by Danielle Dufour
MBC Freelance Correspondent – Regina
With so many people coming into a level of financial wealth from agricultural settlements, there is great temptation to spend, especially during the holiday season.
Cate Morris has been teaching about financial literacy for over 30 years and has some suggestions on ways to manage money wisely.
“Number one, people need to know their limits,” said Morris. “Not only know your financial institution limits, because there are limits set daily, know your spending limits.”
As the owner of Scout Financial Solutions, she focusses on healthy money management and shares this knowledge with the Indigenous community.
“We’re all in the generous holiday spirit,” said Morris. “Don’t overextend yourselves.”
Morris suggests individuals think about the things they want to prioritize that they need to deal with.
“I always say it is debt; it arrives, so you want to make sure you put it in a rearview window for yourselves,” said Morris.
With banks offering contactless payment options with a simple tap of a credit or debit card, Morris encourages people to remove the tap feature from their cards.
“We want to make sure we reduce the risk of other people accessing your money in case you leave it in a machine and walk away,” said Morris.
Unfortunately, many people are victims of theft or fraud.
“People will certainly tap away until you realize that you’ve lost your card, and you may get it back depending on your financial institution and their policies, but maybe not immediately,” said Morris.
Bank customers can choose a personal identification number (PIN) for their credit and debit cards, which is a numerical code to authenticate a user’s identity during electronic financial transactions.
“Don’t share your PIN number with anyone,” said Morris. “Pick a very distinct PIN that you can memorize.”
For those who have received tens of thousands of dollars, Morris suggests that people consider putting money into high-interest savings accounts.
“It’s not going to make you wealthy or build massive wealth, but it will reduce access to your regular savings or checking account while you start aligning things like paying off debt or researching those big purchases,” said Morris.
With these high-interest savings accounts, people can still access their money, as it is not locked in like an investment.
“I would encourage people to make sure that it’s actually not directly tied to your debit card so that you don’t TAP away,” said Morris. “You want to be really intentional with your money as it’s coming around once, so let’s do the best we can in managing it.”
Morris suggests that this holding cell for your money acts as a pause from overspending.
“Next, if you’d like to start creating wealth and abundance for yourself, there are a number of different investment opportunities that people can pursue,” said Morris.
With so many young people coming into agricultural benefits, Morris suggests Indigenous people look at opening a tax-free savings account.
“It’s the underutilized investment tool that I think a lot of Indigenous people should really start considering and tapping into,” said Morris.
“It’s a registered investment, which means the federal government is aware that you’re investing in that program, and it’s tax-free,” said Morris.
This means that any money you put in or take out does not have a tax implication.
For those with taxable income earnings, Morris suggests they consider looking at Registered Retirement Savings Plans (RRSPs).
“This would allow them to reduce the amount of taxes they’ll be paying in this taxable year or the next taxable year, depending on when they contribute,” said Morris.
Starting to invest at a younger age has some advantages because of compounding interest.
“I believe it was Einstein who said that compound interest was the seventh wonder of the world, and he who understands it earns it, and he who doesn’t pays it,” said Morris.
Compound interest is where the interest earned on a principal amount is added to the principal. This allows future interest to be calculated on the new total, where the interest is earned on both the original principal and the accumulated interest from previous periods, leading to growth over time.
“It’s almost like a giant snowball rolling down a hill,” said Morris.
Morris also warns of the risks associated with lending money.
“Our people are really generous, really communal based and we like to ensure everyone is ok,” said Morris. “It’s your money, but never lend more than you can afford to lose.”
With so many people dealing with addictions and life challenges, families may want to find ways to protect these individuals’ finances.
“We have to be aware we have people in our community who are vulnerable and may be houseless, have addictions, mental health or physical limitations, but also our elders,” said Morris. “Know who’s accessing these people and potentially accessing their funds as well.”
Morris suggests that if there are any shopping trips or bills to be paid, consider joining the individual by driving them to run those errands.
“Join them as a physical reminder that there’s another set of eyes on things to be very cautious and respectful of their resources,” said Morris.
With vulnerable family members, Morris suggests considering having a joint account with a financially responsible person or seeing if the individual is open to putting some of their money into investments for financial growth.
“Because of their vulnerability, we want to make sure that there’s things in check to protect them,” said Morris.