Part 2

GETTING AND
EARNING MONEY

45
46
Modul e 5
SOURCES OF INCOME
Let 's Dis cuss...
$$ Employment income: Working for others $$ Investment income
• Wages and salaries • Capital gains
• Benefits • Interest
$$ Self-Employment – Working for Yourself • Inheritance
• Government Transfers
$$ Deductions from your paycheque
• Lotteries and Gambling

W e will all make a great many “mon-

ey decisions” over the course of
our lives. We will make decisions
about earning money, spending, saving,
borrowing, investing, and donating. The first
challenge, before making decisions about
how to use money is, of course, to find ways
to earn money.
Obtaining money is a task most of us
wish was easier than it is. However, even
with modest incomes, most people will
earn at least one to two million dollars over
the course of their lifetime. That’s a lot of
money – and a lot of money decisions.
Regardless of how much money you
make, or will earn, it is important to make
good money decisions – and to know how
to manage money. Some say that it is only
people with lots of money who have to learn
to manage it. The fact is, it’s probably more
important if you don’t have lots of money.
You’ll want to get the most from the money
you have.
Most of the money you will get in your
lifetime will likely come from your hard work
and labour. There are certainly other ways to
earn money. But most will likely come from
wages and salaries you earn by working
for an employer – or from money you make
working for yourself as an entrepreneur.

MODULE 5 47
Thi nk About I t How About You?

Are you a possible entrepreneur? Do

If a person makes an average of you hope to “be your own boss?” It
$30,000 a year, and works from age takes a lot of work – and some risks –
25 to 65, that will add up to $1.2 but many people hope to set up their
million in lifetime earnings. own business some day. What is your
An average of $50,000 a year would interest in being an entrepreneur?
add up to $2 million. What do you
hope to earn as an average income?
How much would that mean you 1 2 3 4 5
would make in your lifetime?
NO INTEREST VERY INTERESTED

Later in life, things may change in terms of your in- You may want to plan to get to where you can de-
come. You may be able to plan and save your money cide whether to work or not work – and work at what
to get to a point where you don’t need to work for you want – before getting to age 65. Reaching
the income you require to enjoy life. You may save “financial independence” is something most people
enough to retire and live on money you make from hope to achieve. Financial independence, in general,
sources such as pensions, savings, and investments. is when you don’t have to rely on others for the in-
You may not be thinking much about those later come you need. That is, you aren’t financially depen-
years right now. It’s hard to think about “retirement” dent on your parents/guardians – or on government.
in your teens and twenties. But if you think about But it can also mean that you are not dependent
retirement, not as getting old and leaving work at an on income from work. You can do what you want –
age like 65, but getting to where “you can do what work or not work. It isn’t easy getting to that point
you want,” that can make a difference. for most people. And, if it is something you hope for,
the earlier you start planning, the better.

i on.
Ta k e Act trol!
Ta k e Con
If you hope to become “financially independent” some day – and not have to work to earn the
income you need – start to plan for that as soon as you can. As an example, if you saved $50 a
month, starting at age 20, and earned 3% average on your savings, by age 65 you would have
over $56,000 from your $50 a month in savings. That’s how savings can build over time with
“compound interest.”

48 MODULE 5
 How About You?

At what age would you hope to be “financially

Making enough money to enjoy life is independent?” How much money do you think you
a challenge for almost everyone. Let’s would have to earn from your savings, investments,
take a look at the different sources of etc., in a year, to be financially independent? How
income you may be able to acquire. might you start to plan to achieve that goal?

Employment Income: Working for Others

Wages and Salaries
i on.
Ta k e Act trol!
Ta k e Con
Most of us will earn income by working for others
– a company, a government, a not-for-profit organi-
zation, and so on. Through education, training, and
experience, people aim to develop a particular talent
or skill while, at the same time, developing general If you hope to be a leader in the
“employability skills” (see the chart at the end of the workplace, it can help to develop
module) and “enterprising skills” (see the module on your enterprising skills. Enterprising
entrepreneurship). people often get recognized for their
Employability skills are those general skills that ideas, initiative, team-building and
can help you get, and keep, a job. Enterprising team-leading skills, etc. Enterprising
skills can be developed and applied by anyone – skills can help a person achieve
whether they work for others or themselves. Such leadership goals.
skills include being able to identify opportunities for
improvement, taking the lead and initiative, being
creative, being a team leader, etc. Such skills are
often attractive to an employer.

