Saturday, October 01, 2005

From the bottle depot to the bank

Markus and I went to the bank not too long ago to open his own savings account. Before that, we went to the Guildford Bottle Depot to redeem four bagfuls of empty bottles and cans that he and Gabriel had collected from our kitchen. (Our deal is that they get to have the $ if they collect the bottles and bring them to the depot with me.)

“Markus, we will deposit $30 to your name,” I told him. I had planned to deposit more but he chose to have a little birthday party. So I deducted some amount to make him understand that choices have a cost. We made a deal. He made a choice. Now we had to stand by it.

“Plus the $5 I got from Jesse,” he remarked, making a reference to a gift he got.

“Oh, yes. That makes it $35,” I said. “And the $10 you made today from the bottles. You have $45 now!” I said excitedly.

“Make it $50, Mom,” he said.

“No, it’s $45.” Even if it was tempting to simply round it off, I stood my ground to teach him that money is hard earned, and you had to work and save up for it.

“What about the massages? I’ve been massaging you since January, blah, blah, blah..and you have not paid, blah, blah, blah…” Markus has a good, albeit sometimes skewed, memory of our “transactions” and it could go all the way back. Or I have a short memory, and don’t do a good accounting of all his massages that were not “for free”. (Yes, he occasionaly offers to give me a free back massage.)

Not wanting to engage him in a long argument (which is hard to win with Markus anyway) about the massages he had given me “since January”, I agreed to the $50. Besides, he could be right.

“So, Mom, can I withdraw a dollar? I want to buy something,” he said after getting his own passbook and ATM card.

“No, this is just for depositing,” I replied. “We need to save up for college.”

I wonder how many bags of empty bottles that would take.


Anonymous said...


lerryblossoms said...

thank you and God bless you too.

LHB said...

Hi Mrs. Blossoms,

Mr. Buttinski here who cannot help but butt in again. I hope you are aware of RESP's (Registered Education Savings Plan). The Canadian governmnet will give you a grant of 20 percent of anything you put in to an RESP, to a maximum of $400 per year. In other words, that $50 would have been worth $60 if you had put it in an RESP. If you put in $2000 this year, you will get the maximum grant of $400. You can put in, let's say, $3000, but your grant will still be $400.

When I was saving up for my daughters, there were no grants. All I got was whatever I put in the RESP plus the compounded income it generated. It proved to be a real life saver for me when they got to be university-age.

I got my brother-in-law to open RESP's for his kids, too. He was a financial analyst by profession and after a couple of years putting money in to the RESP, he came to the conclusion that the fund was too conservative in its investments. It was only making 6 or 7 percent annually. He figured he could get better returns saving up by himself. He quit and got all his money back - no interest, that's part of the deal. (If you back out, you lose the interest). Anyway, to make a long story short, when the time came for his kids to enter university, he had not saved anything. There was always something else to spend the money on - car payments, a new bowling ball, birthday presents for some friend's kid, etc., etc. He kept saying, "I'll just double up next month." Next month never came.

If you have an RESP, you are forced to put something in regularly. If you arrange for an automatic bank deduction, you wouldn't even notice it. Time goes fast. I didn't hear about RESP's until my first daughter was about 5 years old. The plan required me to contribute until she was 16. So I only had 11 years to put money in. With my second daughter, I started as soon as she was born, so I had the whole 16 years to contribute. I had lower monthly contributions for her. I think I was putting in $50 for the first and about $30 for the second. I quickly got used to the $80 being automatically taken out of my bank account.

Just a couple of caveats:
1) When I joined the RESP, my child joined an age-group of children who were all saving up. The RESP I had, like most RESP's do, required that my child enter university. When my child reached age 16, they returned to me all the money I had contributed. Now, the child has from age 17 to 22 to apply for a yearly scholarship which comes from the pool of income accumulated over the years by the age-group. If the child does not qualify for full-time university studies during those years, he doesn't get anything (although, you had already got your capital back when he was 16). The age-group will then have one less member to share the pot and each gets a bigger share.

So, make sure your child is the university-going type. My second child had second thoughts about going to university. She was thinking of opening a beauty salon or a music studio. When she realized how much she would be giving up by going that route, she decided to go for a bachelors at least. Now, she's an employee instead of an entrepreneur. Time will tell if she made the right decision. Maybe she'll still have her own business someday and stil put her BComm to good use.

2) Coming from the Philippines, you may have heard of the Pacifica debacle in Manila last year. People who were saving up for their children's education got soaked and lost all their savings when the company went belly up.

Canadian RESP's are better regulated and regulators here usually do their work. The RESP I had has been paying back its contributors for about 50 years now, I think.

BTW, I do not sell RESP's, :) although I know some friends who do. They sell them from home, like they do Tupperware. :)


lerryblossoms said...

this is very helpful information. thank you, lhb! very much appreciated.

LHB said...

Oh, all that talk and I forgot to tell you the name of the company! I had my accounts with CST (Canadian Scholarship Trust Fund) which I believe is the biggest and oldest in Canada. The second biggest provider is called USC.

Eyriche said...

Hi, Le!

Someone said that other than money, the best inheritance we can pass on to our kids is wisdom. There are parents who give their kids money but fail to teach them how to handle it. You are a wise parent.

Keep up the good work! Ellen and I are praying for you!

lerryblossoms said...

eyriche, thanks 4 ur prayers. we surely need them. give my love to elle and the boys.

Mr. Buttinski said...

I had my kids write me an "invoice" for everytime I owed them money. It was a good writing exercise and it kept me honest. The kids also liked to see their names written on something that looked "official".

For example, they'd write: "Dad owes Lisa $1.00 for a back massage on October 20, 2005" then they'd make me sign it. After they've collected a few invoices, I'd pay them and they'd make me a receipt which they sign, another writing exercise. Then, I retrieved all the invoices and discarded them.

You've really got to be careful handling kids' money. I once saw my daughter with a lot of coins, gifts from the aunties here and there. I offered to change the coins to a few dollar bills. At that time, Canadian dolar bills still came in one- and two-dollar denomination.

It was also the time before I quit smoking. At the grocery checkout, I started counting some coins to pay for the groceries which included some of my cigarettes. My daughter was watching and suddenly yelled out, "Daddy, don't use my coins to buy your cigarettes!!"

Even though I had changed her coins for paper bills, she still thought the coins were hers. Me embarassed? that was to put it mildly. :)


lerryblossoms said...

Hmm, the invoice sounds like a thing. Quitting smoking is wiser still.

Anonymous said...

I quit smoking in 1976 - when the cigarette tax was raised by another dime to fund the Montreal Olympics. I wasn't being wise. I was just being cheap. :)