions. Making decisions is a skill – yet many people have never been taught how to make them. 4 MODULE 1 Tips for Making Good Money Decisions Here are a few tips to consider when making good money decisions. 1. “Think about your thinking”: Take a moment to “think about your thinking.” That might sound a little weird but to make a good decision it helps to take a minute or so to think about the choice you are mak- ing – and why you are making it. Many people make decisions without really thinking about why they are How About You? making that particular decision. Is it because it’s the kind of decision you have always made – because you are trying to make someone happy – because To what extent do you take time to you think it will make you happy – because of what “think about your thinking” – and do someone taught you – because it’s part of who you you think about why you are making are and reflects your values …? that decision? 2. Your “Opportunity Cost”: Consider your opportu- nity cost – that is, what are you giving up in making the decision? Every decision has an opportunity cost – giving up one thing to get another. You could 1 2 3 4 5 be giving up something else you could buy with the NO TIME ENOUGH TIME money you are spending, or something else you could do with the time you are investing, or anoth- er city you could be visiting, or another course at school you could be taking. Among all the possible alternatives, what’s the “next best thing” you will be giving up? That is your opportunity cost. 3. Future Trade-offs: Consider the future possibili- ties. That is, in addition to what you might be giving up today, what might you be giving up in the future because of your decision? What could be different if k e A ct i on. you waited? Ta trol! 4. Can you afford the cost? Finally, can you afford T a k e C on it? Do you have the money to pay for it? If not, and you are going to use a credit card, will you have the money to pay off the credit card balance when you get your bill? Or will you be “carrying the cost” into the future – and paying interest? If you are going to Try to complete the following activity in pay interest you should consider that as part of your less than two minutes. Trying to do this costs – and as part of your decision. quickly helps you to focus on things you feel most strongly about. We have now looked at eight factors that may Identify the five most important influence your decisions– and four tips to consider things in your life at the present time when trying to make good money decisions. But and the five things you most hope for let’s not forget about another key factor in all this – in the future. and that is, what makes you happy. MODULE 1 5  Taking Control: Setting Goals and Finding a Balance Your Happiness is Another Important Factor If You Keep the Bigger Picture in Mind, Taking Control Can Be Easier Each of us has to figure out what will make us happy – today, tomorrow, next week, next year, and in the If you are more of a “big picture” person – and take years to come. If you are one who thinks more about a longer term view of things – you may find it easier today and tomorrow rather than the future, you are to manage your money – and to achieve your goals. probably one who likes “instant gratification” – When you set goals, you need to think about the that is, when you want something you want it now. present and the future. You have to think about what makes you happy today – and what will make you happy in the years ahead. People often talk about If You Like “Instant Gratification”, hoping to have a “happy life” – which, in and of itself, Taking Control Can Be a Challenge is an ambitious goal. Finding the balance between your happiness today and your happiness in the If you tend to like, and want, “instant gratification” then future is key – and not always easy, especially when managing your money will probably be more of a chal- it comes to how you handle and manage your money. lenge. It will be harder for you to think about your trade- How About You? offs down the road – or the challenge of having to pay for something later if you can’t afford to pay today. It may be that some of those influences we just talked about are working on you – and making you want certain What, for you, are the key things that things – and wanting them now! If you tend to be one you think will help make a “happy life” who “acts now and plans later,” managing your money – for you? and your money decisions – will be more difficult. How About You? Money Can’t Buy Happiness – True, But … The saying “money can’t buy happiness” is probably Do you tend to want instant gratifica- quite true. But it is also true that a lack of money can tion – or are you someone who likes create problems. Being in debt over one’s head, be- to plan, and can wait to get what you ing unable to pay bills, being unable to take holidays, want in the future – and achieve the being unable to afford the accommodation one goals that you set for yourself? wants can be both frustrating and unpleasant. “Mon- ey can’t buy happiness” but, let’s face it, it helps. 1 2 3 4 5 Thi nk About I t INSTANT GRATIFIER PLANNER What are your views on the link between money and personal happiness? When are you happiest? What role, if any, does money play in those times? 6 MODULE 1  You Make Your Decisions – But to What End? Money Is a Means to an End There is no shortage of advice you are likely to But what is money anyway? We don’t eat money, receive about how to effectively manage your money wear money, or build buildings out of coins and – and what you should be doing with your money. twenty-dollar bills. Money is a tool. It is a means to But, in the end, you will decide. an end. It is something created to help our econo- A key factor that can affect your decisions are my work more smoothly. It serves as a medium of your goals. If you don’t have goals then goals won’t exchange, that is, we can use it for purchases. And play a role in your money decisions. But if you have money can help each of us in achieving our goals – goals, hopes, and things you want to achieve in the whatever they may be. future, they will have an impact on the decisions that If we turned on the printing presses and gave you make. Therefore, setting goals for yourself can everyone twice as much money, would people be be a powerful incentive which can have an effect on better off? The answer is “no”. Why? Because with the decisions you make. everyone having twice as much money, prices would eventually double as people have more money to spend on things. People would have twice as much How About You? money but would be paying twice the price for things – so people wouldn’t be any better off. So it is important to remember that money is a tool – and Do you think much about what you prices will affect the purchasing power of your mon- hope for in the future when you make ey and how much you can buy with it. your money decisions? If You Want to be In Control, Have a Plan Money can help us out – but it can also cause Having Goals Can Make a Difference problems – getting deep into debt – causing stress, tension, and