Thursday, October 28, 2010

Meet a Money-Savvy Dad & Soulful "Inventor-preneur"

Kevin Royes at CBC after his success on Dragons' Den
Image from MSN
I first heard about Kevin Royes, and his Debbie Travis-endorsed Kelvin.23 super tool, on Dragons' Den. Inventor and president of his own Vancouver-based company, Kelvin Tools, Kevin pitched in the Den earlier this year and walked away with a hefty amount of money to expand his tool company. This week, I was fortunate to spend an hour on Skype with this busy, forty-something dad and talk to him about entrepreneurship, financial literacy and what we should teach our kids about money.

Though he has money now, that wasn't always the case for Kevin. He grew up in a rough area of Toronto in a single parent family (something I can relate to as a sole parent). Financial literacy was not part of his upbringing during his elementary school years, but his inventor's spirit was alive and well.

When I asked him what he wanted to be when he grew up, he told me about the first time he saw a motor home in his neighbourhood. "I was nine or ten years old. I couldn't believe that someone thought of making a house on wheels and actually had it built." His desire to become an "inventor-preneur," as he likes to call himself, was piqued. But without guidance his dreams and passions were largely dormant until he met George Prez.

Early in Kevin's grade eleven year at a Mississauga high school, Prez visited both his marketing and accounting classes to deliver a fifteen-minute presentation about Junior Achievement of Canada, an entrepreneurial program that provides hands-on business training for students. Hearing Prez's spiel, not once but twice, hooked him.

Kevin eagerly participated in the Junior Achievement Program and by age 20 he had invented a locking device for snowboards that two years later was picked up by Burton, a major snowboard manufacturer. This allowed him to quit his mail room job at Kimberly Clark and go into business. I'm pretty sure that he has never looked back.

"I never really was a good employee," he told me with a smile. And when I asked him what the main difference is between being an employee and an entrepreneur, he said, "As an entrepreneur you get to follow your dream. As an employee you have to follow a dream that belongs to someone else." What could I say to that? I nodded my head and we moved on to talk about his teen boys, ages 13 and 15, and how he is getting them ready to deal with money.

At first, Kevin was pretty sure that he didn't have anything useful to share with me on the topic of kids and money. But as we got talking, he spilled this little gem of parenting wisdom. As his boys are getting older, he is consciously pulling back on the amount of stuff he buys for them. That way the kids will have to figure out how to earn money themselves and then manage it so that they can afford buy the things that Dad won't buy them any more. And that wasn't the only little gem that came out of our conversation.

When I asked him the same question that I had asked the Dragons' Den stars--If you had just three things that you could teach a Canadian five-year old about money what would they be?--Kevin said:
  1. Follow your soul and money will follow.
  2. Make as much money as you can "before you die" (a nod to Kevin O'Leary's response) because it allows you to express yourself in the world.
  3. Enjoy it.
I wrapped up the interview by asking Kevin what he thinks about the absence of financial education in Canada's elementary schools. He stated bluntly, "It's a shame because everything we do puts us in contact with money." He added, "The sooner we learn to use money and integrate it into our way of thinking the more natural it becomes."

The idea of money feeling "natural" resonates with me. My approach to financial literacy in Money&Me, my You Tube show, is to teach young children personal finance and business vocabulary one word at a time. It's about fluency and confidence for me. It's about naturalness for Kevin. But we're really talking about the same thing: literacy or "the ability to understand and use information in daily activities at home and work and in the community" (UNESCO). To echo what Kevin said, money is part of just about everything we do and the younger we are when we learn the language of money the easier it is to become fluent in it.

Consider these other bits of wisdom that Kevin shared during our talk: "the more I tried to squeeze money, the more it would squeeze through my fingers;" and "there is no soul or satisfaction in the pursuit of money." This is powerful stuff coming from a powerful guy who, ironically, in the first minute of our conversation told me that he is not a role model for kids when it comes to money. Not true.

