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your-money-their-money-assessment by qingyunliuliu


									F: Assessing Your                                   Name: ________________________
   Financial Intelligence - Part 1

Answer each question “Yes” or “No.” Some of these questions won't apply to all students. If a
question does not apply to you, omit the question. At the end, calculate the percentage of questions
answered “Yes” and “No” and omit any answers marked NA from your calculations.

             Question                    Y/N/NA                    Question                   Y/N/NA
Do you have a budget?                             If you have a budget, do you stick to it?

Do you budget for needs and                       Do you budget for unexpected
wants?                                            expenses?
Do you project expenses for needs                 Have you saved the equivalent of one
and wants?                                        month’s expenses for emergencies
Do you have a saving strategy for                 Have you established a tax-free savings
emergencies?                                      account?
Do you have any savings?                          Do you have any investments?
Have you begun saving for                         Have you started to prepare for your next
university or college?                            job search?
Do you have an inventory of all your              Do you have insurance on any items of
valuable possessions?                             value?

Do you track your expenses?                       Do you have charge cards?

Do you keep track of payment due                  Do you ensure that all payments are
dates?                                            received before their due dates?
                                                  Do you understand how interest is
Do you generally stay within your
                                                  charged on your credit and charge
Do you budget to minimize your                    Do you plan ahead for possible interest
interest payments each month?                     rate increases?

Determining Your Rating:

Number of Questions Answered:          __________
Questions answered “Yes”:              __________ Percentage: ________%
Questions Answered “No”:               __________ Percentage: ________%

The higher the percentage of questions you answered “Yes” the more financially intelligent you are.

Improving Your Score

Look at questions you answered “No”. Decide if any of these areas require some action on your part.

                                             Page 19                           Investor Education
F: Assessing Your                                   Name: ________________________
   Financial Intelligence - Part 2

1.   Some people are unable to save very much money. What can they do to be able to handle
     emergencies or future education expenses?

2.   One of the important parts of financial intelligence is always knowing how your income and
     savings compare with your debt. Let's assume that you have an annual after-tax income of
     a.     What would be a manageable debt limit for you?
     b.     How much money should you have set aside as savings for an emergency?

3.   Many financial experts say it is never too early to start saving, whether eventually to buy a
     car or a home, or even to put money aside for retirement.
     a.      Why is it worthwhile to start saving early for something ten or more years "down the
     b.      Some employers offer a payroll savings plan. That means the money is taken out of
             your pay cheque before you get paid. Why is that an advantage for some people?

4.   Compound interest is a wonderful thing for savers but not so good for borrowers. Discuss
     that in your groups, and write a brief explanation why that is so.

5.   There is an interesting formula for doubling time. It let's you
                                                                          The doubling time formula:
     calculate how long it will take for an investment to double in
     value at different interest rates.

     a.      How long will it take to double an investment if the
             interest rate is 5%?
     b.      At what interest rate will the investment double in ten years?
     c.      Why does this formula encourage someone to start saving for retirement very early in
             their working life?

6.   Just like individuals, companies and governments can be good or bad financial managers.
     Research in the Toronto Star and on financial or investment advice websites and collect
     stories about people or companies that practice good financial management

          a. What are the common characteristics of financially well-managed companies?
          b. While most governments have debts, some do not. Toronto's municipal debt is about
             $2.2 billion. At 5% interest p.a., how much does the city have to pay in interest alone?
          c. Mississauga is considered a prime example of a good financial manager. Since Hazel
             McCallion became mayor, the city has been debt free. Research how McCallion
             achieved that.
          d. Discuss in your groups: How would Toronto's budget change if it was debt-free?

7.   Discuss in class the balance between spending and meeting "Needs and Wants" of your
     community, versus going into debt to meet those "Needs and Wants". Write an essay
     explaining how you would balance spending and debt if you were in charge of the city

                                             Page 20                          Investor Education
F: Assessing Your                                  Name: ________________________
   Financial Intelligence - Part 3

1.      Find in the Toronto Star stories about companies that have survived the current recession
        and those that have found themselves in difficulty.

        a.      In groups, discuss the differences between them.
        b.      Write a newspaper story about how a company can survive a recession.

2.      Look for stories in the Toronto Star about the Presidents or CEOs of large corporations.

        a.      Based on your research, write a newspaper column about the personal and business
                attributes of a successful business leader.
        b.      Discuss: You are the President of a large Canadian manufacturer. Your profits are
                declining and your competition is now able to offer similar products at a lower price.
                Decide what options are available to you and write a report to your Board of Directors
                on your plan. What are the implications of implementing it?

Role Play:

You are the Chief Financial Officer (CFO) of a large corporation. Your profits have been declining for
the last two years. Your company's stock price has fallen substantially and your shareholders are
pushing for dramatic changes. With your knowledge of the financial state of the company, you
realize that the following are possible solutions to the company’s problems:

      Your largest labour contracts are up for renegotiation next month. You could approach the
       union with an ultimatum that you will close the plant if the workers do not take a small cut in
       wages. However, you could offer to leave their benefits intact.

      You could sell the building you occupy and lease equivalent space somewhere else or lease
       back your current property from its new owners. The money raised by selling the property
       could be used to increase temporarily the company's profit.

      You could sell the plant and move the manufacturing off-shore.

      You could look for an investment company to buy the whole company and distribute the
       profits to the company's shareholders.

1.      Which decision would make the most sense to you as CFO? Defend your decision in a report
        to the shareholders.

2.      You are now a journalist.
           a. Write a newspaper story about the effects on the workers and the community of each
               of these options.
           b. Write an editorial about the decision that you, as a journalist, think would be in the
               best interest of the company and its employees.

                                               Page 21                          Investor Education
Internet Links: Links:

This website has a large variety of education programs and teaching resources. We have listed a
few of specific relevance to these activities here.

This module explores growing savings: programs/forteachers/curriculumtools/multimedia

Video on true cost of purchases using a credit card:
       debt/Pages/video-get-it-on-credit.aspx?group=Funny Money&page=1
Budget template:
Mortgage/Loan Calculator:

Other Budget Forms and Templates:

Construction Costs

This site is American, but it gives general estimates that are accurate enough for these activities.

Mortgage/Loan Amortization Calculators:

Other Sites:

Daily Bread Food Bank:

                                              Page 22                           Investor Education

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