anxiety – pushing some people to crime Why can goals make a difference? If you have goals, – having bill collectors on your back. To avoid money you’ll have to consider the possible trade-offs as you problems, it’s best to try and stay in control of your make decisions today. And saving to achieve a goal money and how it affects your life. You’ll want to max- can be very rewarding, personally satisfying, a real imize the help that money can provide and minimize motivator, and a confidence builder. Achieving a goal the problems it can cause. Today is the best time to can help you prove to yourself that you can accom- start to take control of your money. And the best way plish what you set your mind to – and inspire you to to take control is to be prepared and plan. aim for other goals – and to achieve other things. So, “money doesn’t buy happiness”, but it How About You? does play an important role in most people’s lives. We may wish it weren’t so, but it’s true. Earning money. Spending money. Saving money. Invest- ing money. Making money. Losing money. Giving To what degree do you think you are money away. We make all kinds of decisions, often in control of your money? daily, about money. 1 2 3 4 5 OUT OF CONTROL IN TOTAL CONTROL MODULE 1 7  i on. Ta k e Act trol! Ta k e Con Identify the top three goals that you hope to achieve within the next year. Identify the top three goals that you hope to achieve within the next three years. Identify the top three goals that you hope to achieve within the next 5-10 years. Financial Planning is Not Only for Those with People Are Different – Lots of Money Their Goals Are Different Planning how to handle money is not only for those Different people will have different goals. What one who have lots of money. In fact, the less money you person wants out of life can be very different from have, the more important it is to plan. You want to what another person wants. Individuals face life and get the most from the money that you have. its financial challenges from a wide array of starting The best way to plan is to set goals – to know points and with different views. Some people have clearly what you want – to know the difference be- access to a great deal, including opportunities for tween what you need and what you want – to know education, training, working, and acquiring income. the things you care most about – what you want out Others have access to very little and face different of life – what you want to achieve and what will make challenges and opportunities. Different cultures you happy – today and in the future. In setting goals, also have different attitudes to money and material consider the different “time periods” – the short-term things. No matter what the differences, however, (what you hope to achieve over the next year), the everyone will face decisions related to their money. medium-term (1–3 years), the long-term (3–5 years), To guide these decisions, we need goals. What and the more distant future (5 years and beyond). are yours? Knowing your goals is a key first step in Short-term goals can be very helpful as they serve starting to take control of your money. as stepping stones to achieving your medium-term goals. Then, use medium-term goals as stepping stones to long-term goals, and so on. Doing this gives you some “check points” to see how you are doing over time – and think about whether your goals have changed and if you want to change direction. Plan for a Balance between Your Short-term and Long-term Goals As important as it is to keep an eye on the future and your longer terms goals, you want to be happy today too. That is understandable, and should be part of your planning. Finding a balance between to- day and the future is important. Develop a plan that helps you live as happy a life as you can – today, next month, and into the future. 8 MODULE 1 Module Summary Ti ps & Su ggest i ons Say What? Possible New Terms! 1. Opportunity Cost: the next best alternative given up when you make a decision. Five Steps to Saving Money 2. Carrying Cost of Debt: the interest charges that you pay on debts that you carry on a credit card over 1. Set a savings goal. Ask yourself: time. That is, credit card debts that you don’t pay off How much money will I need? right away and result in interest charges. How soon? Be realistic. 3. Medium of Exchange: one of the roles of money. 2. Decide how much you will save from Prices can be set in terms of money for goods and your pay. Put aside money to save services and then money can be used to “exchange” first, then spend what’s left. to receive a good or service. 3. Track where you spend your money. 4. Financial Planning: setting goals for things you Learn more about where your money hope to achieve and acquire over time and making a is going. This will help you find ways plan for how to achieve those goals. to cut your spending if you need to – since you will probably be surprised where some of it is going. Did It Stick? Can You Recall? 4. Build a budget and try to stick to it. 5. Reward yourself when you reach a 1. What factors may be having an influence on your goal. Give yourself something to look money decisions? forward to if you do what you set out 2. What are four things you can do to try and make a to do. good decision? 3. What is the purpose of having a financial plan? 4. How can setting goals help you to make better financial decisions and find a balance in life? Tech Ta l k 5. What is a key role of money in the economy? If you have access to the Internet via a computer or hand-held device, you might consider searching: Thinkabout... or Discuss: Common frauds and scams Which kind of financial decision do you find hardest to make – and why? Metacognition – thinking about your thinking In your opinion, which factors have the biggest influence on money decisions made by youth? Tips for good decision making What are the advantages and disadvantages of Setting goals and basic financial credit cards for youth? planning What are the biggest “money mistakes” youth Advertising techniques often make? MODULE 1 9 10 Modul e 2 YOUR GOALS AND YOUR VALUES Let 's Dis cuss... $$ Exploring Your Values $$ Advertising – and Advertising and You $$ Peer Pressure $$ How to Avoid Frauds and Scams $$ Keeping Up with the Joneses W hen you think about the things that are most important in your life – and the goals you have for what you want to achieve – do they reflect your “values”? Can you tell? Have you thought much about your values? Thi nk About I t What are values anyway? Values are those things that make up your character. They represent what you think is important in life. They show up in your decisions, actions, and judgments. If you were asked to identify How we look on the outside usually tells very little. It’s more three of your “values,” how what’s on the inside that will make most of the difference in would you answer? who we are. And values are a big part of what’s inside. Exploring Your Values There are many things that can influence your values. Family members, teachers, and friends are How About You? particularly strong