3 Financial Basics Presentation Deck

7/27/2019 3 Financial Basics Presentation Deck

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How to manage your spendingWhat you

.

Ways to save. How to a off debt.

during thisworkshop

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How to invest to make your money work

for you. ow o p an o reac your own

financial goal.

How to rotect ourself from fraud.


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Control your financial future.Benefits of

.

Provide for yourself and your family. Be a smarter consumer.

financiallyliterate

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Reduce stress and sleep better at night.


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The current average percentage of their

a) 5%

5

.c) 10%


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In 2010, the average household debt of

a)$26,000

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,c)$96,000


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In 2009, the total reported dollar loss by

a)$7 million

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m onc)$11 million


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In 2009, the average debt:

For college graduates was:a) $3,500

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,c) $13,500

For a university graduates was:a) $11,500

,c) $32,500


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The percentage of Canadian youth whose

savings for education after high school is:9

ab) 35%

c 50%


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IncomeParts of a

Difference between the two:sur lus or deficit

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Keep every receipt.Know what

ecor every expense n a no e oo

or electronic device.

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.

Do this for at least three months.

Make a list of irre ular ex enses ifts

donations, car or home repairs, vacations).

Total your expenses at the end of

the month.


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Monthly

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Monthly expensesFixed vs variable expenses

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Difference between total monthly incomeNet

Net surplus _______________

deficit15

Net deficit _______________


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Check your bills.Areas for

ego a e e er p ans an ng ees an

services, telephone, cell phone).

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.

Consider whether you need to own a car,

a home or the latest hi h-tech ad et.


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Spot mistakes and overcharges.Check

ay ess n a e ees, n eres an pena es.

Get errors corrected before its too late.

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Call each service provider and ask:Negotiate

How can I cut back my monthly bills?

plans19

m curren y on any p ans

Do you have a better plan or deal for me?

, w

Will I be put on contract for any new deals?

Can I avoid interest or late


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What am I paying in monthlyReduce

serv ce c arges

How much am I paying for ATM fees?

costs20

Am I eligible for a low-fee deal if

I m a student?

Can I get a reduced fee if I keep a

minimum balance?

Can you suggest a better plan for me?


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Banking

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What am I paying for land line andCompare

ce p one

How much do my long-distance calls cost?

costs22

Can I switch suppliers to save money?

Do I have a contract? When does it ex ire?

Have I called suppliers to ask how to

cut costs?


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You pay $25/month for home phone,Bundling

or ce p one, or n erne an

$40 for cable TV = $130

paysbig-time

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Example of bundling discounts:

Combine 2 services save 5%

Combine 3 services, save 10%

Combine 4 services, save 15%

Save 15% of $130 = $19.50 per month


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Eat breakfast at home.How to

r ng your unc , r n s an snac s

(and coffee).

food24

week or more.

Cook one bi dish on weekends and freeze.

Shop with a buddy at discount supermarkets

and split quantities.

Set a budget and stick to it. Bring a list and dont shop on an

empty stomach.


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Add up the real costs of ownershipDo you

gas, nsurance, eprec a on, n eres

and maintenance).

a car?25

www.caa.ca, select Public Affairs.

Tr the Lease or Bu Calculatorwww.ic.gc.ca, select For Consumers and

click Money, Credit and Debt.

Check out Where can I find car sharing?www.carsharing.ca, click City List.


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When you move frequently:When

a es a eas years o ma e

it worthwhile.homedoesnt

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If you have a very low down payment:

You ll need mort a e default insurance.

sense

You may have a higher interest rate.

When your income covers only mortgagepayments and taxes.


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Try it out:

Put the monthly costs of owning a home

Can youafford it?

mor gage, proper y axes, ma n enance,

etc.) into a savings account.

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Could you afford higher costs for heating,

taxes or insurance?

Use a Buy or Rent calculator:

www.ic. c.ca select For Consumers

and click Money, Credit and Debt

www.getsmarteraboutmoney.ca/

tools-and-calculators/rent-vs-

buy/default.aspx


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How to cut

of spending28


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Weve all got a latte factor, regardless of ourWhat is

ncome eve . av ac

factor?30

Lunch in restaurants

Im ulse bu s The latest, greatest [fill in the blank]


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When does a want become a need?Questions

a mo va es you o uy

advertising, friends, trendy styles?

yourself31

Do your purchases make you happier?

