Featured Faculty: Pat Foran

We are pleased to have Pat Foran, host CTV's Consumer Alert and author of The Smart, Savvy Young Consumer, as part of the Knowledge Bureau team. Learn more about Pat and read an excerpt from the Canadian bestseller The Smart, Savvy Young Consumer.

"I'll pay this book the ultimate compliment: I'm buying copies for my two university-aged children. Excellent advice throughout!" – David Chilton, author of The Wealthy Barber Returns

Excerpt from The Smart, Savvy Young Consumer,
by Pat Foran

Chapter 3: Financial Literacy—Why it’s More Important than Ever

As the Consumer Reporter at CTV, I receive calls, emails and letters from people every day who have made terrible financial mistakes. They sign contracts without knowing what they are agreeing to, they put down payments on cars they can’t afford, and dig themselves into debt they don’t know how to get out of. They buy things they don’t need, they have bills they can’t pay and they often are looking to blame anyone but themselves. However, the truth is that many of the financial mistakes we make are our own fault. That is why financial literacy is more important than ever. Debt levels in Canada are at record levels and while many of us are great at spending money, we are not as great at saving it. It was in 2009 that the federal government commissioned a Federal Task Force to research the state of the Canadian consumer’s financial affairs. The Task Force met over two years and in 2010, public hearings for 12 weeks were held across the country in every province and territory. Our job was to research ways to help Canadians become better savers and spenders. I was asked to participate as a task force member because of my role as the Consumer Reporter at CTV News. It was a volunteer position for which I was paid one dollar (and I can’t spend it because it is encased in glass).

As we crossed the country and met with Canadians, many of the same issues came up—overspending, growing debt loads and lack of basic financial knowledge. Many people were making bad decisions and it didn’t seem to matter if they were in British Columbia or Newfoundland. We studied what they were doing in other countries to advance financial literacy and we met with financial groups, student councils, credit counselling officials, charitable agencies, and government officials to see what could be done to make Canadians more financially literate. For the national public hearings I travelled to Yellowknife, Edmonton, Calgary, Saskatoon, Ottawa and Toronto. We did hear that there are Canadians carefully watching the amount of interest they pay, saving for their retirement and paying off their credit card bills every month, but there are others who could be doing so much more to help their financial situation.

So what does this mean for a young person? Well if you can learn proper money management techniques, how to live within your means, avoid overspending and save for the future, you will be so much further ahead than many Canadians are now. Don’t think that making a huge salary is the answer either, because we heard that even professionals with six-figure incomes are running into problems despite earning good money. Whether it’s a single parent trying to make ends meet, a student facing huge school loans or a person ready to go into retirement, the more money you can keep for yourself, the better off you will be. We, as a Task Force, made 30 recommendations that we feel will help Canadians become more financially literate. Here are the top five recommendations:

1. Appoint a national financial literacy leader
2. Establish a financial literacy advisory council
3. Create a website for independent financial information
4. Integrate financial literacy into all school systems
5. Require clear communication in financial documents

For the complete list of 30 recommendations, other information on the task force and our full report, you can check www.financialliteracyincanada.com.

The Task Force defined financial literacy as having the knowledge, skills and confidence to make responsible financial decisions. Not a day goes by that Canadians do not have to make some kind of financial decision. Some decisions are routine, such as what groceries to buy or whether to pay by cash or by credit card. However, others require more thought, such as deciding where to invest money, where to go to college or university or where and how to take out a first mortgage. As a young person, if you can create good habits for yourself and put some of the wealth building tools in this book to good use, you will be so much further ahead than many Canadians are today. The secret is to start early and as a young person you have time on your side. Like most things in life, learning the hard way is one way to do it. Some people figure out how to manage their money in their 20s, some their 30s, others their 40s or 50s, but the truth is, some don’t get it figured out until it’s too late. If you can become a Smart, Savvy Young Consumer, you will be on the right track to financial success. You will be happier, less stressed and feel better about your finances and, in turn, feel better about your life in general.

Click here for more information about Pat Foran.