influences. Religion, culture and heritage can also have a big impact. Television, movies, videos, and music certainly play a role, too. Advertising can also do a great deal to influence, or Do you think you are influenced by try to influence, what you think is important and what advertising? Did you make a decision you value. recently that was influenced by Your values govern many of your financial deci- advertising? sions. What material things are important to you? How much money will you need? What will you do to get it? What trade-offs will you make? What will 1 2 3 4 5 you do with your money when you get it? And so on. There is no denying that decisions related to money EASILY INFLUENCED LITTLE INFLUENCE are important – they affect each of our lives and those around us. And your values affect those decisions. Let’s try to explore the things in life that you value – and the things that have influenced your values. MODULE 2 11  k e A ct i on. Ta trol! T a k e C on It is time for brutal honesty. Below are a number of things you may think are important in life. They may be things in life you want for yourself, what you try to be or hope for, or things you respect in others. There are probably other things that are important to you that aren’t included. Please add them to the list. Then select the “top ten,” the things you value most, and rank them one to ten. What’s Important to You? Happiness Recreation and Travel Maturity Good health Work Status Education Freedom Family Tolerance Love Compassion Sympathy Loyalty Fitness Honesty Reliability Fun Wealth Acceptance Patriotism Responsibility Respect Sense of humour Security Beauty Honour Safety Faith Commitment Religion Being in style Acquiring abilities/skills Independence Excitement Influence Friendship Risk Helping others Community involvement Others: 12 MODULE 2 There are many people, groups, and things that can influence your values. Some may intentionally try to influence your values. Others may do so without even trying. It is important to be cautious about those who are out to influence what you do and the decisions you make. Take a look at the following visual. 1. ARE ALL OF THE FIGURES THE SAME SIZE? 2. To most people, the figures will appear to be of different sizes. Put a ruler alongside each one. They are, in fact, the same size. But the way they have been drawn makes them appear to be different than they really are. Visual illusions such as this can be fun. They also make a point. We can be fooled. We can be influenced. We can be made to see things differently than they real- ly are. Take a look at the following visual. Did you see both? Both are there. The point is that dif- ferent people can see things differently. It’s not neces- sarily such that one is wrong and the other is right. Both may be right. So whenever you think something is true, and someone offers a different point of view, consider whether or not there might be other ways of looking at DO YOU SEE A PICTURE OF AN OLD things. Is there another point of view? A better point of WOMAN OR A YOUNG WOMAN? view? A view that will strengthen what you believe? 1. Handbook for Economics Teachers, edited by David J. Whitehead. London: Heineman Educational Books, 1979 2. Handbook for Economics Teachers, edited by David J. Whitehead. London: Heineman Educational Books, 1979 MODULE 2 13 How About You? In the earlier activity, you identified the things you feel you value most in life. But where did those values come from? What influenced your values in the past? What influences your values today? $ Ti p Possible influences are listed be- low. From those shown, or others There are many people who make decisions you can think of, identify the top without thinking about their “values.” When you seven factors that you believe have make decisions related to money, take a moment contributed the most to determin- to think about your values and if they should play a ing what you value most. role in your decision. Possible Influences Your parents/guardians Your religion Books Camp experiences Other relatives Television Magazines Volunteer experiences Your childhood experiences Entertainers Travel experiences Work experiences Your childhood friends Sport personalities Specific events Sickness or injury Your current friends Radio Community activity Employer Your teachers Music Teammates Coach Others: Thi nk About I t The fact is, there are many things in life where oth- ers could see things differently than you do. Others may try to bring you around to their way of thinking. And, as you know, what is right for them, may not necessarily be right for you. Think about the last time that Consider some instances where people’s views somebody tried to influence a have been different. Did you agree with a particular decision that you made. How long point of view? What is “right” and “wrong” can often ago was it? Why were they trying to be unclear. influence your decision? Were they able to influence you in any way? 14 MODULE 2  i on. Peer Pressure Ta k e Act trol! Peer pressure refers to how others around your own age Ta k e Con can influence your thinking – on purpose or not. Peer pressure is one of the strongest influences on young people. Friends, classmates, teammates, and workmates In a group situation, discuss are usually very important to you. You may value them the following: and what they think and do. At the same time, they are in the same situation as Where does peer pressure push you are – trying to figure out their lives, trying things, the hardest? For example, is thinking about things, and figuring out what they value pressure hardest when deciding and what’s most important to them. whether or not to smoke, to dress Many of the decisions that you make in your youth will a certain way, to listen to certain be influenced by your peers. Situations can arise that music, to drink, to take drugs, to involve making decisions related to alcohol, smoking, associate with certain people, to drugs, clothing fads and styles, courses you take, con- want certain possessions, and certs, schools, careers, jobs, and so on. Many of these so on? When do you feel the are difficult decisions, and peers can apply a great deal of pressure the most? pressure – either directly on you or by the decisions they have made and what they are doing. You will face times What are the best ways to deal and decisions when your values are really put to the test. with peer pressure when you disagree with the direction toward which it is pushing you? How About You? Do you tend to be influenced by your peers – or do you tend to influence others? As far as money matters go, your peers may seek to influ- Thi nk About I t ence you – such as how much you spend, what you buy, how much you borrow, what styles you follow, where you How have you handled peer pres- shop, and so on. It can be challenging, but it is important sure in the past? Have you ever to make the decisions you believe are best for you, the made a money decision that was ones that fit your values, priorities, and goals – and that influenced by your peers? make you happy and feel good about your decision. $ Ti p A funny