1. Financial Literacy 101 for Teens
Presented by
Michael A. Goldberg, BComm, BEd
October/November 2010
Money 101
M.A. Goldberg, October/November 2010

2. Opening a Bank Account & Debts & Credit Cards Tuesday October 26, 2010
Money 101
M.A. Goldberg, October/November 2010

3. M.A. Goldberg, October/November 2010
Opening a Bank Account
Types
Savings
Chequing
Which one’s for Me?
Money 101
M.A. Goldberg, October/November 2010

4. Opening a Bank Account Types
Savings vs Chequing
Money 101
M.A. Goldberg, October/November 2010

5. Opening a Bank Account Savings Account
What is it?
A safe place to keep your money in a bank, trust company, credit union or caisse populaire
Banks pay interest
Percentage based on the balance of your account.
What does Percent mean?
Money 101
M.A. Goldberg, October/November 2010

6. M.A. Goldberg, October/November 2010
What does Percent mean? %
Per
Cent
out of/
divided by
100
Money 101
M.A. Goldberg, October/November 2010

7. Opening a Bank Account Savings Account
Advantages of savings accounts:
Good for emergencies
Good if you’re not comfortable with investing
Convenient – can use a debit card for deposits (putting-in) or withdrawals (taking-out)
No risk of losing your money
Deposits in Canada are protected by the CIDC
(Canadian Deposit Insurance Corporation)
Insures up to $100,000/institution
Image Source: ( October 23, 2010)
Money 101
M.A. Goldberg, October/November 2010

8. Opening a Bank Account Chequing Account
What is it?
Chequing accounts are a safe place to keep money that you plan to use over the next month or so for bill payments and buying things
A chequing account is for money you plan to use soon
Money 101
M.A. Goldberg, October/November 2010

9. Opening a Bank Account Chequing Account
Similar to Savings accounts?
Chequing accounts are a safe, covered by the CDIC
Differences?
Used for different reasons (bill payments, etc.)
Pays less interest
Can cost more in fees
Cheques
Transaction charges
Service charges
Minimum balance charges
NSF (non-sufficient funds) charges
Money 101
M.A. Goldberg, October/November 2010

10. Opening a Bank Account Chequing Account
Risks?
Low return (you’ll earn little interest)
High costs (be aware of fees charged)
Bounced cheques (can be costly)
Money 101
M.A. Goldberg, October/November 2010

11. M.A. Goldberg, October/November 2010
Which One’s for Me?
Depends on the purpose of having an account
Save money?
Pay bills?
Internet banking/access?
Debit card needed?
Whatever you use the bank for, make sure you minimize any charges!!!
Money 101
M.A. Goldberg, October/November 2010

12. Who can get an account/ what’s needed?
Anyone can have an account
If you’re under 18, you need a parent/guardian to help you sign-up
When you get your account, you will need to provide identification
Money 101
M.A. Goldberg, October/November 2010

13. High Interest Savings Accounts
This should be considered
Lately, some high interest savings accounts are paying 2% interest/year
Examples – President’s Choice Financial, ING Direct, ICICI
Money 101
M.A. Goldberg, October/November 2010

14. M.A. Goldberg, October/November 2010
Debts & Credit Cards
Why do People Borrow Money?
Why you should Avoid Borrowing Money
Credit Ratings
Types of Debt
Credit Cards
Money 101
M.A. Goldberg, October/November 2010

15. M.A. Goldberg, October/November 2010
Debts & Credit Cards
Why do People Borrow Money?
Large purchases they couldn’t otherwise afford, like…
House
Car
Education (after high school)
Start a business
Emergency
Pay off another debt, but at a lower interest rate
Money 101
M.A. Goldberg, October/November 2010

16. M.A. Goldberg, October/November 2010
Debts & Credit Cards
Why you should avoid borrowing money (using credit wisely)
It can become a habit
You have to pay interest (takes money away from other things you need)
If misused, it could damage your credit rating
Money 101
M.A. Goldberg, October/November 2010

17. M.A. Goldberg, October/November 2010
Debts & Credit Cards
Credit Rating
Your ability to repay you borrow is scored
Your credit rating will have an effect on how much or at what rate you may borrow in the future
If your credit rating’s bad, you may not be able to borrow at all
Once you start borrowing, you should check your credit rating every year (sometimes mistakes are made)
Money 101
M.A. Goldberg, October/November 2010

18. M.A. Goldberg, October/November 2010
Debts & Credit Cards
Types of Debt
Credit Cards
Overdraft Protection (let’s your chequing account go negative without bouncing checks – a big money maker for banks!)
Loan
Mortgage (used to finance house)
Lease (like a long term rental)
Money 101
M.A. Goldberg, October/November 2010

19. M.A. Goldberg, October/November 2010
Debts & Credit Cards
Credit Cards
Let’s you pay for things without money (for now!)
Most are issued by banks (Visa/Mastercard)
Charge Cards
Issued by particular stores
Avoid these, as their use is limited to the one store
Charge higher interest rates than regular credit cards
Money 101
M.A. Goldberg, October/November 2010

20. M.A. Goldberg, October/November 2010
Debts & Credit Cards
Credit Card Tips
Pay credit cards off every month – once you carry a balance, you get charged interest (and it’s expensive debt)
Ask the bank for a better/lower interest rate
Avoid cards with annual fees
Look for rewards associated with the card (travel point, groceries, cash bonuses, etc.)
Shop around – lots of banks will eventually offer you a credit card – find the lowest interest rate
Only own ONE credit card
Money 101
M.A. Goldberg, October/November 2010

21. M.A. Goldberg, October/November 2010
Debts & Credit Cards
APR
Annual Percentage Rate
The interest rate you’ll pay, which is quoted on an annual basis
Must be quoted/stated when you sign-up for credit
Always try to figure out “What will this cost me per year?”
18%???
Money 101
M.A. Goldberg, October/November 2010

22. M.A. Goldberg, October/November 2010
Resources
cdic.ca (Canada Deposit Insurance Corporation)
getsmarteraboutmoney.ca (Investor Education Fund)
(Additional information on Credit Reports)
Chilton, David. The Wealthy Barber. Toronto: Stoddart, 1989.
Money 101
M.A. Goldberg, October/November 2010