What needsare now collectin dust? What can you learn to live without?


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Avoid trips to stores and shopping mallsReduce

an on ne uy ng s es.

Pay cash or cheque for purchases and onlybuying32

.

Reduce available credit on your credit card

and line of credit. Leave credit cards at home.

Sleep on it and see if you still want it the

next day. Take baby steps and cut costs by increments.


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Paying your credit card bill just a couple of

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days after the due date won't affect yourcredit report.

True or false?


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All credit cards have the same grace period- .

True or false?


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Last month, your credit card balance was zero. This

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,purchase. If you pay off $400 by the due date, you

will be charged interest only on the $100 left to pay.

True or false?


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If you use your credit card to take money out as acash advance ou don t have to a interest on the

amount youve withdrawn as long as you pay yourcredit card bill in full by the due date on your

.

True or false?


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Without a good credit history

A. Your bank may charge you higherinterest rates on a personal loan for a

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car, house, etc.

B. Your bank may refuse to give you a loan.

.

an apartment.

D. A and B only.

E. All of the above.


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Pay the balance in full each month.

How to

,

as you can. Dont make only the minimum payment.

trouble

39

you a ways carry a a ance, ge alow-rate card.

Transfer the balance to a line of creditwith a lower rate.

Pay a few days before the due date.


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Initial balance: $3,000

Minimum

payments

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Shop around.

Tips for.

your first offer. Keep within your budget.

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debt

orrow on y w a you can a or o payback regularly and on time.

Pa back more and a more often. Additional payments mean youll pay it

off sooner and pay less interest.


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For students in financial needs - -

Canada

secondary education Become payable 6 months after you leave

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loans

you s u es Apply for this federal support through your

provincial or territorial student assistance office For more information, visit www.Canlearn.ca


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Student

Calculator 43


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Getting a copy of your credit report is:

a) A good way to check for identity theftb) The only way to know if your report

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is accurate

c) Free of charge, if you request the report

d) All of the above


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If you have applied for several credit cards

of time, this could have a negative impact onyour credit score.

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True or false?


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Which of the followin does not affect

a Your a ment histor whether ou have

46your credit score?

ever missed a debt paymentb) Any collection of bankruptcy that has

c) Your history of repaying informal loans

from famil or friends

d) Any outstanding debts you havee) Your account history how long you

ave a cre t, an t e type o cre t

you have


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You use your credit cards as a necessityRecognize

.

You use credit or cash advances for yourdail livin ex enses.

signals 47

You miss payments or due dates.

Youre near the credit limit on most of

your car s.

You borrow from one card to pay another.

You transfer balances ever few months

just before the introductory offer expires.


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Use savings to pay off balances.Take

debts first. Switch to less ex ensive credit cards.

your debt 48

Call creditors to negotiate for lower rates.

Start automatic/online bill payment to stay

on sc e u e.

Leave your credit card at home.

Avoid bu now a later offers.

Get a consolidation loan to make onelow-interest payment.


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Feel more secure and in control.Why save

.

Reduce stress and conflict. S end with less uilt or fear.

future? 50

Afford major purchases.

Pay off debt and avoid new debt.

e re com or a y.


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Set a dollar amount and deadline.Make your

.

Write down your goal and post itwhere ou can see it ever da .

specific 51


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Set up an emergency fund.Savings

.

Make savings automatic. Grow our savin s.

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Set up direct debits from your bank accountMake your

.

Save 5% to 10% of our take-home a .

automatic 53

If you earn $2,000 a month after tax:

Saving 5 percent = $100 a month =

, a year.

Saving 10 percent = $200 a month =

2 400 a ear.

Extra money (from gifts, tax refunds, etc.)

or a raise? Save it.


