Making sense of finance : financial education, secondary V. Student textbook

694 Pages·2018·32.174 MB·English

by  Nadia Choquette-Bernier, Léa Grahovac, Matthew Brown

MFINANCaIAL EkDUCAiTIONnSgECON DASRY Vense
FINANCE
of
STUDENT TEXTBOOK
NADIA CHOQUETTE-BERNIER
VINCENT FONTAINE
CYNTHIA LIZOTTE
JEAN-FRANÇOIS MOORE
XAVIER ROCHON
ACRONYMS AND ABBREVIATIONS
ACS Attestation of Collegial Studies
AFE Aide nancière aux études
AMF Autorité des marchés nanciers
AVE Attestation of Vocational Education
AVS Attestation of Vocational Specialization
CLE Local Employment Center
CNESST Commission des normes, de l’équité, de la santé et de la sécurité du travail
CRA Canada Revenue Agency
DCS Diploma of College Studies
DVS Diploma of Vocational Studies
EI Employment Insurance
FCAC Financial Consumer Agency of Canada
MEES Ministère de l’Éducation et de l’Enseignement supérieur
OPC Oce de la protection du consommateur
QPIP Québec Parental Insurance Plan
QPP Québec Pension Plan
RESP Registered Education Savings Plan
RRSP Registered Retirement Savings Plan
STC Skills Training Certicate
TAT Tribunal administratif du travail
TCST Training Certicate for a Semiskilled Trade
TFSA Tax-Free Savings Account
VRSP Voluntary Retirement Savings Plan
FINAMNCIALa EDUCkATIONinSECOgNDAR Y VSense
FINANCE
of
STUDENT TEXTBOOK
NADIA CHOQUETTE-BERNIER
VINCENT FONTAINE
CYNTHIA LIZOTTE
JEAN-FRANÇOIS MOORE
XAVIER ROCHON
Translators:
Matthew Brown
Léa Grahovac
Making Sense of Finance
Financial Education, Secondary V Acknowledgements
The Publisher would like to warmly thank the following individual for
Nadia Choquette-Bernier, Vincent Fontaine, Cynthia Lizotte, coordinating revisions:
Jean-François Moore, Xavier Rochon
Jocelyne Lévesque, Head of Practical Training, Consumer Sciences,
© 2018 TC Media Books Inc. Université Laval
The Publisher would like to thank the following individuals for their
Editors:Anne Lavigne, Yzabelle Martineau, Audrée-Isabelle Tardif
carefully executed and constructive revisions:
Coordination:Marie-Noëlle Hamar, Lucie Michaud, Julie Nadeau-Lavigne
Copy Editors:Marie-Noëlle Hamar, Lucie Michaud, Caroline Bouffard Jean Robitaille, Professor and Program Director, Consumer
Proofreader:Anne-Marie Théorêt, Caroline Bouffard Sciences, Université Laval (Chapter 1)
Graphic design and layout:Gisèle H Gale Ellen West, Professor, Consumer Sciences, Université Laval
Typesetters:Pige Communication, Josée Brunelle (Chapter 1)
Cover:Gisèle H Jocelyne Lévesque, Head of Practical Training, Consumer Sciences,
Illustrations:Laurent Pinabel Université Laval (Chapter 1)
Comic strips:Sophie Bédard (pages 4 and 5), Luc Bossé (pages 148 and
Maryse Côté-Hamel, Assistant Professor, Consumer Sciences,
149), Cathon (pages 112 and 113)
Université Laval (Chapter 2)
Authors of theFinancial adviceboxes:Dominique Froment, Pierre Théroux
Printer:TC Transcontinental Printing Jacinthe Cloutier, Assistant Professor, Consumer Sciences,
Université Laval (Chapter 3)
English Version Michel Magnan, Director, Desjardins Centre for Innovation in
Project Manager:Hannah Rahimi Business Finance, and Stephen A. Jarislowsky Chair in Corporate
Translators:Matthew Brown, Léa Grahovac Governance, Concordia University (Chapters 4 and 10)
Copy Editor:Leila Marshy Gilbert-M. Noreau, lawyer and lecturer, Université Laval (Chapter 5)
Proofreader:Dawn Hunter
Typesetter:Pige Communication Anick Lapointe, Guidance Counsellor and Counsellor in Academic
Printer:TC Transcontinental Printing and Professional Information, C.S. des Affluents (Chapter 6)
Patrick Dubé, Full-time Lecturer, Department of Human Resources
Management, HEC Montréal (Chapters 6 and 9)
Thérèse Côté, Director, Financial Assistance Services, Université de
Sherbrooke (Chapter 7)
Louise Alain, Coordinator, Financial Assistance Services, Université
de Sherbrooke (Chapter 7)
Gilles Godin, Coordinator, Financial Assistance Services, Université
de Sherbrooke (Chapter 7)
Lise Lachance, Vice-Provost of Education, Faculty of Education,
Université du Québec à Montréal (Chapter 8)
The Publisher would also like to thank the following individuals for
their valuable collaboration as pedagogical consultants:
Guylain Cyr, Collège Laval
Suzanne Fortin, C.S. des Patriotes
Denis Lambert, C.S. de Laval
Nathalie Lampron, C.S. Marie-Victorin
Mathieu Savary, C.S. du Chemin-du-Roy
Jade Winsor, Collège Villa Maria
ALL RIGHTS RESERVED.