Photo by Michael Kalus
It may be that Kevin does not see himself as a financial role model because he is so entirely engrossed in the process of creation--creating useful products, creating a business, creating jobs--that he does not focus on wealth itself. Instead, Kevin seems to focus on joyfully expressing himself through the process of creating things that create wealth. As he told me, "There is soul in what I do." That was evident during the interview, from hello to good-bye.

It's not surprising that just as we were to end our Skype call, Kevin shared yet another creative and soulful idea with me: the idea that I am a "soul" parent, and not just a "sole" parent. Wow! Not a role model? Not money-savvy? I don't think so.

Copyright 2010. Laura Thomas. All rights reserved.
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Tuesday, October 26, 2010

Asset & Liability: Take these Words to the Toy Store

Last night, after the "tucking in," I put my feet up on the sofa and read Robert Kiyosaki's 2004 financial  literacy book Rich Dad, Poor Dad for Teens. It's an easy read, an hour or two tops, and worth going through with your kids even though it was written for an American audience. And be prepared. The book will inspire some lively debate with your kids about the stuff in your lives: what is an asset and what is not.

 Assets & Liabilities
As Kiyosaki points out in his book, the difference between an asset and a liability is this: an asset puts money in your pocket, while a liability takes money out of it. It's all about balance, or should I say imbalance. Ideally, we want to have way more assets than liabilities and getting there starts with understanding the difference between the two words.

What is an asset?
An asset puts money in your pocket. It pays you to own it. For example, your investment portfolio should be an asset that pays you income in the form of interest, capital gains or dividends (and if it's not an asset, get help!). A rental property is an asset when the renters pay their rent. And, your home can be an asset too, assuming that you don't lose money when you sell it. Collector's items and artwork can be can assets if their value goes up. Assets pay you. They generate income.

I have pointed out to my six-year old that "silly bands" (the latest trading craze for kids) are not, by definition an asset unless she saves them until she's my age and they become collector's items. I'm not optimistic that silly bands will be worth anything in 2046, but she, who owns 78 of these cheap rubber bands that sell at the insane price of 24 for $4.99, disagrees. "They're NOT a liability, MOM!" she told me while headfirst in a bin of silly bands at Toys R Us madly searching for a Western-themed package to go with her Halloween cowgirl costume.

What is a liability?
A liability is something that takes money out of  your pocket. The truth is, almost all the stuff that we own is a liability.  For example, my computer, my new TV, my car, my clothes, my books, my kitchen appliances, my daughter's Littlest Pet Shop collection and those silly bands, of course, none of these things can be sold today for a profit (not even on Craig's List). Debt is a liability too, although like your home it can be an asset if that money is being saved and invested to build wealth such as in an RRSP. But, in general, any money you own is a liability. And don't forget taxes. Talk about a personal liability; the 12% HST is killing me.

Getting back to Kiyosaki's Rich Dad Poor Dad, the bottom line is imbalance. You want to have more assets than liabilities in your financial life. I also appreciate his observation that the rich and poor speak differently about money. Kiyosaki says that the "rich dad" mentor in his early years taught him to spend his money on assets, while his real "poor dad" seemed to unconsciously focus on acquiring liabilities and then complain about them. It was "rich dad" who spoke about and taught him the difference between an asset and a liability. That is powerful vocabulary to pass on to our kids.

So while I'm not happy about my daughter squandering her pocket money on silly bands, I am happy that she is beginning to understand the difference between an asset and a liability. In the end, all I want her to learn from these early spending experiences is the vocabulary, this powerful, life-shaping vocabulary.

Copyright 2010. Laura Thomas. All Rights Reserved.
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Thursday, October 21, 2010

Valuation, Dragons' Den & The Wealthy Barber Returns

Though I write a blog about money and do a children's You Tube show about money, and though I'm self-employed and entrepreneurial, what I really am is a writer, an artsy-fartsy writer. But as a writer who, these days, is equally passionate about money and manuscripts, I seem to be making some strange connections between the economic arts and the literary ones.

Like this one.

Is creating a company similar to creating a piece of writing? I think it might be and I write this with Dave Chilton, author of The Wealthy Barber, in mind. But more about Dave in a moment.