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Compounding

money grow 54


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Actions Amy Amanda

Starts saving at: 20 30

Puts $1,000 a year into herRRSP to age:

34 64

, ,

Total she earns at age 65: $141,700 $116,100


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Actions Amy Amanda

Total she earns at age 65: $141,700 $116,100

Conclusion:

is better) Save as long as you can (for a long period

of time)


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Rule of 72: Time it takes to double your money

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Interest rate Your money doubles in:

4% 18 years

years

8% 9 years

. years

12% 6 years


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Risk and

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Four types of Investments that pay interest

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Shares in a company (stocks, mutualfunds that invest in stocks, etc.

Property (real estate, art, precious metals, etc.)

Direct investment in a business


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Savings

Investor Tool 60


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GICs Your money is locked up for a period of time,

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Generally, the longer the term, the higherthe rate of interest.

Traditional GICs: principal and return

are guaranteed.

ar e - n e s: pr nc pa s guaran ee ,

but returns are linked to a stock market index,

so the fluctuate.

You can also get cashable GICs; moreflexible but with lower rates.


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Stocks Shares in a company; you are partial owner

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Share prices and returns can be positiveor ne ative.

No guarantee of income: you could lose your

whole investment.

ra e on s oc exc anges or

over-the-counter markets.

Stocks have out erformed other investment

options by a wide margin over periods of10 years or more.


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Why invest Professional managementfunds? 64

several investments Ease of access: ou can enerall sell

any time

Readily available through most

nanc a ns u ons


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Questions to What is your background, experience

prospective

financial

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Is your firm registered with a securitiescommission or other formal bod ?

What can you do for me? Provide advice only,

sell products, help me build a financial plan?

a pro uc s o you se

How do you get paid?

How do ou work with our clients?

Can you provide references?


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The three Know yourself: your investment goals

66, .

Know your investment: is it right for you? Know our advisor.


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Registered Tax-Free Savings Accounts (TFSAs):

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paying taxes on the income Re istered Retirement Savin s Plans RRSPs :

defer paying income tax until retirement

Registered Education Savings Plans (RESPs):

s e ax o a s u en

Registered Disability Savings Plans (RDSPs):

shift the tax to someone with a disabilit


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Budget and

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How can a Minimize your taxes.

help you? 70 over nsurance nee s.

Buy a home and pay off the mortgage quickly..

Optimize employee benefits and pensions.

Save and lan for retirement. Fund long-term health issues.

Care for elderly parents.

Manage estate planning and how to transferwealth in families.


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Identity theft 4 million North Americans fell victim to

76en y rau

Average loss to identity fraud: $1,086,

Scholarship and loan scams: more than

$100 million Average loss from a scholarship or loan

scam: $263


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Transfer

scam 77


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Lottery

scams78


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Phishingemails

and

phonyWeb

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pages


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Items for-

payment

scam

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Signs of Offer considerable pay with few to no duties

job ads 81 rom se paymen o wages n cas

Contain no physical address or contact person

or accept company cheques to testa wire

transfer service


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Protect Dont share personal information freely.

82 es roy ocumen s w

personal information..

Dont carry ID you dont need (such as SIN).

Lock our household mailbox if ossible.


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Protect Limit the number of credit cards you hold.

cont. 83 ec your cre repor once a year.

Make sure websites are secure before.

Delete emails that ask for personal information.

Kee com uter firewalls and s wareup-to-date.


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Protect Keep your computer passwords safe.

cont. 84 on g ve e emar e ers

personal information.

identity information.

Be ske tical

if an offer sounds too ood tobe true, it is!

Save paper bank records for at least a year.


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What to do Contact your financial institution immediately.

85 o y ana a s cre ureaus

(Equifax Canada at www.equifax.ca and. . .

Notify your local police as soon as you are

aware of it.


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K t k f i d


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What havewe learned?

Keep track of your income and your expensesin a budget.

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reducing yourlatte factor.

Pay yourself first with automatic savings.

Start an emergency fund.

Shop around for the best banking accounts.

ay a e s on me an n u , poss e. Set clear savings goals.

Find a licensed financial advisor for lon -term

investment guidance. Use RRSPs and TFSAs to let your savings

grow tax-free.

Secure your identity and avoid identity theft.


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3 Financial Basics Presentation Deck