Unformatted text preview: Financial Empowerment Financial Empowerment
Personal Finance for Indigenous and Non-Indigenous People BETTINA SCHNEIDER SAYLOR ACADEMY UNIVERSITY OF REGINA PRESS
REGINA Financial Empowerment by Bettina Schneider and Saylor Academy is licensed under a Creative Commons
Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted. Financial Empowerment: Personal Finance for Indigenous and Non-Indigenous People is a derivative work of
the Personal Finance, v. 1.0 openly licensed textbook adapted by Saylor Academy (2012) under a Creative
Commons Attribution-NonCommerical-ShareAlike 3.0 License without attribution as requested by the
work’s original creator and licensee. The textbook can be accessed at:
The modifications to the original textbook Personal Finance, v. 1.0 are released under the same license and
are described in the section “Modifications made to Personal Finance.”
Under the terms of the CC BY-NC-SA 4.0 International License, you are free to copy, redistribute for
non-commercial purposes, modify or adapt this book as long as you provide attribution to Bettina
Schneider and Saylor Academy, and distribute any modified work on the same licensing terms.
Additionally, if you redistribute this textbook, in whole or in part, in either print or digital format, then you
must retain on every physical and/or electronic page the following attribution:
Download Financial Empowerment: Personal Finance for Indigenous and Non-Indigenous People adapted by
Bettina Schneider from Personal Finance, v. 1.0 by Saylor Academy for free at
Cover design: John van der Woude, JVDW Designs, is licensed under a CC BY 4.0 International License.
Cover photo: Terry Massey, Strictly Social, is licensed under a CC BY 4.0 International License.
Video production for the Elder interviews was provided by Terry Massey, Strictly Social. The Elder videos
are the copyright of each interviewee and licensed under a CC BY-NC-SA 4.0 International License.
For questions regarding this license and publication, please contact: [email protected] To learn more
about University of Regina Press’s Open Textbook Publishing Program, visit . Contents About the Book vii Preface to the 2018 Edition x Introduction 1 Part I. Learning Basic Skills, Knowledge, and Context
1. Personal Financial Planning 13 2. Basic Ideas of Finance 39 3. Financial Statements 57 4. Evaluating Choices: Time, Risk, and Value 92 5. Financial Plans: Budgets 116 6. Taxes and Tax Planning 155 Part II. Achieving Your Financial Goals
7. Financial Management 185 8. Consumer Strategies 218 9. Buying a Home 242 Part III. Protecting What Is Important to You
10. Personal Risk Management: Insurance 272 11. Personal Risk Management: Retirement and Estate Planning 293 Part IV. Planning for the Future
12. Investing 316 13. Owning Stocks 342 14. Owning Bonds and Investing in Mutual Funds 362 15. Career Planning 392 Video Interviews with Elders 418 Modifications made to Personal Finance 430 Acknowledgements 434 About the Author 436 Open Access Publishing 437 Library and Archives Canada Cataloguing in Publication 438 About the Book
Financial Empowerment is an adaptation of the openly licensed textbook Personal Finance, v. 1.0
which was adapted by Saylor Academy under a Creative Commons Attribution-NonCommercialShareAlike 3.0 License without attribution as requested by the work’s original creator or licensee
and is available here: .
The purpose of this textbook adaptation is to take an accessible, student-focused personal
finance textbook from the United States and make it affordable and relevant for Indigenous
and non-Indigenous people in Canada. While many mainstream Canadian personal finance texts
provide excellent content in terms of the mechanics of personal finance, they are expensive and
not always relevant to the values and experiences of students in the classroom. Many mainstream personal finance texts fall short for Indigenous Canadians and non-Indigenous Canadians alike because they do not speak to readers’ varied backgrounds, knowledge systems, and
experiences. This textbook aims to motivate a broad range of students to learn about personal
finance. While it is beyond the scope of this book to address all of the diverse groups that
comprise the Canadian population, the text does attempt to provide practical, student-focused
information that all students can relate to.