I taught four writing classes this week. And, whether I was working with adults or kids, teaching live or in my virtual classroom, I wanted my students to be super clear about one thing: the writing process and at what stage they should be asking for feedback.

When should a writer go begging for someone to read and evaluate his manuscript? The answer is: absolutely not until he has draft number one finished. As I said to my students over and over this week, "How can you possibly evaluate any part of a story, poem or article until you get to the end? You need to make your lump of clay before you can decide how to sculpt it!"

Could there be a connection between writing a manuscript and starting a company? How can you evaluate or assign value to a business that is not finished, that is not yet a lump of clay? It was last night's episode of Dragons' Den that helped me make this connection between evaluating a piece of writing and valuing a company.

Two pitchers from a company called Flu Goo (hand sanitizers for kids) came on the show asking for $113,000 in exchange for 40% of their company, which was strange because they had not sold one bottle of their product. Not one. The Dragons pointed out that there is huge difference between saying you need $113,000 to finish building your company and saying that your company is worth $282,500 ($113,000 x 2.5) even though it's not "finished" because it has no sales.

Without sales, a company is incomplete and of no value to anyone; the same is true of a manuscript that has no ending. You have to have all the parts of something before you can assign value to it. Which brings me back to Dave Chilton who is at this moment sequestered in his office and madly typing away at the long-awaited sequel to The Wealthy Barber, The Wealthy Barber Returns. I have some advice but it may be too late for him to take it: don't release any excerpts or early chapters until the first draft of your manuscript is done; make your lump of clay before you send it out into the world for evaluation.

But my advice may be too late. On the homepage of his website, Dave writes, "I'm hoping a number of published excerpts and the book's Introduction, below, will whet your appetite." I can only hope that unlike the Flu Goo people and their still-to-be-done sales, that Dave already has all of his chapters written, including the last one, which is always the hardest one to write, especially because you know that when it's done you are going to have to go back to the beginning and truly evaluate your creation...and get out the sharp tools. Sales are the same.

It's easier to do just about everything than get out there and make cold calls. But without sales, as the Flu Goo pitchers learned in the Den, you don't have a lump of clay that can be valued.  A start-up company with no sales is like a manuscript with no ending, assigning value is impossible. There is still a lot of hard work to be done.

By the way, the Flu Goo people don't even have a website. I know that I'm just an artsy-fartsy writer, but it seems like the stuff that shakes loose and the focusing that happens during the process of creating a website is an essential part of building a new company, right up there with sales and making your business "manuscript" complete and ready for e-valuation.

Copyright 2010. Laura Thomas. All Rights Reserved.
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Wednesday, October 13, 2010

Savings Accounts for Kids: A Ranking of the Big 5 Banks

Before I suggest where you might open an account for your kids, take a look at what the Big 5 banks offer:

#1 CIBC Advantage for Youth
0.50% interest
Almost no transaction fees

#2 TD Bank Youth Account
0.05% interest / 0.25% on balances $5,000+
Almost no transaction fees 

#3 Bank of Nova Scotia Getting There Savings Program for Youth
0.05% interest  / 0.10% on balances $500+
Some transaction fees

#4 RBC Leo's Young Savers Account
0.01% interest rate
Some transaction fees 

#5 Bank of Montreal - does not have an account for kids

Interest rates that don't crack a full percent and no bonus for signing up? I'm surprised at how little interest (no pun intended) the Big 5 banks have in courting the next generation of consumers. So are there any banks in Canada that do want to have our kids as future borrowers and investors? Yes. There's one, that I know of, and that's INGDirect.

2.0% interest
$25 bonus when you sign up with a $100 balance
No transaction fees

That 2% interest rate is not a typo, nor is the bonus. "How can that be?" you might ask.

I had the opportunity of interviewing Meena Sandhu, the Regional Retail Manager at the downtown Vancouver ING Cafe, about their stand-out children's savings account. Essentially, she informed me by phone, this account is driven by two areas of the company: marketing, of course, but also their philanthropy mandate.

