Beware of the Credit Monster:
Win the War for Your Dollars -- A Guide for Young Adults.
Carole M. Wallace.
Grades 10 and up / Ages 15 and up.
THESE TWO TAPES ARE DIVIDED into four programs, each a lively discussion between two financially naive radio announcers and the fictitious investment advisor, Sage Counsellor. For someone with little or no experience they offer sound advice. The major weakness is that much of the information is American and not relevant to a Canadian audience. Canadians, for example, can't deduct the cost of mortgage interest from their income tax while Americans can.
The first program answers the question "Who is the credit monster?" by explaining the dangers of buying on credit. The advice to teenagers who are beginning to earn interest from part-time jobs is excellent. The tape urges young adults to use money wisely, to save and earn interest rather than to pay interest on debt.
In the interests of verisimilitude, the interviews are interrupted by commercial messages. But while these ads illustrate the points made in the program, they aren't really necessary.
The program two explains compound interest and discusses how to make financial security a priority by saying, earning interest, and deferring taxes. Again, the advice on deferring taxes isn't relevant to Canadians because there is no exact American equivalent of RRSPs.
The third program discusses the risk involved in various types of loans and investments, from savings accounts to loans to family members and friends. It also explains how banks make money by lending customer's money, and the differences between government and corporate bonds.
There is a brief and informative discussion about investing in stocks and how this can be riskier than buying bonds. It also points out that stocks can provide greater returns through the combination of dividends and capital gains. In addition, there is a useful discussion on inflation and how it can erode interest income.
Program four discusses how to accumulate money through savings accounts, savings bonds, and mutual funds. There is reference to the difference between front-end and no-load mutual funds, but this is too brief to be of much value. Program four also suggests that everyone should establish an emergency fund equal to three months' worth of living expenses. Once this fund is set up, the money should be put into something secure and eventually into the equivalent of an RRSP.
The tapes are easy to follow and well suited to a young audience. But the American focus makes them less valuable to a Canadian audience.
Recommended with reservations.
Tom Chambers is a professor at Canadore College in North Bay Ontario.
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