Thi nk About I t
Equipped with education, training, skills, and the
“right attitudes,” the aim for most people is to get as
good a job as they can. And people differ in what
they see as a “good job.” Some might want to get
the highest wage or salary they can (a wage is paid How could you use the decision-
hourly whereas a salary is paid on the basis of one making steps to make a decision
year’s work). Some might want to work with others about the kind of job you would like
– helping people. Some may want to work outdoors. to get?
Some may want a job that involves travel.

MODULE 5 49
How About You?
WHAT ARE THE THINGS THAT WILL BE MOST IMPORTANT
TO YOU IN YOUR JOB?

The following are some possibilities. There may be other

things important to you too.

• Level of income
• Work environment
• Work as part of a team
• Opportunities to be creative
• Benefits (health, dental, pension)
• Helping others
• Learn and develop a skill/trade or expertise
• Work outdoors
• Travel
• Work in a profession
• Apply a talent you have (athlete, musician, etc.)
• Work in a particular industry (technology, entertainment, finance...)

When we decide to look for work, we enter into the supply, the higher the wage or salary will be. There-
“labour market.” Here, you will encounter the forces fore, you would ideally want to be looking for work
of “supply” and “demand” that, along with other in an area where there is, or will be, a relatively high
influences, will affect the wage or salary paid for level of demand compared with supply.
different kinds of work. This is a challenge young people face when they
In any market – for goods, services, labour, are planning their education, training, and career.
stocks, bonds, etc. – there will be both sellers and For example, as you are in your last stages of high
buyers. In the case of the labour market, a person school, you may do research and find there seems
offering his/her services in return for an income is to be a high level of demand for teachers. It looks to
part of the “supply.” You, for example, would be the you like the chances of getting a teaching job might
“seller” of your labour services as you look for a job. be quite good.
Employers looking to hire people and pay a wage or But the challenge is to look beyond the situation
salary in return for labour represent the “demand.” today. You have to look ahead to when you will be
They are the “buyers” of labour services. a teacher – and looking for a job. What are the job
In general, the higher the level of demand for a prospects like in four or five years? Will there still be
particular occupation or skill, compared with the a high level of demand for teachers then?

50 MODULE 5
 Thi nk About I t
It is important to consider the labour market condi-
tions for occupations that interest you – both today
and in the future. You can do this by researching
some of the “labour market information” (LMI) that
is available on the Internet. The federal government, What are some of the jobs
provincial governments, business associations, that you think are “in demand”
professional associations, and others will often today? What jobs may increase
have LMI available. Governments and employers are in demand in the future? For
anxious to help young people know about labour what jobs today might there be a
conditions – and which occupations are going to be decline in demand in the future?
needing workers.

a k e A ct i on.
T trol!
Today, Canada has a skilled labour shortage – and

T a k e C on the shortages will likely increase in the future. Many

jobs requiring the skilled trades go unfilled. Many
young people could do well if they went into the
skilled trades and apprenticeship programs.
In addition, the “post war baby boom” is reaching
Try and use available “LMI” to help retirement age. There will be a large number of jobs
you pick the occupation, profession, opening up – that is, if the “baby boomers” have
or trade that is of most interest to done their planning and are able to retire.
you. There is lots of information that Therefore, there should be some good job op-
you will be able to find about different portunities available for today’s youth. The key is to
occupations and careers – and what do your homework, learn about where job opportuni-
the job prospects are likely to be in ties are (and will be) and factor this information into
the future. Use it to help you decide. your career planning.
But there is something else that is very important
to consider. Research has shown that one of the
most important keys to career success is “passion”
– doing what you love to do. So if there is something
you love to do – something for which you have a
passion – don’t be afraid to go with your heart. If

How About You?

you have always wanted to be a teacher – and the
LMI you find shows demand may not be strong – or
the supply may be high – don’t let that stop you. If
you love it, want to do it, and have a passion for it –
Is there a particular kind of work for go for it. The chances are you will be good at it, will
which you have a passion? Do you find a job, and will be happy in your work.
have an interest or hobby that you
could turn into a career?

MODULE 5 51
In addition to supply and demand, there are other
factors that can also influence job opportunities and
wages and salaries. Let’s take a look at these.