This savings program for kids helps ING meet its mission statement of improving financial literacy through education and tools. "ING," said Sandhu, "is a very hands on bank." She went on to add that it's important for Canada's economic future that we "empower through knowledge." The ING children's account,  hand-in-hand with their online financial literacy website for young children called Planet Orange, helps the bank meet their philanthropic goals.

Philanthropy aside, I love the bottom line in this story. My daughter will earn 2% interest plus be rewarded with that $25 bonus for opening her first bank account. Correction, she has earned and has already been rewarded. Thank you ING, see you later Big 5.

Copyright 2010. Laura Thomas. All Rights Reserved.
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Sunday, October 10, 2010

Money-Talk: How Fluent Are You?

I woke up this morning with a thought, a curious thought, about the situation of some of the pitchers on the popular CBC reality show Dragons' Den. My thought was: Is it fair that financially illiterate pitchers end up giving away chunks of their businesses (and chunks of future profits) to Dragons who are fluent in the language of business and finance?

I love the show, but I don't think it's ethical (and I wonder that it is even legal in Canada) to enter into a contract with someone who does not fully understand the language the agreement is written in. Like I said, a curious thought to wake up with on the Sunday morning of Thanksgiving weekend. However, it has prompted me to investigate further and I will blog the fruits of that research in the coming weeks.

As for today, I posted a survey on my blog (top right corner), which I hope that you will participate in. And I decided to throw out some of the vocabulary that makes up "money-talk" and see what you can do with it. Take a look at this list and see how many of these ten words you completely understand:

annual percentage rate
compound interest
ETF or exchange traded fund
gross income

So how did you do? Are you fluent in money-talk or is it Greek to you? Either way, here are a couple of my favourite online financial dictionaries: The Money Belt by the Financial Consumer Agency of Canada and Investopedia. If you find some of other good ones, please post a link in the comment box below.

If money-talk is truly foreign and uncomfortable, remember that no matter what your financial fluency is today, it can be better tomorrow. Learning just one word a day could translate into real money gains in the future.

Copyright 2010. Laura Thomas. All Rights Reserved.
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Saturday, October 9, 2010

Waiting for the Next Crash: Why "Meltdown" Episode 4 Freaked Me Out


Meltdown: A Four-Part Investigation of the Global Financial Crash
Episode 4: After the Fall
Written & Directed by Terence McKenna

CBC Documentary
My rating $$$$.5

Images of empty, never-meant-to-be-occupied, skyscrapers in Dubai in the pre-meltdown boom and China's eerily similar urban skyline of today are vividly stored in my memory. McKenna has created in me a visual reminder that all is not well with the financial world and that I really need to step up my game if I want to ride out the next 50+ years of earning, spending, growing and protecting my money with any kind of grace.

What follows are just a few of the documentary's comments and conclusions that have renewed my commitment to not only being financially literate but 100-percent fluent in money-speak and to keep up with its ever-evolving dialects.

Here are some of the key words phrases that were used describe the behaviour of the bankers, traders, real estate moguls, executives, and even nations (like Dubai) who are seen as responsible for the meltdown: fraud, corruption, false rumours, secrets, drugs, sexism, immoral, criminal, insider trading, state-run pyramid scheme, flipping real estate "like they are playing musical chairs."

According to the documentary, the money guys "found suckers to invest" and "convinced people" to invest more money in bad deals and deliberately sold investment products "to unsophisticated investors...orphans and widows I met at the airport."

This episode is all about accountability. Governments have been trying to make sense of the real estate bubble and financial crisis. They desperately want to know what caused it so they can put public policies in place that will help prevent or at least minimize the effect of future meltdowns...which, it seems, are just around the corner.

With the help of that empty-skyscraper imagery, you will come away with a deeper understanding of our global situation: while western countries are envisioning a kinder, gentler, less risky capitalism, China and India are embracing the current more brutal model. Because the global economy has never been so complex and interconnected we are going to have another crisis.

But better to face it, freak out and then get on with building your financial literacy so that you can ride the next meltdown with more grace. Make episode 4, if not all four parts, part of that exercise.

