Many Canadians have lost the ability to budget and understand their own financial situation, especially with the increasing use of debit and credit cards, says Centum network partner Troy Tisserand.
Tisserand was recently recognized with a Man of Honour 2012 Award from CEASE for his work helping Edmonton residents, especially those in high-risk situations, learn how to understand and improve their finances.
It all started seven years ago when the City of Edmonton asked Tisserand to work with other organizations to teach financial literacy to low-income individuals as a poverty reduction strategy. At that time, the majority of people Tisserand saw were low-income, high-risk – the traditional demographic for financial literacy classes.
But the trends are changing. Now Tisserand sees middle-income people coming in, and bringing their children to learn good habits, early.
Children aren’t taught financial skills in school so if they don’t learn from their parents they’re expected to figure it out for themselves. As a child Tisserand’s family did not have a lot of money but he watched his parents make the most of what they had.
“My parents had an understanding about how money was to be used and they used it effectively to create the best family environment we could have based on the income we had,” he says. “At an early age I learned respect for money.”
One of the main messages he tries to pass on is that money is a non-renewable resource. You can earn more, but what you’ve spent is gone. For people whose spending is often on credit cards or into overdraft it can be a difficult mindset to accept.
“Our financial system has fundamentally changed. Twenty years ago you withdrew cash for the week and if you spent it all on Monday then that’s it,” Tisserand says. “People have lost touch with how to budget. Average Canadians are now coming back and saying how do we learn financial literacy?”
The debt restructuring programs structured by 4 Pillars has a default rate of 3 to 5 per cent for all its consumers. Compare that with a 30-40 per cent default rate for trustees and a 60 per cent rate for credit counselling and the importance of teaching financial literacy becomes clear.
“It’s not about the transaction, it’s about having consumers understand where they’re at financially and how to implement new skills allowing them to move forward,” Tisserand says.
Tisserand’s passion for financial literacy goes far beyond business – he thinks courses for Canadians should be free and the majority of the work he does is on a volunteer basis.
“The reward is that you actually are teaching skills to individuals that give them the opportunity to create a fundamental change in how they view money. You have the ability to create change in individuals that they never thought was possible,” Tisserand says.
“There’s a spark that occurs and it’s at that moment that they realize that they can change their outcome. They’re being given the skills to make those changes and there is a long-term positive effect about how they’re going to move on from where they’re at and get to a better place.”
Tisserand has been working with the organizations for long enough to have seen individuals coming through programs such as an Elizabeth Frye class, which supports women still in or just leaving high-risk situations such as prostitution or legal trouble, who then return a few years later to learn even more. Having made positive changes to their lives, now they’re looking for ways to leverage the assets they have – a job, reliable income and a stable place to live – and accumulate wealth.
“Only three things go up in value: real estate, financial investments and businesses. Sometimes they go up, sometimes they go down but everything else we buy is a depreciating asset,” Tisserand tells his students. “If you can buy more of those three and less of everything else, you’re guaranteed to have wealth in your life. “