Factors That Can Influence Job Prospects – and Your Wage or Salary

• the level of education, training, and experience that • government legislation such as setting levels for the
is required to do a particular job – and the level you “minimum wage”
have acquired • the impact of unions on the wages that are
• the number of others who have similar or better skills negotiated for certain jobs
who can compete with you for a job • the region in which you live and work and the labour
• how good you are at what you do market conditions in that region
• how long you have been working – your experience, • the profitability and success of the particular
your “seniority” company or organization for which you work
• your work habits, reliability, dependability, • luck and chance – do you happen to be at the right
perseverance place at the right time or the wrong place at the
• the state of the economy and whether businesses wrong time? There are a great many careers that
are growing or struggling were a result of “happenstance” or “serendipity”

Thi nk About I t
There are, of course, other factors that can affect
job opportunities and incomes. For example, in many
cases women are still paid at lower levels than their
male counterparts. There may also be discrimination
on the basis of age, race, or colour. Authorities, in What are some of the factors
many cases, are trying to prevent situations of wage that would likely influence the
discrimination based on sex, age, race, and colour. job opportunities and salary of a
But some cases of inequity and workplace prejudice professional hockey player, a dentist,
still exist and pose challenges to some. an actor, an electrician, a computer
programmer, or a journalist?

52 MODULE 5
Other Benefits from Employers

Lea rn About
When you work as an employee for a company,
other benefits may be provided in addition to your
wage or salary. It is certainly not the case that all
companies offer attractive benefits packages. Ben-
efits packages vary a great deal from company to Find information online, from a
company, industry to industry, and even occupation financial institution, or a family
to occupation. Since they can be quite significant, member, about RRSPs and RESPs.
you should ask about the benefits that may be These may be of interest to you in
available to you from a particular occupation – or a saving for education or retirement.
particular employer.

The possible benefits that may be available from

an employer can include the following:

• paid vacation holidays

• paid sick days
• paid provincial government medical premiums
(covering your health insurance)
• extended health care insurance
• disability income insurance (short-term and We should say a little more about this last point.
long-term) – which can provide some income if you It is becoming less common for companies to
become ill or disabled provide a pension for employees. It is more common
to encourage employees to set up a “Registered
• life insurance
Retirement Savings Plan” – and the employer may
• dental insurance
make a contribution to the plan. For example, the
• profit sharing (employees receive a share of the employer may match your contribution to your RRSP
company’s profits) up to a certain maximum amount. Or the employer
• payroll savings plan (convenient plan to help you may contribute the equivalent of 5% of your salary
build up savings) to your RRSP. There are different kinds of plans
• stock option purchase (become a part owner of and possibilities. Make sure you ask your employer
the company through owning some shares in the about this.
company) In addition, if the company does offer a pension
• registered pension plan (to help build a plan, it is more likely to be a “defined contribution
retirement fund) plan.” In the past, some companies offered “defined
• group registered retirement savings plan benefit plans.” These latter plans set an amount that
you would receive monthly or yearly when you retire.
• educational expense reimbursement (to cover costs
of additional education and training) Few companies offer these plans any more.

• provision of an automobile or funds for travel

For a “defined contribution plan,” the company tells
expenses
you how much it will contribute to your plan – not
• benefits for a spouse
how much you will receive when you retire. How
• access to financial advice much you will receive will depend on how the money
• company pension program in the plan is invested – and how well those invest-

MODULE 5 53
 How About You?
ments perform. Most Canadians have to take more
responsibility for planning for their retirement than
they used to. Planning and money management Calculate the approximate income
skills are becoming more and more important. You you have received in your life so far.
will probably be involved in many, if not all, of the de- Consider the following sources from
cisions about how your savings will be invested. As which you may have received money.
with any investment, you can make money – or lose
money. Planning for retirement is a major responsi- • Allowances
bility and challenge for most Canadians. • Investment Income
Now, at a young age, you may not be thinking
• Gifts
much about retirement – but try and give it some
thought. When you start working, or if you are work-
• Employment Income

ing, company benefits may help a lot. And the earlier • Business Income
you start to build up savings, the more likely you will • Awards
be able to enjoy your retirement when you get there. • Inheritances

