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New education project makes money ‘real’ for students

What do you get when you've got 28 Grade 5 students, a $50 budget and a goal? The best Halloween party ever, according to one Toronto teacher's experience helping school children understand money management.

Over a period of about two weeks, the students went through the process of real-life party planning, from drafting a budget to checking out sales in fliers to thinking about creative ways to trim costs.

"This was probably one of the most memorable parties ever because each student realized why that item was there. Every student had a voice in determining what was at the party and they realized what they gave up to have certain things," said Carolyn Ball, a teacher at Sprucecourt Public School in Toronto's Cabbagetown area, a community that is comprised of people from diverse socio-economic backgrounds.

"It is making it real for them," she said.

Understanding the concept of money, personal finance and encouraging broader financial literacy early on through home and school activities is part of a recently-launched project by the Canadian Foundation for Economic Education.

April 17 is the first annual “Talk With Our Kids About Money Day and the initial focus will be on Grade 7 students. The project, which is funded by Bank of Montreal, will have two key components.

The school program will be rolled out in the Toronto and Montreal areas, and will expand across the country over the next three years, while the public will be able to access the online home program of resources, tools and activities.

Once a taboo topic (remember those "good debt, bad debt" articles your parents used to slip under your bedroom door), the foundation hopes the program will help Canadian families make sense of dollars and cents by ensuring the topic is prevalent in classrooms and at home.

Bank of Canada Governor Mark Carney and Jim Flaherty, Canada's finance minister, have for months been sounding the alarm bell on soaring Canadian debt levels, with the debt -to-income ratio at a record 164.6 per cent.

Getting started early will help teach kids to think critically about financial decisions later in life, said Gary Rabbior, the foundation's president. He also noted the financial crisis of 2008-09 was a major call to action.

"Get them involved, get them doing things, don't put them in a classroom and deliver a presentation where you tell them all the things they should know and hope that life will change because a lot of it will go in one ear and out the other," is how Rabbior characterized the focus on making finance stick with kids.

Needs or wants?

In October 2011, the British Columbia Securities Commission issued a report that showed roughly half of Canadian high-school graduates carry debt, with the average debt load at $8,000. The majority of the debt, 69 per cent, was a result of student loans. Other loans were from family members, outstanding credit card balances and lines of credit.

The commission's report, which was an online survey of 3,006 Canadian high-school graduates aged 17 to 20, also showed nearly 20 per cent of high school students expect to be making more than $100,000 annually within a decade. The median estimate is closer to $70,000, it said.

Separately, a BMO analysis last summer on debt among post-secondary students showed nearly 60 per cent of students expect to graduate with upwards of $20,000 in debt, and 41 per cent say they expect paying off student debt to take more than five years.

Jacques Menard, chairman of BMO Nesbitt Burns and vice-chair of the federal government’s Task Force on Financial Literacy, said he set up bank accounts for his kids early on, starting them off with $25 each. They would drop into the bank branch on routine neighbourhood walks to make small deposits and withdrawals.

"If parents and teachers can have intelligent conversations in an interactive way, that also speaks to their emotions, then they're more likely to remember the dos and don'ts, and the smart things to do with money," he said.

"They're more likely to be able at an early age to make the distinction between their needs and their wants."