No part of this book may be reproduced by any means
known or not yet known without prior permission from
TC Media Books Inc.
Any use not expressly authorized shall constitute an
infringement, which could result in legal action against
the individual or institution reproducing any part of this
book without permission.
ISBN 978-2-7650-5664-5
Legal deposit: 1st quarter 2018
Bibliothèque et Archives nationales du Québec
Library and Archives Canada
Printed in Canada
1 2 3 4 5 ITIB 21 20 19 18 17
These programs are funded by Québec’s Ministère de l’Éducation et de
l’Enseignement supérieur, through contributions from the Canada-Québec
Agreement on Minority-Language Education and Second-Language Instruction.
Government of Québec – Tax credit program for book publishing – SODEC
TABLE OF CONTENTS
Content of the textbook............................................................................................................................................................................ VI
Organization of the textbook............................................................................................................................................................ VIII
Content of the digital version............................................................................................................................................................ XII
ISSUE CONSUMING GOODS AND SERVICES........................................................................................................................ 2
CHAPTER 1 FOCUS ON CONSUMPTION.......................................................................................................................................... 6
PART1.1 What is consumption and how are prices set?........................................................................ 8
Consumption in a system • Opportunity costs • Price-setting: the principle
of supply and demand
PART1.2 How does the government intervene in the economy?.................................................... 14
The government and the economy • Consumption taxes
PART1.3 What factors inuence consumer habits?................................................................................. 18
Needs and wants • Consumer socialization • Internal and external factors
that inuence consumers
PART1.4 The purchasing process: where can I nd the information I need?............................. 24
The six steps of a rational purchasing process • The reliability and relevance
of information sources
CHAPTER 2 ADVERTISING: DECODING THE MESSAGE....................................................................................................... 28
PART2.1 Advertising: how does it work?....................................................................................................... 30
The ABCs of advertising • Anatomy of an advertisement •
Advertising: issues and trends
PART2.2 What are the limits of advertising?................................................................................................ 36
Laws that regulate advertising • Proling and targeted advertising
CHAPTER 3 BE CAREFUL WITH CREDIT............................................................................................................................................ 40
PART3.1 How does credit work?......................................................................................................................... 42
What is credit? • Eligibility for credit • The guaranty
PART3.2 Using credit: how risky is it?.............................................................................................................. 48
Do not go over the limit! • Risks associated with credit •
Finding solutions to debt
PART3.3 What is a credit report?........................................................................................................................ 54
The credit report: a tool for credit issuers • Credit scores
PART3.4 What do I need to know about credit contracts?.................................................................. 58
The main types of credit contracts • Information contained in a credit contract •
Know your rights and responsibilities regarding variable credit contracts
CHAPTER 4 GROWING YOUR SAVINGS............................................................................................................................................ 64
PART4.1 A budget? What for?.............................................................................................................................. 66
The budget: an essential tool • Drawing up a budget in three easy steps •
Fixed expenses: the heart of the budget
III
TABLE OF CONTENTS
PART4.2 Saving up: is it right for me?.............................................................................................................. 72
Why save money? • Saving money to make a dream project come true •
Investing your savings in registered and non-registered accounts
PART4.3 Investing: is it right for me?............................................................................................................... 76
From savings to investments • Investment vehicles with the highest
returns • Purchasing property: investing in quality of life
CHAPTER 5 MY RIGHTS, THEIR RIGHTS, OUR REMEDIES................................................................................................. 82
PART5.1 Rights and responsibilities: why and for whom?................................................................... 84
Consumer rights and responsibilities • Merchant rights and responsibilities •
The world of warranties • ThePrice Accuracy Policy
PART5.2 What are some possible remedies?............................................................................................... 90
Remedies for consumers • Cancelling a cell phone contract •
Remedies for merchants
PART5.3 Which laws protect and assist me?................................................................................................ 96
The main federal and provincial laws applicable in Québec • TheConsumer
Protection Actand the regulation of business practices • Consumer rights
