De-Cluttering the Message: How to Speak with Consumers about Money Management in Plain English

By Jeffrey Schwartz

As experts in our respective areas in credit, it is easy to get caught up using our own jargon when we speak with each other.  We understand our language.  However, the consumer may find it difficult to interpret, and miss the message we are trying to convey.  We need to clarify our message on the importance of using credit responsibly, managing debt and saving for a healthy financial future.

The debt-to-income ratio is hovering just under 153%; Canadians are living beyond their means and aren’t saving as much as they should for their retirement.  Warning bells are sounded every day but are they falling on deaf ears?

Consumers are inundated with messages on money management and financial literacy everyday in print, online and on television.  Using acronyms such as DMP, CL, RESP, CLB and TFSA are all common-place in our discussions.  Ask a consumer plagued with credit issues who is about to lose their home what DMP stands for and you may be looking back at a ‘blank stare’. In fact, it’s this lack of understanding that can lead to inaction or choosing the wrong alternative by the consumer.  Using the term Debt Management Program is a clearer message and much easier to understand.  We can decipher these messages for the public and assist them in making educated decisions.

In speaking with May Wong, Executive Director of The Omega Foundation she also found this to be the case among their clients.  “Our SmartSAVER program helps lower-income Canadian families to use existing Government programs to save for their children's post-secondary education,” says Wong. With a focus on the Canada Learning Bond (CLB), a Federal contribution of up to $2,000 towards the education savings of a lower-income child, SmartSAVER explains to parents, in plain language, the facts about this free money:

• The CLB is available to any child in Canada whose family’s net income is in the lowest tax bracket (approx. $41,500 net income in 2011) and who was born in 2004 or after;
• Although the CLB is an entitlement, the Government will only pay it out if a parent requests it;
• The CLB can only be paid into a Registered Education Savings Plan (RESP);
• A parent can open a RESP account at any of the major banks with $0 in fees and contributions;
• The Canada Learning Bond is not counted as income or as an asset and does not impact any other social assistance the family may be receiving.

At our conference in April, we will have a panel of experts lead a discussion focusing on de-cluttering the message for consumers.  We know that stress levels can increase when our clients are not properly educated on paying down debt and using credit responsibly.  We don’t want them to see credit as ‘free money’ or the ticket to an island vacation. Credit is money on loan to the consumer that must be repaid.  Its how long will it take to pay back the money, and at what cost, that needs to be explained in order for the consumer to make an educated decision. Credit should not always be their preferred method of payment.

We can help consumers decipher the messages and define the best solution for them, no matter what segment of the credit industry employs us. 

Jeffrey Schwartz is the President of the Credit Association of Greater Toronto (www.cagt.ca) and the Executive Director of Consolidated Credit Counseling Services of Canada (www.consolidatedcredit.ca).   CAGT is a non-profit association with a mission to provide a dynamic forum in which members can share information and expertise.  Consolidated Credit is a national non-profit credit counselling organization that teaches consumers about personal finance through web-based budget and debt analysis tools, financial literacy community outreach programs and in-person or telephone counselling.