Copyright 2010. Laura Thomas. All Rights Reserved.
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Tuesday, October 5, 2010

What the Dragons' Den Stars Think We Should Teach Little Kids About Money

Kevin O'Leary
It began with a simple comment that Kevin O'Leary made on one of my favourite financial news shows, The Lang & O'Leary Exchange. In a heated discussion about government pensions and taking personal responsibility for our "old and crusty" years, Kevin said, "Fiscal responsibility-we should be teaching this to kids that are five years old."

I could not believe that a Dragons' Den star and all-round Canadian icon of entrepreneurship was talking my language: financial literacy for little kids.

I emailed the show with this question for Kevin: If you had just three things that you could teach a Canadian five-year-old kid about money, what would they be? The producer, Matt Fairley, asked me to go to CBC Vancouver to tape my question. I did.

Then I had to wait for my answer because it was G20-time in Toronto. But on July 6th the answer came and it has influenced my work as storyteller and entrepreneur, as well as lit a fire in my belly to become the best financial literacy educator in the country.

Here are the three things that Kevin thinks we should teach Canadian kids about money and he said it on national television:
  1. Nothing matters more than money.
  2. Make as much money as you can before you die.
  3. See number 1.
My six-year-old daughter and I were watching Lang & O'Leary when it aired and, boy, did we have a good laugh...until we started to think about it.

My daughter and I are big Dragons' Den fans. What I love about the show is that it allows Canadians who are not business people or entrepreneurs to boost their understanding of how business works, plus learn some cool new vocabulary along the way. Words like "valuation" and "equity" were familiar but not comfortable for me before I started watching the show, which is why I started encouraging my daughter to watch with me. So what does this have to do with my question and Kevin's answer?

Inspired by Kevin's radical opinion, we set out to find out what the rest of the Dragons would say if asked the same question. We got replies from three and a half out of five (Brett Wilson gave me a half-answer), not bad for a storyteller and her six-year-old side kick, neither of whom have any connections whatsoever in Dragon-type circles.

Here's what Kevin's co-stars said...

Arlene Dickinson
I contacted Arlene by email through her Calgary-based marketing company Venture Communications. She responded within a day with a very polite and encouraging email. These are the three things that Arlene thinks we should teach little kids about money as she wrote them in her email to me:
  1. Money does not buy you happiness. It's an old saying but it's true.
  2. Money is good for freedom. It will give you the freedom to do what you want, when you want and help who you want.
  3. Money is important, but not as important as doing what you love. I believe that if you do what you love you will be satisfied with the money and lifestyle that it provides you with.
Robert Herjavec
I tried contacting Robert by email through The Herjavec Group, his tech company, but I didn't hear anything back. I took a chance and  tweeted my question to him and I happened catch him while he was online and he gave me this reply in Twitter-lingo almost immediately:
  1. $ is not the key to happiness
  2. u need $ to take care of those u luv
  3. the more u luv what u do, the more $ u make
Brett Wilson
I also caught Brett Wilson on Twitter and, when I asked him what three things we should teach kids about money, he referred me to a series of six Mastermind YouTube videos to hunt for the answers. I found the videos and an hour later came up with this:
  1. Wealth is not the true measure of success (from video 1 of 6).
  2. People matter more than money (from video 3 of 6). Brett's priorities are health, family, friends, life-long learning, and community.
  3. Follow your passion and talk to kids about the possibility of earning a living as an entrepreneur (from video 4 of 6).
I emailed Jim Treliving through the Boston Pizza Foundation, but to date have not had a reply.

I do hope to hear back from both Brett and Jim because I do believe that each of the Dragons are at this point in history (and more than any finance minister) the public face of money and all it means in Canada. They are playing an important role in getting teachers, parents and even little Canadians like my daughter excited and curious about learning about money. And while Kevin says that nothing matters more than money, these Dragons' views on money and financial literacy matter a great deal, maybe even more than money.

With its sixth season well underway I say hang in there with those long, dark twelve-hour taping days in the Den and keep teaching us about money.

Copyright 2010. Laura Thomas. All Rights Reserved.
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