Everyone needs to be able to see themselves in what they are learning, and this text represents
one small effort to make personal finance more relevant to Indigenous students in Canada, and
to also teach non-Indigenous students about Indigenous histories, perspectives, and realities. It
is this understanding and knowledge that will contribute to reconciliation in Canada.
Another intention of this text is to contribute to real social, political, and economic change,
which the Truth and Reconciliation Commission of Canada calls for in order for reconciliation to
be achieved. Increased financial literacy and personal finance knowledge can contribute to that
social, political, and economic change.
Financial Empowerment is designed for a single-semester introduction to financial planning and
decision-making. It seeks to provide students with the necessary financial literacy and skills
needed to make sound financial decisions, assess financial risk, and achieve financial success.
Given the broad scope and application of financial literacy, this textbook is developed for students taking first- and second-year business and administration courses in a post-secondary
The specific goals of this textbook are: About the Book | vii • to help students build a solid understanding of personal finance in order to achieve financial literacy and financial success by providing them with the skills and knowledge necessary to navigate short- and long-term financial change;
• to tailor the content for a Canadian audience by providing Indigenous and non-Indigenous
perspectives on personal finance and financial planning using examples and information
from the Canadian financial system and economy;
• to increase accessibility to financial education resources for students and the general public alike, regardless of where they live or study;
• to customize the content for Indigenous students in Canada and address student needs for
practical and theoretical knowledge on financial decision-making and financial risk assessment; and
• to connect financial literacy with Indigenous Knowledge and history by threading Indigenous perspectives and interviews with Elders and other community leaders throughout the
APPROACH AND PEDAGOGY
Financial Empowerment will introduce you to the theory of personal finance through real-life
examples of financial decision-making, including videos with Elders. This textbook has been
adapted in order to provide you with the most up-to-date and relevant information. Since this
is an open textbook, there will be annual reviews and updates of the content to ensure that the
predetermined critical learning elements and outcomes are met. Instructors may assign additional readings to each class in order to enrich your learning.
Each chapter will begin with a brief overview of the chapter content. Key terms are highlighted
Coloured boxes are used in each chapter to differentiate and highlight important learning features (see the following diagram). viii | About the Book Key Learning Features Learning Objectives Key Takeaways Exercises Learning objectives in the green coloured boxes provide clear directions for each section and
provide structure to your learning. Orange boxes containing key takeaways contain a general
overview of chapter content at the end of each chapter section. Exercises in the blue boxes at
the end of each chapter section provide additional information, as well as an opportunity for
students to review and apply what they have learned.
Where relevant, a complete list of references is included at the end of chapter sections to clearly
document and attribute the source material and to assist students in locating resources.
Video interviews with Elders provide critical historical information, First Nations perspectives
on personal finance, and wisdom meant to help guide students.
Figures, diagrams, and tables provide a plethora of attractive and concise visual learning aids.
Hypothesis (or Hypothes.is) is an open source web annotation tool that students and instructors
can use to highlight and annotate online text, which they can share publicly or privately (for
group discussion) or use for individual study. Hypothesis encourages deeper engagement with
academic text and other Internet resources.
Hypothesis has been enabled for the online format of this textbook. To use this tool, you will first
need to create a free account with Hypothesis and then follow the step-by-step instructions. For
more information, Hypothesis offers the following Quick Start Guides:
1. Quick Start Guide for Students
2. Quick Start Guide for Teachers About the Book | ix Preface to the 2018 Edition
(Adapted from the original)
This text has a goal: in addition to providing sources of practical information, it should introduce
you to a way of thinking about your personal financial decisions. This should lead you to thinking
harder and farther about the long-term consequences of your decisions. Many of the more practical aspects of personal finance will change over time, as practices, technologies, intermediaries, customs, and laws change, but a fundamental awareness of how to think well about solving
financial questions can always be useful. Some of the more practical ideas may be obviously and
immediately relevant—and some not—but decision-making and research skills are lasting.
