Values-Based Financial Literacy

For Graduate Students – Queen’s University

Financial literacy is the ability to make appropriate decisions in managing one’s personal finances

It requires a set of skills and knowledge to help make informed financial decisions

It additionally requires an understanding of how your financial well-being also has an impact on your everyday decisions

What is Financial Literacy?

A 2011 Ipsos Reid survey indicated that 72% of Canadians are not confident in their money management skills

From the same survey, 38% of Canadians reported that they do not put away savings on a monthly basis

62% of Canadians agree that they could “use help with their financial literacy skills”, including 73% of 18-34 year olds

Financial Literacy Facts

Graduate students have already experienced the challenges of managing money during their undergraduate studies and are often skilled at getting much out of little

Graduate work sometimes carries with it research expenses which students must bear but did not anticipate (eg language acquisition)

Financial Responsibility & University

Grad students come from various backgrounds and life stages

Some graduate students have spouses and children

Others are mature students who have returned to pursue their studies

Queen’s University has international graduate students from all over the world

Each type of graduate student faces their own set of financial challenges and concerns

The Diversity of Graduate Students

Home and Family Many people with low financial literacy skills were

not exposed to financial tools as children Poverty and lack of access to info may also be major

factors Low financial literacy is “often intergenerational” Parents are also often reluctant to let their children

be financially independent

Multiple Intelligences People have a mix of different cognitive strengths

and challenges, it is important to know our own strengths and when to ask for help

Causes of Financial Illiteracy

Learning Disabilities Some people have learning or cognitive limitations

that make financial literacy a particular challenge Consumer Culture

We are surrounded by social pressures that dictate a culture of “buy, buy, buy”

We are also subject to market influences that encourage the mass availability of credit (purchasing things now and paying later)

Accordingly, debt piles up leading to massive financial burdens

Fatalism: “I’m already $40,000 in debt, why not more?”

Other Causes of Financial Illiteracy

You have $100 for the month after rent, utilities, and all your other bills have been paid

How will you allocate the remainder of your money?

Make a list of at least 3 expenditures

Let’s go around the room and discuss how we categorized our expenses

Discussion – Budgeting

Values-Based Financial Literacy is a new concept that seeks to incorporate peoples’ values, whatever they may be, into money-management strategies

-students at Queen’s name socio-economic prejudice as a significant pressure in their life at Queen’s

Name your top 3 personal values- eg family, accumulating wealth, helping others…

Values-Based Financial Literacy

Take a moment to reflect on your spending habits

What do you need to know about a product before you purchase it?

Do you consider the following?

Is it something you need or something you want?

Is the price within your budget?

How long will it last?

Discussion – What influences you?

What are your personal values?

Do your spending habits reflect your internal values?

Do they reflect the values of the culture/community you live in?

How far ahead are you thinking? Are you managing your

finances today in a way that works towards minimizing debt and financial hardships in the future?

Discussion – Reflection

Your money management skills affect your levels of stress and anxiety in dealing with finances and debt

Discussion: How do finances and debt have long-term implications on happiness and relationships?

How do your spending habits affect those around you?

Financial Literacy and Happiness

Money that literally gets partied away or goes up in

smoke on your weekly night out with friends

Don’t just throw your money

away, make the right choices to

achieve financial independence

Look at your income/savings in comparison to your expenses

Make a list of your necessary monthly expenditures

Tuition, rent, groceries, etc.

Calculate what you have left after those expenditures

If you’re falling short consistently, adjust your flexible expenses

Consider wants v. needs

Making a Budget

Expenses Costs

Tuition $7,484

Books & Supplies $2,100

Rent + Utilities + Internet (~$750/month) $9,000

Food $1,800

Cell Phone (~$50/month) $600

Entertainment (~$200/month) $2,400

Transportation (~$80 round trip to YYZ @Tricolour

Outlet) x 6$480

TOTAL $23,864

Sample Budget – Master’s Student

Financial advisors recommend splitting income/allowance into 4 categories every month:

Saving Spending Giving/Sharing Investing (tuition, etc)

Review your spending habits and create monthly budgets/limits

Ex: $10-15 on Coffee Ex: $50-75 on

Restaurants

Budgeting & Saving

Emergency Money Having access to ‘emergency’ money – for a last minute trip

home cause someone is sick or dying.  Many kids lose a grandparent while at school and they often have to make an expensive trip home.  Be ready for something like that, especially if home is a long way away.  Parents will usually step up and help, but it’s a darned awkward time to ask for money in the middle of a hospital or funeral visit!