thing about peer pressure – it can pass quickly. You may be in a situation where you are feeling pressure to buy and wear certain shoes – shoes you don’t need. If you decide no, the pressure often soon passes and others forget about it. If you decide yes, others may still soon forget about it – but you are out of pocket the money – and may be wearing shoes you don’t need – and maybe don’t even like. Make sure you use your money the way you think best. MODULE 2 15  i on. Ta k e Act trol! Ta k e Con Are you one who tends to make decisions on the basis of what others are doing to try and be “in” or look “cool”? Or are you more of a “do your own thing” person who makes your own decisions based on how you feel and what you think is important? Keeping Up With The Joneses You probably don’t even know anyone by the name of Jones. For you, it may be the Howards, the Garneaus, the Villachis, or others. The “Joneses” is How About You? simply a reference to those around us with whom we may struggle to keep up. We may want what they have, or try to live how they live. For youth, the “Joneses” can be friends who wear certain clothes or shoes, go to certain concerts, drive certain cars, Are you an envious person? Does have a new possession (such as the latest “iProd- envy play much of a role in terms of uct” or computer game), take vacations to nice your goals, decisions, and actions? places, eat at nice restaurants, and so on. No one On a scale of 1 to 5, rate the influence may be pressuring you to have them – but you may of “envy” on your economic decisions. be pressuring yourself to keep up. 1 2 3 4 5 Thi nk About I t ENVY PLAYS A ROLE ENVY PLAYS NO ROLE Do you feel envy plays much of a role in your life at this time? Do you feel envious of anyone? Is there something that you currently want Basically, it comes down to how much you are will- that is based on envy? Have you ing to let envy affect your values, decisions, actions, made a recent decision or purchase and goals. If you want to be in control, you should that was based on envy? avoid envy when you can. $ Ti p Watch out for envy – it can lead to some pretty crazy decisions – and ones you may regret. It’s funny how often others that you envy, may envy you for things you have in your life. Keep in mind the things you value in life – it may make you less envious – and put the brakes on some decisions that you might come to regret. 16 MODULE 2  Advertising Advertising is the way producers provide informa- untrue or deceptive information. They cannot make tion to consumers about a product or service. They false claims about their product. They cannot make also use advertising to encourage consumers to untrue statements about their competitor’s product. purchase their products or services. Their goal is Therefore, within certain guidelines, the advertis- to convince you, as a consumer, to purchase their er’s aim is to influence you and to get you to buy a product over that of a competitor. particular product or service. This is not as decep- That doesn’t mean advertisers can tell you tive an act as it may sound. As you know, there are anything they want. Advertisers are governed by many good products and services available. If you rules and regulations (such as those provided under don’t know about them, you can’t make effective the Competition Act, the Food and Drugs Act, the decisions about which ones, if any, you want to Canadian Radio-television and Telecommunications purchase and use. Furthermore, producers have Commission, and other federal and provincial laws) the right to make accurate claims about how good that set standards and guidelines for advertisers. their product is. If the product is good, they should For example, it is illegal for advertisers to provide certainly be able to let you know about it. Thi nk About I t On most occasions, have the products and services you bought been as advertised? Have you bought a product that doesn’t live up to the advertising? MODULE 2 17  How About You? Advertising is good in a number of ways: 1. Was it how you felt looking at the item – that is, To what extent do you think your your emotion is a source of information about new consumer decisions are affected by products, existing products, and improvements or advertising? changes to products. 2. It encourages competition, which can lead to prod- uct improvements, lower prices, specials, improve- ments in supply and availability, and more. 1 2 3 4 5 3. As you are probably well aware, advertising pays for AFFECTED A LOT AFFECTED A LITTLE many media presentations. Advertising sponsors TV and radio shows, magazines and newspapers, con- certs, and so forth. Increasingly, through “product placement” it also helps sponsor movie production. 4. Advertisers sponsor these activities according to How can advertising influence your buying de- how many of their potential customers they be- cisions? Advertising may lead to impulse buying lieve will watch the show, listen to the show, read (buying on the spot without much thought) or fad the magazine or paper, or come to the concert. buying. It may lead you to buy something you really Through sponsorship, some of these activities, don’t want, or don’t need, or shouldn’t buy at this such as TV and radio programs, are provided free time. In other words, it may help lead to a consumer to us (even though we do end up paying for the advertising in the prices we pay for what we buy – decision that you might come to regret. and we may also pay cable or satellite fees for the But whose fault is that – the advertiser’s or programming). Some (such as a newspaper) are yours? There is a saying – caveat emptor – which provided to us at much lower cost than would oth- means “let the buyer beware.” In the end, you are erwise be the case, and some (such as a concert) responsible for your own decisions. If you make a might not have come to town without the sponsor. bad buy (one that is not in your best interest), then, 5. Advertising helps consumers to compare the different unless an ad has been false, misleading, or illegal, products and services that are available and hopefully you have only yourself to blame. to help them make better consumer decisions. Therefore, when making your buying decisions it is important for you to be aware of some of the ways in which advertisers may try to influence you to buy their product. The advertiser’s job is to put the prod- uct forward in the best light possible and hope you will buy their product or service. Your job, as a wise consumer, is to make the decisions that you think will be best for you. $ Ti p Try to get to know yourself as a consumer. Do past decisions show you are influenced by advertising? If so, know that and try to control the extent to which advertising takes control of your decisions. 