organizations
PART5.4 Online shopping: how safe is it?.....................................................................................................102
E-commerce in Québec in 2016 • Risks related to online shopping •
Fraudulent practices • Cancelling an online purchase
SUMMARY.............................................................................................................................................................................................................................106
ISSUE PURSUING AN EDUCATION......................................................................................................................................................... 110
CHAPTER 6 A JOB FOR EVERYONE....................................................................................................................................................... 114
PART6.1 What are my employment options?............................................................................................. 116
Criteria used to determine a salary based on the job • Criteria used
to determine a salary based on the employee • Remuneration
PART6.2 What are some possible job search strategies?......................................................................122
The job search process • It’s all in the resumé! • The cover letter
• Preparing for your interview
CHAPTER 7 INVESTING IN THE FUTURE.......................................................................................................................................... 128
PART7.1 How much does an education cost and how can I nance it?........................................ 130
The cost of education • The main ways of nancing an education •
When there is no choice but to go into debt
PART7.2 Aide nancière aux études: am I eligible?.................................................................................136
Loans • Bursaries • Calculating nancial assistance •
Repaying a loan after graduation
SUMMARY.............................................................................................................................................................................................................................142
IV
TABLE OF CONTENTS
ENTERING THE WORKFORCE
ISSUE ...................................................................................................................................................146
CHAPTER 8 SHORT GUIDE TOBALANCING SCHOOL AND WORK...........................................................................150
PART8.1 Working while studying: what are the advantages and disadvantages?................. 152
Advantages of balancing school and work • Disadvantages of balancing
school and work
PART8.2 How can I successfully balance school and work?................................................................156
A question of balance • The Work/Study Program
CHAPTER 9 SPOTLIGHT ON THE WORLD OF EMPLOYMENT........................................................................................160
PART9.1 How can I make sense of laws, regulations and standards?............................................162
Laws that regulate employment • CNESST: overseeing occupational
health and safety
PART9.2 Why do we have a pay equity law?................................................................................................166
Equal pay: a hard-earned right • The wage gap remains a problem •
From equality to equity: equal pay for work of equal value
PART9.3 What are my rights, responsibilities and remedies in the workplace?....................... 170
Workers’ responsibilities • Workers’ rights and employers’ obligations •
Unionization: a worker’s fundamental right
PART9.4 From unemployment to employment insurance: what is the process?.................... 174
What is unemployment? • Employment Insurance (EI): temporary nancial
assistance for the unemployed • Who is eligible for Employment Insurance (EI)?
CHAPTER 10 A LOOK AT SALARY, INCOME AND TAXES.......................................................................................................178
PART10.1 How can I make sense of salaries and pay slips?....................................................................180
Direct remuneration and fringe benets • Pay slips • The largest source
deduction: income tax • Other mandatory source deductions •
Other source deductions
PART10.2 What is income tax?...............................................................................................................................186
Why does the government collect income tax? • Distribution of the tax
burden among taxpayers • The basis of tax rates: taxable income brackets •
Income tax returns • Tax deductions and tax credits
PART10.3 How do I recognize tax evasion?....................................................................................................192
What is tax evasion? • Consequences of tax evasion •
Citizens and the ght against tax evasion
SUMMARY.............................................................................................................................................................................................................................196
Appendix: Strategies and techniques...................................................................................................................................................................200
Glossary–Index.......................................................................................................................................................................................................................................216
Sources ...............................................................................................................................................................................................................................................................220
V
TABLE OF CONTENTS
CONTENT OF THE TEXTBOOK
Issue: Consuming Goods and Services
Program concepts and knowledge presented in this chapter:
• Consumption (P.*1)
• Purchasing power (P.1)
• Principle of supply and demand (P.1)
