By Steve McLellan
Imagine these situations:
Elaine is a recent widow. Her husband did all the banking and, during their 40 years of marriage, she worked, looked after the house, and raised their three children. Now she is the family broker, investment advisor, and budgeter. She is finding the task a challenge.
Isaac is a proud, recent graduate of the Saskatchewan Polytechnic CAD technician program and, after 12 years of school and the additional two years of study to get his diploma, he is ready to make some money and start living life. While he has some student loans, he believes that with his newfound income in manufacturing he will soon be in the ‘big money’ and will not have to rely on Kraft Dinner for supper five nights a week. A sure sign of his future success is that he received notice in the mail he’s been pre-approved for three credit cards and has signed up for them all.
Susan, meanwhile, moved to Canada from Somalia as a refugee and saw this country as a bright light of peace and harmony — a great place to raise three children and see them grow to be productive and proud Canadians of Somali descent. She has never had a bank account or many belongings but, now in this land of plenty, she has been offered a deal to furnish her apartment with all new furniture for one very low monthly payment. Susan’s dream is coming true. From a refugee camp tent to donated furniture and beds — which were appreciated but not what other Canadians had — to now having a family home with all new furniture: She ‘had made it.’
How do these stories end? Well, there are two scenarios.
Elaine received the insurance money and let it sit in her chequing account for months. She listened to her grandson, who is 30 and living with his parents, and invested in a ‘get rich scheme’ that allowed someone else to get rich quick. She managed to keep her home but never had the life that she and her husband had planned for their golden years.
Isaac went on two trips — one with his buddies and one with his family — and used his new credit cards. He did get a good job as a CAD technician but, after eight months, he got laid off when the company lost a big contract. Then, he spent six months with no income and learned what 28 per cent interest was on credit card debt.
Susan lived in her apartment with her new furniture for 17 years and paid each month for the furniture. In total, she paid three times the retail price for the honour.
Elaine went to her bank where, until then, she had only gone to get cash from the ATM or — for many years — from a teller. She asked for an appointment and met with a patient and skilled person named Tamara, who helped her with budgeting and investment advice, and told her she had enough money to go on a trip each year to visit her sister in B.C. In fact, she even gave her grandson money to go to school and he finally moved out of his mom’s house.
Isaac used the cards once to take his parents out for dinner to thank them for their support. When his first ‘career paycheque’ came in, he paid off the credit card and put it into his sock drawer. He then reviewed the costs and benefits of all three cards and cancelled two.
Susan saw a billboard on her way to the furniture store from a credit union that spoke about advice and loan services for free. They helped her do a budget and, with her income, she could pay cash for the furniture and make monthly payments to the credit union. In three years, she had paid the loan back, kept to the budget, and had the nice furniture for years to come. Once the furniture loan was paid off entirely, she put the same amount into an RESP for her kids’ education — all part of her budget and part of her life plan.
The difference is in the detail
These are three very different stories. Each could have several outcomes, but all could end with success — if they receive sound advice and are financially literate.
Sadly, many people experience financial challenges like these all too often. The pain and grief of carrying heavy debt can be consuming, especially when it’s done with bad advice or no advice at all. That said, more and more people are looking up, getting the advice they need, and turning the second scenario from the exception to the norm.
This is, in large part, thanks to the financial services sector — credit unions, banks, and investment advisors —seriously evaluating their services. They all offer advice — often free — so their clients are informed and make decisions based on fact and reality, not hype and pipe dreams.
In Saskatchewan, we have a sincere group of financial sector and business leaders whose commitment to financial literacy is making a difference. Each of our credit unions and banks are committed to their clients’ success.
Many of these financial institutions have banded together with the Saskatchewan Chamber of Commerce and other businesses to form the Saskatchewan Financial Literacy Network (SFLN). It’s a new initiative, but is already doing good things. The SFLN has held two gatherings of people across a multitude of sectors involved in financial literacy, and is creating a new and improved website to be launched this summer. The mandate of the project is to promote the services and expertise of their member organizations. One clear and trusted Saskatchewan-focused website, where information on the basics and contact to experts is available, will be a very positive service.
The best way to ensure the lack of financial literacy is never again a problem is to ensure all people are educated early. The SFLN and the Saskatchewan Chamber of Commerce have been advocating for years the need for a mandatory high school course to be made available in all schools. Fortunately, the Saskatchewan Ministry of Education recently made the commitment to have this course available in all high schools by fall 2019. While it will be offered as an elective, it is still a tremendously positive first step.
Many of you reading this probably wish you’d had better financial advice early in your life — or that you took the advice you received. ‘Freedom 55’ was a great marketing slogan and is a reality for some. For others, we can look back five, 10, or 25 years and say, “I should have invested in Google, not Bre-X.”. Looking through the rearview mirror is a waste of time. The future is where your focus should be.
You can always learn more about financial issues, regardless if you are 18 or 68. New programs are being created like the tax-free savings account that are worth knowing about and, if they make sense, to utilize. The key is to get educated. Make financial literacy a priority for yourself, your family, and your business.
My final message is for all of you grandparents and parents. Help your kids out. Not by giving them money, but by giving them the tools. Buy them David Chilton’s The Wealthy Barber Returns and tell them once they read it and have a discussion with you about it, you’ll give them $100. That’s education and cash. And if they don’t read the book, hit them over the head with it.
There are too many Elaines, Isaacs, and Susans out there, and it is our responsibility to help them learn and to reduce the number of people — many of them our employees — who face unnecessary challenges because of bad financial decisions. Those challenges have a very real impact on your business and the economy.
So, get busy. Go see the barber or your own financial advisor today.
Steve McLellan is the CEO of the Saskatchewan Chamber