18 MODULE 2 There is one further point to mention in this section. You may believe that, on some occasion, your rights As a consumer, you do have certain “rights.” The have been abused. Or you may have a complaint Consumers’ Association of Canada states that its goal about a good or service you purchased. If so, identify is to help uphold the following consumer rights: who you can speak with and voice your complaints. For those times (which we hope will be few) the right to choice when you have legitimate complaints, you need to the right to consumer education learn the “art of effective complaining.” Most pro- ducers will welcome the chance to turn an unhappy the right to be informed customer into a happy one. After all, if you leave the right to participate in marketplace decision unhappy, you’ll probably never return. They lose your making future business. And you will probably tell others the right to safety about your bad experience. Give them a chance to the right to have access to basic services fix any mistakes or problems. You may find you end the right to be heard up quite happy. Sometimes you may even come out the right to a sustainable enviroment1 ahead. If you find you are not satisfied, and you feel you have a legitimate complaint that was not dealt the right to redress with properly, you can contact the Better Business 1. From the web site of the Consumers’ Association of Canada. Bureau and put in a complaint. But do give the pro- www.consumer.ca ducer or retailer a chance to fix the problem first. How About You? Have you ever bought a product and had a problem or reason to complain? If so, did you – or did you just let it go? How would you assess yourself in terms of your willingness to act if you have a problem with a product? 1 2 3 4 5 PROBABLY DO VERY LIKELY TO NOTHING TAKE ACTION MODULE 2 19 Advertising And You Review each of the advertising techniques described [“Nick and Lotta were about to kiss when, all of below. See if you can think of one or more product or a sudden, Lotta noticed Nick’s teeth. If only Nick service ads that you have seen recently that use the had used...”] following techniques. Snob Appeal: These ads are designed to appeal to those who want to be seen as in the Rank these techniques from 1 to 10 in terms of which lead, on the move, those who have made it – and you think is the most effective at influencing your opin- want others to know about it. These ads empha- ion of a product or service. Let “1” represent the most size that if you have the product you are definitely effective and “10” the least. “in” or among the “elite” or “successful.” [“If you need to know the price, you’re not interested.”] Economic Appeal: This type of ad presents Repetition: You have heard it said that “If you the “great deal” – no money down, no interest tell people the same thing often enough, they will payments, and so on. Be on your toes and come to believe it.” Some advertisers will use watch for those that are genuine deals and this method, repeating their message over and those that have catches to them or key points over again in an ad or a series of ads over time. in the fine print. There can be very legitimate [Built Tough!, “Eat Fresh,” “I’m Lovin It”] offers to help you pay for a purchase over time – such as equal payments over 24 months with Conformity: This approach aims to have you no interest. But, in the fine print, it can say that “get on board,” “be in,” “get with it,” if the amount isn’t paid in full within 24 months, [Join the “cool crowd.”] all interest charges become payable for the full Imitation: This is the effort by an advertiser two years. So check that out and, if that’s the to influence a consumer by having a celebrity case, make sure you complete the payments associated with the good or service. The adver- within the 24 months. [“No payments for three tiser hopes that those who like and respect the years! That’s right, it can be yours and you celebrity will imitate the behaviour by using the don’t pay a cent for three years!”] product. [Sports star's running shoes. Celebri- ty's make-up line.] Comfort And Enjoyment Some advertisers may attempt to present their product in relation Emotional Appeal: This is where the advertiser to something that, although enjoyable, is largely seeks to draw upon one or more of the consum- unrelated to the product. For example, have er’s emotions to influence the decision. [Being you ever sat through a commercial wondering away from home – kittens and bathroom tissue what on earth was being advertised – only to be – beer and being Canadian] surprised at the end? The purpose of the ad may Good Will: Providing something for free – a free simply have been to get your attention – not tell sample, a free issue, and so on. However, always you anything about the product. remember that “there is no such thing as a free Humour One method to attempt to influence lunch” – someone always pays the cost. It’s a your purchase is to present the product or question of who pays and why. [“Four free CDs! service in a humorous way and hope that your Just sign up to buy one CD a month and you’ll laughter will carry over all the way to your get four free CDs!”] buying decisions. Scare Techniques: Well, maybe not exactly scare techniques, but who wants to face the consequences of going around with bad breath, Can you think of any other techniques that blotchy skin, or underarm odor, especially when are used by advertisers to affect consumer the ads portray such awful consequences. decisions? 20 MODULE 2  i on. Ta k e Act trol! Ta k e Con Always protect your PINs and security codes. Change your passwords regularly. Avoiding Frauds and Scams As you know, there are lots of things that you can do with your money. One thing you don’t want to do, How About You? though, is to let others take or steal your money. It would be great if we lived in a world where you didn’t have to worry about that – but that is not the case. There are people and organizations that may try to access your online bank account, fraudulently use Have you ever experienced an your credit card, learn your PIN and use your debit attempted fraud or scam? If so, card – or use a duplicate of your card, fool you with what did you do? Do you know an online purchase or payment, and so on. You have some key indicators of attempted to be vigilant in protecting your personal information frauds and scams? and your money – especially in this day of online purchases and banking. MODULE 2 21  i on. Ta k e Act trol! Ta k e Con accounts and other financial assets to watch for any surprises. If you see a withdrawal or some other If you have a credit card, always check action that you did not take, report it to your financial your statements carefully to make institution immediately. sure there are no false charges. Health Promotions: People are often vulnerable when they are concerned about their health or appearance. Unsolicited offers may arrive for ways to cure baldness, cure acne, lose or gain weight, feel better and stronger, and so on. Be very The following is just a sample of fraud and scams cautious about such promotions especially if they that people may try to use against you. Included are promise results that sound too good to be true. suggestions for how to protect yourself from those Check them out thoroughly before spending any who might be looking to take advantage of you. money on such offers. Subscription Traps: Be cautious of those Requests