• Taxes imposed by the government (P.2)
1 • Consumption taxes (P.2)
• Goods and services exempt from the GST and QST (P.2)
Focus on • Factors that inuence consumer choices (P.3)
Consumption • Changes in consumer habits (P.3)
• Sources of information on goods and services (P.4)
Additional concepts related to consumption:
– Ination (P.1)
– Consumer socialization (P.3)
– Responsible consumption (P.3)
Program concepts and knowledge presented in this chapter:
2
• Goals of advertising (P.1)
• Laws that regulate advertising (P.2)
Advertising:
Decoding the Additional concepts related to online advertising:
Message – Issues, trends and function of advertising (P.1)
– Proling and targeted advertising (P.2)
Program concepts and knowledge presented in this chapter:
• Using credit (P.1)
• Eligibility for credit (P.1)
• The main obligation of the person acting as a guarantor (P.1)
• Situations in which a guaranty may be required (P.1)
3 • Debt (P.2)
• Risks involved in using credit (P.2)
Be Careful • Purpose of the credit report (P.3)
with Credit • Information found in the credit report (P.3)
• Types of credit contracts (P.4)
• Information that appears in credit contracts (P.4)
• Rights and responsibilities of consumers who enter into a variable credit contract (P.4)
An additional concept related to the credit report:
– Credit scores (P.3)
Program concepts and knowledge presented in this chapter:
• Savings (P.1)
• Drawing up a budget (P.1)
• Sources of income to be considered in drawing up a budget (P.1)
4 • Fixed and variable expenses (P.1)
• Reasons to save money (P.2)
Growing
• Ways of allocating savings (P.2 and P.3)
Your Savings
Additional examples of ways of allocating savings
– Investments (P.3)
– Investment vehicles with the highest returns (P.3)
– Investing in real estate (P.3)
Program concepts and knowledge presented in this chapter:
• Consumer rights and responsibilities (P.1)
• Merchant rights and responsibilities (P.1)
5
• Remedies available to consumers and merchants (P.2)
• Areas governed by the laws in force in Québec (P.3)
My Rights,
• Laws that regulate commercial practices (P.3)
Their Rights,
• Consumer rights organizations (P.3)
Our Remedies
Additional information on the basics of e-commerce
– Risks related to online shopping (P.4)
– Cancelling an online purchase (P.4)
VI
CONTENT OF THE TEXTBOOK
Issue: Pursuing an Education
Program concepts and knowledge presented in this chapter:
• Training (P.1)
• Qualications (P.1)
• Criteria used to determine a salary (P.1)
6 • Possible economic impact of not earning a diploma or degree (P.1)
• Types of remuneration (P.1)
A Job for Everyone • Job search strategies (P.2)
• Organizations that provide job search assistance (P.2)
Additional information on job search strategies:
– Resumés and cover letters (P.2)
– Preparing for an interview (P.2)
Program concepts and knowledge presented in this chapter:
• Financing (P.1)
• Factors that account for the variability of registration and tuition fees (P.1)
7 • Education-related expenses (P.1)
• Ways of nancing an education (P.1)
Investing
• Places where students can obtain nancial assistance (P.1 and P.2)
in the Future • Main characteristic of a loan issued by the Québec government’s Aide Financière aux Études (AFE) (P.2)
• Eligibility requirements for AFE’s Loans and Bursaries Program (P.2)
• Calculation of nancial assistance provided by the Loans and Bursaries Program (P.2)
• Main responsibility associated with obtaining a student loan (P.2)
Issue: Entering the Workforce
Program concepts and knowledge presented in this chapter:
8
• Work (P.1)
Short Guide • Advantages and disadvantages of working during the school year (P.1)
to Balancing School • Possible economic impact of not earning a diploma or degree (P.1)
• Ways of balancing school and work (P.2)
and Work
• Goal of AFE’s Work/Study Program (P.2)
Program concepts and knowledge presented in this chapter:
• Laws the govern labour standards (P.1)
• Sectors governed by theCanada Labour Code(P.1)
• Provisions of theAct Respecting Labour Standards(P.1)
• Role of organizations that ensure the application of labour laws and regulations (P.1, P.2 and P.3)
9 • Workers’ rights guaranteed under theCharter of Human Rights and Freedoms(P.2)
• Main purpose of pay equity (P.2)
Spotlight on • Responsibilities of workers (P.3)
the World • Roles of a union (P.3)
of Employment • Characteristics of unemployment (P.4)
• Purpose of employment insurance benets (P.4)
• Eligibility criteria for employment insurance benets (P.4)
Additional concepts related to pay equity
– Equal pay (P.2)
– Steps to follow for employers (P.2)
Program concepts and knowledge presented in this chapter:
• Remuneration (P.1)
• Fringe benets for employees (P.1)
• Fringe benets that may exceed labour standards provided for by law (P.1)
10 • Main information found on a pay slip (P.1)
• Source deductions (P.1)
A Look at Salary,
• Taxation (P.2 and P.3)
Income and Taxes • Reasons why governments collect income tax (P.2)
• Income tax rates and taxable income brackets (P.2)
• Purpose of tax returns (P.2)
• Types of tax evasion (P.3)
• Consequences of tax evasion (P.3)
*The “P” stands for “Part.”
VII
CONTENT OF THE TEXTBOOK
ORGANIZATION OF THE TEXTBOOK
The student textbook helps develop the competency
and covers all the issues, concepts and learning specied in the Financial
Education program for Secondary V. It contains three sections, one for each issue,
10 chapters divided into parts, an Appendix that includes strategies and techniques,
and a Glossary–Index.
Opening pages
of each issue
Each of the three
sections opens with
a two-page spread
that presents both
the print and the digital
content of the issue
and introduces the
concepts under study.
TheInteractive table of contentspresents the digital content
to be consulted at the opening and summary of each issue.
This two-page spread
follows the opening
pages of the issue
and features a comic
strip that puts the issue
in context.
TheMy prolebox
helps students reect
on their own nancial
situations and
determine their credit
and consumer proles.
Thetarget questionis a common thread
that runs throughout the issue.
VIII
ORGANIZATION OF THE TEXTBOOK