You may be enrolled in a traditional two- or four-year degree program, or you may just be taking
the course for personal growth. You may be a business major or a family or consumer studies major with some prerequisite knowledge of economics or some level of accounting or math
skills, or you may be filling in an elective and have no such skills. In fact, although such skills
can enhance one’s ability to make personal financial decisions, they are not necessary. Software,
downloadable applications, and calculators perform ever more sophisticated functions with ever
more approachable interfaces. The emphasis in this text is on understanding the fundamental
relationships behind the math and being able to use that understanding to make better decisions
about your personal finances.
The idea here is to introduce you to the practical and conceptual framework for making personal
financial decisions as part of a greater economy of financial participants.
The text is divided into four parts:
Learning Basic Skills, Knowledge, and Context (Chapter 1 “Personal Financial Planning”–Chapter 6 “Taxes and Tax Planning”)
Achieving Your Financial Goals (Chapter 7 “Financial Management”–Chapter 9 “Buying a Home”)
Protecting What Is Important to You (Chapter 10 “Personal Risk Management: Insurance”–Chapter 11 “Personal Risk Management: Retirement and Estate Planning”)
Planning for the Future (Chapter 12 “Investing”–Chapter 15 “Career Planning”) x | Preface to the 2018 Edition This structure is based on the typical life cycle of personal financial decisions, which in turn is
based on the premise that, in a market economy, an individual participates by trading something
of value: labour or capital. Most of us start with nothing to trade but labour. We hope to sustain
our desired lifestyle on the earnings from our labour and to gradually (or quickly) amass capital
that will then provide additional earnings.
PART 1: Learning Basic Skills, Knowledge, and Context
(Chapter 1 “Personal Financial Planning”–Chapter 6 “Taxes and Tax Planning”)
Chapter 1 “Personal Financial Planning” introduces four major themes of the textbook:
1. Financial decisions are individual-specific (Section 1.1 “Individual or ‘Micro’ Factors That
Affect Financial Thinking”)
2. Financial decisions are economic decisions (Section 1.2 “Systemic or ‘Macro’ Factors That
Affect Financial Thinking”)
3. Financial decision-making is a continuous process (Section 1.3 “The Planning Process”)
4. Professional advisers work for financial decision-makers (Section 1.4 “Financial Planning
These themes emphasize the idiosyncratic, systemic, and continuous nature of personal finance,
putting decisions within the larger contexts of an entire lifetime and an economy.
Chapter 2 “Basic Ideas of Finance” introduces the basic financial and accounting categories of
revenues, expenses, assets, liabilities, and net worth as tools to understand the relationships
between them as a way, in turn, of organizing financial thinking. It also introduces the concepts
of opportunity costs and sunk costs as implicit but critical considerations in financial thinking.
Chapter 3 “Financial Statements” continues with the discussion of organizing financial data to
help in decision-making and introduces basic analytical tools that can be used to clarify the situation portrayed in financial statements.
Chapter 4 “Evaluating Choices: Time, Risk, and Value” introduces the critical relationship of time
and risk to value. It demonstrates the math but focuses on the role that those relationships play
in financial thinking, especially in comparing and evaluating choices in making financial decisions.
Chapter 5 “Financial Plans: Budgets” demonstrates how organized financial data can be used to
create a plan, monitor progress, and adjust goals. Preface to the 2018 Edition | xi Chapter 6 “Taxes and Tax Planning” discusses the role of taxation in personal finance and its
effects on earnings and on accumulating wealth. The chapter emphasizes the types, purposes,
and impacts of taxes; the organization of resources for information; and the areas of controversy
that lead to changes in the tax rules.
PART 2: Achieving Your Financial Goals
(Chapter 7 “Financial Management”–Chapter 9 “Buying a Home”)
Chapter 7 “Financial Management” focuses on financing consumption using current earnings
and/or credit, and financing longer-term assets with debt.
Chapter 8 “Consumer Strategies” discusses purchasing decisions, starting with recurring consumption, and then goes into detail on the purchase of a car, a more significant and longer-term
purchase both in terms of its use and financing.
Chapter 9 “Buying a Home” applies the ideas developed in the previous chapter to what, for
most people, will be the major purchase: a home. The chapter discusses its role both as a living
expense and an investment, as well as the financing and financial consequences of the purchase.