for Personal Information: Any email who offer you a really good deal for a magazine asking you to disclose or share personal information subscription, an online subscription, etc. Some will is likely to be a scam and before taking any action offer really good deals at the outset and ask for your you should check with the supposed source making credit card information. Then, over time, they will the request. Financial institutions and government raise the rates and continue to charge you monthly officials will never ask you to provide personal fees at a rate you never wanted to pay – but may information over the Internet. have agreed to in the fine print. So be cautious “CRA” Calls: Anyone calling on the phone about subscriptions – and do read the fine print! indicating that they are from the Canada Revenue Family Member in Distress: Sometimes Agency and stating that you owe taxes and that individuals will receive calls from someone who says you can pay them right away over the phone with a that a family member has been badly injured and credit card is a scam. The CRA will never do that. that the individual needs you to send money. The Such calls can sound very threatening, and state caller may have even done some digging and found that you may face a heavy fine or jail time if you don’t a name and some personal information about the pay. Don’t fall for it! person they say is injured. They may say that they Sending False Invoices: It is amazing how often can help your family member but need money as people and businesses will simply pay an invoice soon as possible to do so. They may also say that that is sent to them in the mail – even though it may they are the police and need money. Don’t ignore a be totally false. If you are not aware of a purchase that was made, do not simply pay a received invoice. i on. Check into it. Make sure it is legitimate. Stealing Your Identity: If someone has access to Ta k e A ct trol! Ta k e Con your personal information – your Social Insurance Number, Passport Number, bank records, etc. – they may use that information to try to access your money or your assets. Protect your personal information and keep a close eye on your bank Always review your monthly bank statements to make sure all deposits and withdrawals are correct. 22 MODULE 2  call that may be legitimate about such an event – but be very cautious if the caller asks for money to help especially if they want you to send it right away. Try and verify the situation if you can. Door to Door Sales and Canvassing: It is rare these days for any legitimate cause or organization to have people canvassing door to door asking for money. Door to door visitors may look to get $ Ti p your support in an election – and that is fine. But if people come to your door asking for money, be very, very cautious about donating or buying If something sounds too good to be anything from someone going door to door. And true, it usually is. also be cautious that they are not “checking out” your home. Some may ask for a glass of water or something similar and look for what they can steal while you have left them alone at the door – purse, car keys, etc. Internet Solicitations and Requests for Payment: It is very common for scammers to try and convince you to support a cause or pay a bill via an email. Again, be very cautious. Watch for typos in the email request. Look at the email source that sent the email to you. It may say it is from a store requesting payment but the originating email address has no indication of the store’s name. As a rule of thumb, it is probably best never to respond to email requests for money. Follow up with a phone call or visit to verify. The following are a couple of links with more information on frauds and scams and how to protect your money, assets, and valuables. “Little Black Book of Scams”: http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04333.html Links to a number of government sources of information: https://www.canada.ca/en/services/finance/fraud.html RCMP Site Focusing on Frauds and Scams: http://www.rcmp-grc.gc.ca/scams-fraudes/index-eng.htm MODULE 2 23 Module Summary Ti ps & Say What? Possible New Terms! Su ggest i ons 5. What kinds of techniques can advertisers use to try and affect 1. Values: the beliefs, morals, your decisions? As you can, think about your attitudes and decisions that 6. What are some of the benefits values – know your values – make up your character, from advertising? and call upon them to help with affect what you do in life, how your money decisions. People you handle situations, and 7. What are some of the “rights” often make money decisions your goals. that consumers should without considering what is 2. Peer pressure: the influence reasonably expect in the really important to them. that others, around the same marketplace? Peer pressure can be very age, can have on your actions powerful. In the end, try and and decisions. This is a control your own life as much pressure that others try to Thinkabout... or Discuss: as possible. That way you put on you. What are the biggest factors can apply your own values 3. Envy: the desire to have what affecting values as a person to your decisions rather than others have, look like others grows up? someone else’s. look, live like others live, etc. Do values change over the To get a sense of where you This is a pressure you usually course of your life? If so, why are at, and coming from, put on yourself. and when? regarding money in your life, 4. Consumer rights: these make one list of the things you are what a consumer should What values would likely help value and want out of life that reasonably expect in the course lead to good financial decisions? don’t relate to money. Make of fair dealings and expectations What “peer pressures” are another list of those that do with a producer or retailer. positive? Which are not so relate to, or involve, money. 5. Caveat emptor: “buyer positive? What can be done It helps to keep in mind the beware,” which means that, in to deal with and resist peer things we have, or hope to the end, a consumer is largely pressure if you don’t like have, that don’t involve money. responsible for each decision the direction it is pushing you toward? Consider the “opportunity that is made. cost” of any decision you make. What are some of the “best” ads That is, what is the next best you have seen (TV, print, radio, alternative that you are giving Internet) and why? Which are up – today or in the future. Did It Stick? Can You Recall? some of the worst – and why? 1. What factors may be having an influence on your money decisions? 2. Why values are important in terms of “money decisions”? 