Although this is an uncomfortable topic for some, students need to have a Will prepared, even a simple, handwritten one.  Most parents don’t know anything about the student’s finances, so a list can be a big help for them – it should include credit card info to cancel, debt info and where they bank or have investments, if any.  Also, it’s a chance to make some ‘good’ choices with assets they do have.  Handwritten is fine, but it must be entirely in the students own handwriting (no typing), witnessed by 2 others, signed and dated.

Do you have a Will?

Defining “Financial Integrity”

 

3 questions that tell us if we are in “Financial Integrity”

1) Did I receive fulfillment in proportion to life energy spent?

2) Was this in alignment with my values, goals and purpose?

3) How would this change if I didn’t have to work for a living?

Your Money or Your life by Vicki Robin, Joe Dominguez and Monique Tilford

If you spend more money than you earn, you increase your level of debt

Borrowed money (or using credit) is not considered to be part of earnings

Review your expenses to see where you can limit your spending

Ex: Look at your cell phone plan?

Are you paying for services you don’t use or need?

Have you considered downsizing?

Essential Financial Knowledge

While using credit to pay for expenses may be tempting, it comes with the dangers of piling up compound interest fees

Compound interest consists of interest calculated on the initial amount owed in addition to the accumulated interest thereafter

Example: If a $100 credit card bill accrues 10% interest every month, then in the first month you will be charged $10 (100x0.1). With compound interest, that $10 is added to your original debt, resulting in $110 of debt.

In the second month, you will be charged an additional 10%, except now on $110 (110x0.10), resulting in $11 added to your debt. Your new debt is now $121.

If that bill is unpaid12 months later, the new debt is $313.84

Essential Financial Knowledge– Compound Interest

• There is a $300.00 difference between a high end coat and a regular name brand department store coat.

• There is a $70.00 difference between Hunter’s boats and a pair of rubber boats from Canadian Tires.

• You will pay $600.00 a year for meals if you go out 2x per week during the school year.

• You will pay $300.00 per school year if you have 1 coffee per day x 5 days per week.

• That’s a total of $1,270.00 per year times 4 years = $5,080.00

• At 6% interest that would equal $1,143.00 per year in interest times 4 years = $4,572.00 total interest paid

Compound Interest on “Extras”

• The average student debt after 4 years of school is approximately

$25,000.00 • in student loans.

• If the student pays this debt off over a 15 year period the total amount of

interest paid on that loan would be $22,500.00.

In order to improve financial literacy, apps, websites, and other tools are available to better organize & track expenses

Mint.com – Mint is a free personal finance app that organizes and categorizes your spending for you. It helps track your expenses and budgets to show you where you can save money

Available for download on iPhones , Androids, and most smartphones

YNAB – “You Need a Budget” is a personal home budget software available for free download to students

Email support@youneedabudget.com with your “Proof of Enrolment” from SOLUS and receive the free download license key

Financial Management Tools

youtu.be/rK6WLHNYjwM

Choosing to make long-term investments represents a forward-thinking attitude

Discussion: Is there such a thing as an “ethical investment”?

How can you spend and invest your money in ways that align with your internal values?

Making Values-Based Investments

Ask for help, find a financial planner You may think that because you don’t have any money, there is no point in financial planning but this is not the case. Many financial planners take a long-term view of bringing people to financial success and enjoy the challenge of showing their clients the way out. Shop around for a Certified Financial Planner who “gets” you and your circumstances if you do not have the skills yourself

Financial Resources

If you have credit card debt: www.K3CCreditCounselling.org

GetSmarterAboutMoney.ca A website with scholarship

resources, student budget tools, university cost calculators, etc.

CanLearn.ca A Canadian government

website with interactive info and tools to help you save for post-secondary education

AMS Food Centre A confidential and non-judgmental food donation

service Located in McGillivray-Brown Hall near Earl & Barrie

St

Student Awards – Scholarships and Bursaries Many grants/awards are based on financial-need Apply at www.queensu.ca/studentawards

Apply to the Work-Study Program Queen’s offers part-time positions to students who

demonstrate financial-need Go to the “Financial Assistance” tab on the Student

Awards page

Resources @ Queen’s University

Society of Graduate and Professional Students (SGPS)

Offers Emergency Student Aid, Dental, and International Student Bursaries

Apply at www.sgps.ca/services/awards.html

Queen’s University International Centre Find info on housing, financial aid, health

insurance, etc. Visit www.quic.queensu.ca

Queen’s University School of Graduate Studies Find financial-need based awards and bursaries for

grad students Apply at www.queensu.ca/sgs/awards-scholarships

Financial Aid - Graduate Students

Questions or Comments?

Thank you for participating!

• Special thanks to Ali Tejpar for his work in developing this slideshow and to Betty-Ann Howard of “Making Your Financial Dreams a Reality” her support and sharing her knowledge.