PART 3: Protecting What Is Important to You
(Chapter 10 “Personal Risk Management: Insurance”–Chapter 11 “Personal Risk Management: Retirement and
Chapter 10 “Personal Risk Management: Insurance” introduces the idea of incorporating risk
management into financial planning. This chapter focuses on planning for the unexpected. It
progresses from the more obvious risks to property to less obvious risks, such as the possible
inability to earn due to temporary ill health, permanent disability, or death.
Chapter 11 “Personal Risk Management: Retirement and Estate Planning” focuses on planning for
the expected: retirement, loss of income from wages, and the subsequent distribution of assets
after death. Retirement planning discusses ways to develop alternative sources of income from
capital that can eventually substitute for wages. Estate planning also touches on the considerations and mechanics of distributing accumulated wealth.
PART 4: Planning for the Future
(Chapter 12 “Investing”–Chapter 15 “Career Planning”)
Chapter 12 “Investing” presents basic information about investment instruments and markets
and explains the classic relationships of risk and return developed in modern portfolio theory. xii | Preface to the 2018 Edition Chapter 13 “Owning Stocks” and Chapter 14 “Owning Bonds and Investing in Mutual Funds” look
at investments commonly made by individual investors and their use in (and the risks of) building
wealth as part of a diverse investment strategy. Chapter 15 “Career Planning” brings the planning
process full circle with a discussion on how to think about getting started—that is, deciding how
to approach the process of selling your labour. The chapter introduces the idea of selling labour
to employers in the labour market and explores how to search and apply for a job in light of its
strategic as well as immediate potential. Preface to the 2018 Edition | xiii Introduction
My name is Bettina Schneider and I am currently an associate professor and associate vice-president academic at First Nations University of Canada (FNUniv) in Regina, Saskatchewan. I have
worked in the School of Business and Public Administration at FNUniv since 2007. I am nonIndigenous and originally from the United States. I have a PhD in Native American Studies and
a master’s in Community Development from the University of California, Davis. My dissertation focused on Indigenous financial institutions in Canada and the United States. Through this
research, and my work as a consultant with the First Nations Development Institute and First
Nations Oweesta Corporation in the United States, I was exposed to a number of Indigenous
financial institutions and the culturally relevant financial literacy curricula they were utilizing
and sharing with their communities. In 2013, I began working with the Newo Yotina Friendship
Centre (NYFC) in Regina on the development of culturally relevant financial literacy workshops,
as the NYFC had identified a need for such services among its clientele. Thanks to a grant from
the Urban Aboriginal Knowledge Network, we were able to research and develop such a curriculum for the NYFC. My work with the NYFC was the catalyst for the financial empowerment
course I later developed at FNUniv and the adaptation of this textbook.
PURPOSE OF THIS TEXTBOOK
The purpose of this textbook adaptation is to take an accessible, student-focused personal
finance textbook written for an American audience and make it relevant for Indigenous and nonIndigenous people in Canada. In so doing, it aims to not only help students build their own personal financial capacity, but to prepare them to help others do the same.
My greatest goal with this text is to ensure that students do not make the same mistakes that
I and many people before me have made because we did not pursue or have access to financial literacy courses or resources when we were young. Financial literacy education should be a
requirement for every student in Canada and throughout the world. It is my sincere hope that
this Open Access textbook makes the delivery of financial literacy education more accessible
and affordable for all.
Financial literacy resources do not always speak to the varied values and experiences of their
audience. For example, mainstream resources may provide a review of the Canadian tax system,
but make no mention of taxation as it relates to First Nations peoples. Furthermore, I believe
it is important to understand our own values, histories, and life experiences in order to better 1 | Introduction understand our financial decision-making processes. This text attempts to include the perspectives, values, and realities of Indigenous and non-Indigenous people in Canada in order to better
understand our relationship to personal finance.
Colonization has denied many Indigenous people equal access to money, economic opportunities, financial literacy education, financial institutions, and much more. It was, in fact, the pursuit of money that fueled much of the conquest that colonized Indigenous people in Canada and
throughout the world.
During pre-contact times, Indigenous people had a rich economic h...
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