3. What are some of the key things Tech Ta l k that can affect your values? How If you have access to the Internet, you may consider searching: can peer pressure influence decisions about money? Dealing with peer pressure Values and setting goals 4. What kinds of pressures can people put on themselves Advertising techniques Consumer rights that can affect their money Best ads ever Common frauds and scams decisions? Worst ads ever 24 MODULE 2 Modul e 3 YOUR GOALS: SOME THINGS TO CONSIDER Let 's Dis cuss... $$ “Luck of the Draw” $$ Political Factors $$ The Life Cycle $$ Technological Change $$ Tastes, Preferences, and Lifestyle $$ Language and Communication Skills $$ The Economy $$ Prejudice $$ Social Factors $$ Ways we can help others I n addition to your values and what you believe is important in life, there are other factors that can influence your financial decisions and actions. Let’s take a look at some of these factors. “Luck Of The Draw” Each of us is born into our own individual set of circumstances. We are born at a certain period of time, in a certain location to particular parents (who may or may not stay together as a family unit), into a certain lifestyle, and so on. We enter into different economic circumstances, geographic locations, cultures, family conditions, and values. You may believe that all are created equal, but few will claim we are all born into circumstances How About You? of equal opportunity. The way we start life can vary greatly. And, for many people, life probably doesn’t seem fair in terms of “money.” Some may have eas- ier access to money. Some may have to work much YOUR “LUCK OF THE DRAW” harder. Some are born into families that have lots of money. Some are born into families with relatively When you entered this world on the little money. But remember that old adage – “Money “highway” to life, you may believe doesn’t buy happiness.” There are some who may you started with certain advantages well argue that it may be harder to be happy if one is or disadvantages. Identify both the “born into money.” There are different goals we can advantages and disadvantages you set in life – and different ways to define opportuni- feel you started with. ties and happiness. Keep that in mind. MODULE 3 25  The Life Cycle Thi nk About I t If you are in your teens or early twenties, your thoughts are probably mostly on personal relation- On a recent trip to Malawi, the poorest ships, your education, your job or work opportunities, country in Africa, a person commented entertainment, sporting events, and travel. You are that people seemed to be so happy probably thinking about possible careers, education- there. Why might that be the case? al options, work opportunities and prospects, moving out on your own, and deciding who, if anyone, might There are parts of Canada that some be that particular person with whom to share a life – say don’t have the highest standard of or at least go out with over the next while. living – but have the highest quality of Over time, though, and at different stages of life, life. How might that be the case? our priorities and concerns can change. The prior- ities, concerns, and goals of someone who is 15 will likely be quite different from those of someone who is 65. Therefore, when setting goals, you have to consider the changes that will occur throughout what is called the “life cycle.” How About You? Think back three years. Have your interests, priorities, and goals changed even over that brief period? What is the life cycle? Although each of us will Taking control of your financial affairs means experience our own individual life cycle, we often thinking about the various stages of your own life share similarities in our primary concerns at various cycle. You can’t think only about what is important stages in our life. Importance will vary in our lives today. You also have to think about what will be with respect to education, training, finding a job, important to you in the future – at a future stage in getting promoted, marriage, children, housing, sav- your life cycle. Therefore, you will need to set goals ing, investing, health care, life insurance, retirement for various times in your life. planning, travel, and so on. In addition, recognize that for many people, at some point in the life cycle, personal plans will have to be combined with those of someone else. You may also have to consider the hopes, goals, assets, How About You? debts, and so forth of a possible life partner. There- fore, you may find you will face trade-offs down the road when making decisions as a couple or family. Are you a planner? Do you think It is often harder for two people (or more) to make ahead? Or do you live in the “here a decision than one. Families have to make many and now” without much thought for financial choices together. the future? 26 MODULE 3  $ Ti p Remember if you are a person who lives in the “here and now” with little thought of the future, the future will some day be the “here and now”. If you think only about today, you may find your life in the future is less enjoyable than you had hoped. A good “money rule” is to “pay yourself first” with money you make. That is, set some aside for saving first before doing other things with your money. How About You? HOW ABOUT YOU? GOALS AND YOUR LIFE CYCLE The following is a list of possible goals (including some financial goals) that a person may have in life. Add others that you can think of. Then, pick the ones that are most important to you now. Owning a home Helping to educate future grandchildren Obtaining a good education Caring for parents Learning a trade Having good health, fitness, and medical care Developing an artistic skill Having a hobby Becoming an athlete Donating to charity Saving for an enjoyable retirement Having time to volunteer and help others Travelling Working part-time rather than full-time Obtaining a good job/career Joining a club Owning a business Building a collection Owning a cottage Developing a specific talent Owning a car Getting married Having children Others: At different times in your life, you will probably assign a different priority to your different goals. Review the above list and identify those goals that you think will be most important to you five years from now. How, if at all, do you think your goals may change over those years? How about 10 years? MODULE 3 27 $ Ti p TIME VALUE OF MONEY Money that you don’t spend today, but save for the future, can increase in value if saved or in- vested wisely. It can help sometimes to get advice from good and qualified sources. Saving can help you afford, in the future, things you might not be able to afford today – such as paying for education, buying a car, putting a down-payment on a house, or saving for retirement. Tastes, Preferences, And Lifestyle Your tastes and preferences will likely affect almost every money deci- sion you make. For example, is it important to you to one day own your own home? If so, does it have to be a house? What about a condomini- um? An apartment? A townhouse? Where do you want to live – in an urban/downtown area, in the country, or in a small town? Thi nk About I t What kind of workplace environment do you want to work in? Do you want to work for yourself? Do you prefer to work with a company, in a factory, or outdoors? Do you want a career that will require many years of education, or do you want to start working as soon as possible? What is your taste in clothes? Do you like to eat out? Do you want to travel? If so, where? Do you have a costly hobby? Do you like going to