Brittany Hartman has a problem. The 22-year-old is thousands of dollars in debt and has little hope of meeting her retirement goals.
Fortunately, Bellerose Composite students Luc Salunier, Brad Rutherford, Damien Pon and David Neumann are here to assist this fictional woman. “She made a lot of poor decisions,” Neumann said, and they’re using their fiscal skills to help her climb out of debt.
These budding bankers will put their skills to the test this Saturday as they take part in the Northern Alberta Institute of Technology’s (NAIT) second annual High School Case Competition. The students are some of the 30 people taking part in the event and the only ones from St. Albert.
The members of Team Bellerose said they got involved in the competition through student Nicholas Sroka, who had to leave the team for personal reasons.
Most of the team is interested in business, Rutherford said, and saw this as a fun way to try it out. “It’s kind of like problem solving.” They’ve spent the last few weeks crunching numbers on practice cases such as Brittany’s in preparation for this weekend’s event.
The event was organized in part by Tannya McBride, a financial instructor at NAIT, as part of Financial Literacy Month. Three schools are participating.
Students will have three hours Saturday to come up with a financial plan for a hypothetical person with a mountain of debt, she explained. First prize is $1,000.
McBride said she started the contest in order to encourage young Canadians to learn about money management. “Our (consumer) debt ratios in Canada are at the highest they’ve ever been,” she noted, with most Canadians owing about $1.63 for every dollar they earn — even more than what most Americans owed before the 2008 recession.
That has federal and provincial governments concerned, McBride continued — one lost job or a recession, and these Canadians will be in financial ruin.
Some of this debt is driven by low interest rates (which encourage borrowing), McBride said, but much of it is due to fiscal illiteracy.
A recent survey by Capital One Canada suggested that 18 per cent of Canadians are relying on winning the lottery in order to afford retirement, for example, while two thirds spent beyond their monthly budgets. Another study by the Bank of Montreal found that 27 per cent of Canadians aged 18 to 34 had not started saving for retirement.
The government is doing a good job of promoting financial literacy to adults, McBride said, but not for students. “Our kids need to learn how to manage their money when they’re young,” she said, as it will be too late when they’re old and debt-ridden.
Students are taught little about budgeting in school, Rutherford said, and he’s not sure why. “Maybe it’s expected that it’s something you learn from your parents,” he guessed, even though this wasn’t often the case.
And some parents don’t know how to budget, noted Saulnier. “People think its okay to only pay the minimal payment on their credit card,” he said. “If you keep paying only the minimum … you’re never going to get out of debt.”
Staying out of debt is a simple matter of budgeting, McBride said. “At least once in a while, you should sit down and see where you are spending your money.” The envelope method, where people use envelopes to set aside fixed amounts of money for various items each month, is one popular method.
The competition is on Nov. 17 at NAIT’s main campus. For details, call Max Varela at 780-604-4360.