concerts or sporting events? What was your last On and on it goes. What are your tastes? What are your preferenc- purchase? Did you es? What are your expectations? It’s important to have a sense of what need or want what your tastes and preferences are since they will affect the decisions you you purchased? make with the money you have. How can needs and A key distinction that is often made is between what you “need” and wants differ from what you “want.” A need is considered to be something you must have person to person? in your life to get by. It includes the basic necessities in life. A want How might your is something that makes life easier, better, more enjoyable – but isn’t needs and wants essential. When making a decision, you will want to consider whether differ over time? you are dealing with something that you “need” or “want.” $ Ti p When it comes to your tastes and preferences, try some other options now and then to see what they are like. If you like some things now that are on the “pricey” side, give some less pricey options a chance – just in case it works out you are as happy with them – or even happier. 28 MODULE 3 How About You? GOALS AND YOUR LIFE CYCLE Suppose you have 100 votes with which to indicate your preferences for various types of enter- tainment. Indicate your preferences for each type of entertainment by allocating a portion of your votes to the types of entertainment you most prefer. The total should equal 100 (for example, 30 votes for concerts, 30 for movies, 20 for magazines, 10 for sporting events, and 10 for books). Music Sports events   Concerts Playing sports Books   Playing a musical instrument Computer games Dancing   Magazines Shopping Movies   Eating out Parties Camping   Others: If you can, compare how you split up your 100 votes with others. It will help show how people’s tastes and preferences are different – and can affect their money decisions. The Economy $ Ti p Conditions in the economy can affect financial decisions and affairs. The following are just some of the economic factors that can have an important influence: An important the rate of inflation (affecting tax policies (affecting how much prices you pay) tax you pay) part of planning is “contingency the availability of jobs (affecting the status and strength of your ability to earn money) labour unions (affecting your planning.” That interest rates (affecting the income, benefits, and working is, to have a plan cost of borrowing money or conditions) if things don’t go as planned. Be how much you can make on what goes on in other countries your savings) (affecting jobs, incomes, and flexible. Have a the stock market, bond markets, opportunities in Canada) backup or alternate option – just in etc. (affecting the returns the exchange rate for the that are possible on your Canadian dollar (affecting the case things don’t investments) cost of things we buy that are work out as you government programs (affecting made in other countries) had anticipated – or hoped. benefits you may be able to receive) MODULE 3 29  Many of the money decisions and challenges you face may be How About You? influenced by these kinds of economic factors. This can be frus- trating since they are often factors that are beyond your control. If you hope to work for a technology company in Waterloo, and Think back over the last that company closes or reduces its operations there, that can five years and identify any throw a wrench into your plans. On the other hand, if the tech- ways in which the economy nology company does well, and expands its operations there, has affected your financial that can help improve the chances of getting the job you want. circumstances or those But while you won’t be able to affect the company’s decision on of your family or a family your own, your life may be affected by their decision. member. Has it affected So economic events, developments, and changes can influ- you or someone else’s ence your life – and be beyond your financial control. But, at the job, income, housing, car same time, the more you can learn about the economy, the more purchase or lease, vacation this can help you understand, and prepare for, factors that can plans, and so on? affect your financial decisions. Thi nk About I t Think about the world as it is today and how it would have been when your grandparents or parents were your age. How have things changed? What social factors have changed that might influence financial actions, decision, and goals today versus in their day? In what ways do you think things are better? In what ways do you think things are more difficult? Social Factors Changes in our society can affect our living conditions and our tastes, preferences, and goals. As cultural values change, we may find our own values changing. For example, conditions in the workplace, the nature of work, types How About You? of jobs and attitudes toward work, can change. Over recent decades, the number of women in the workforce has increased significantly. In the past, men were often seen as the “breadwinners” and many thought the “woman’s place was in the home.” Well, that certainly is not the com- mon attitude these days. This is reflected in the large increase in the How do you deal number of women working and the greater social acceptance of women with change? Do being in the labour market. you: resist? Ignore? Social changes that occur with respect to having children and family Lead? Adapt? size, getting married, types of marriages, the level of education seen as Accept? React? “needed,” housing styles and opportunities, the popularity of certain ca- Respond? Or...? reers, the kinds of new jobs available, and so on can all have a bearing on our financial decisions and plans. 30 MODULE 3  Thi nk About I t Political Factors We live in a society in which governments The post-war baby boomer is aging. often play a significant role. Governments are The “boomers” have influenced society involved in areas such as the following: in many ways. How do you think society may change as (a) the “boomers” move the rate of inflation (affecting prices you pay) into their senior years and (b) a new, insurance and banking regulations and different, generation takes over? The millennials? employment insurance programs parkland and other recreational facilities legislation affecting wages and conditions in the workplace transportation and communication Government decisions can affect the prices of training programs goods and services we buy and the taxes we pay; taxation the availability of certain jobs; the quality, cost, and availability of health care and education and health care training programs; pension plans; housing costs; public education and much more. welfare programs Each of us has the right to vote, and we have a interest rates responsibility to cast our votes for those candidates with views and values each of us believes are best. The decisions of those people we elect will affect, to Thi nk About I t some degree, the conditions in which we live, work, play, spend, invest, raise a family, and retire. Along with our financial responsibilities, we have a respon-