Self-Employment: Working For Yourself

In another module, we explore working for yourself ment, the original entrepreneur(s) may sell shares
and being an entrepreneur. An entrepreneur is of ownership to raise the additional funds needed
someone who, in order to accomplish his/her goals, for growth. Eventually, the original entrepreneur(s)
sets up and operates a venture. In many cases, this may sell all of his/her/their shares of ownership. In
means starting a business. There are thousands this way, large companies often become owned by a
of Canadians who have set up and run their own large number of shareholders.
businesses. It is an attractive option for those who Shareholders are people who invest part of their
can make it work. But a great deal of thought and financial resources in shares of the company. As
planning must go into setting up a business – and a shareholders, they receive a share of profits – called
lot of hard work is required once it is up and run- dividends. Each shareholder receives a share of the
ning. So it’s not for everyone. profits of the company or corporation according to
If you set up a business, and run it successfully, the number of shares owned. If the company is a
your reward is “profit.” Your profit is what is left over “publicly traded company,” shareholders can buy
after you add up all your revenue from sales and sub- and sell their shares on the stock exchange. More
tract all of your costs to run the business. If that final on that in a moment.
total comes out positive, you earn an income – profit. You may someday set up and operate your own
If it comes out negative, you have a loss. That is why business – or you may already have done so. If the
there is risk involved in being an entrepreneur. company makes a profit, you earn an income. If you
Most of today’s large companies started out have other shareholders, and share your profits with
small and were started by one or more entrepre- them, they will earn dividends. So “profit” and “divi-
neurs. Over time, though, as a business grows and dends” are two other forms of income.
requires more money for expansion and improve-

54 MODULE 5
Lea rn About
Go online to a newspaper, or pick up a copy, that provides information on stock prices.
Learn how to read the stock table. Select a single stock and calculate how much you would
have to pay (without any fees) to purchase 100 shares of that stock today. Follow the price
of the stock on a daily or weekly basis for the period of a month. At the end of the month,
determine the value of the 100 shares of this stock if you were to sell them. Would you have
gained or lost money?

Investment Income
Capital Gains

In addition to a share of the profits that you can earn Capital gains are earned any time you take owner-
from investing in a company (paid as dividends), you ship of an asset (something of value) for a period of
can also earn income in another way. If a company’s time and then sell that asset later at a higher price.
shares are publicly traded, you can buy shares on As you probably know, though, you can buy an
the “stock exchange.” An owner of shares (“stock”) asset – stock, bond, etc. – at one price and then find
of a publicly traded company can sell their shares its price falls. In that case, you have a “capital loss”
through a stock exchange – such as the Toronto rather than a “capital gain.“ In some cases, the gains
Stock Exchange. There are many stock exchanges – or losses – can be quite large. That is why there
around the world – in New York, London, Paris, are professionals in the different financial areas to
Tokyo, etc. provide help and advice. You would need to pay fees
There are different ways to explore buying shares for their services. There are professionals who can
– such as working with a “broker” or “advisor“ who provide help and advice with buying and selling real
works with you and provides advice, or making your estate, stocks, bonds, mutual funds, RRSPs, RESPs,
own decisions and working with a company that and so on. You will have to decide, when/if the time
serves as an online broker enabling you to buy and comes, as to whether you want or need professional
sell stock from your account, and so on. advice. If you get help, make sure the person you
If you buy shares of a company on the stock work with is trained and qualified to help you with the
exchange at $10 a share and sell those shares later investments you are planning to make.
at $12 a share, the difference is referred to as a Therefore, buying an asset at one price and
“capital gain.” This can occur with any investment selling it at a higher price to make a capital gain is
(for example, bonds, real estate, mutual funds, art), another way of getting income.
not just investments in the shares of a business.

Lea rn About
The “get smarter about money” web site of the investor education fund has a lot of great
information about investing, saving, and banking. Check it out at
http://www.getsmarteraboutmoney.ca/en/pages/default.aspx

MODULE 5 55
 Lea rn About
Interest

Interest is another form of income. Interest is the

income you receive when you provide someone
with use of your money for a particular period of Tax-free savings accounts (TFSAs):
time – e.g., a loan. That time period may range from these can be a good way for young
a matter of days to years. As an example, you may people to save money. The money
provide funds to a bank by depositing your savings you can make from interest and
there. The bank pays you interest while they hold capital gains in a TFSA is tax-free.
on to your money. Why? Because the bank will Check out TFSAs. They are becoming
lend a good portion of your money out to others very popular.
who are looking to borrow money from the bank –
for a home, a car, a consolidation loan, etc. Those
borrowers will then pay interest to the bank. Don’t
worry, banks and other financial institutions keep
enough money on hand to give you back your money
if and when you need it. Depositors’ insurance, pro-
vided by the Canadian Deposit Insurance Company You may also lend money to a company or gov-
(CDIC), also helps protect depositors’ money, up to ernment by buying “bonds” that they issue (sell).
a certain limit, should a bank ever get into difficulty. Bonds are like an I.O.U. If a government or compa-
The banks earn an income on the “spread” – the ny wants to raise money by borrowing rather than
difference between the interest they pay to savers selling shares of ownership, they can sell bonds to
and the interest they charge to borrowers. They also borrow money over a certain period of time (e.g.,
earn income in other ways too – such as fees. 10 years). They will pay a certain amount of interest
(e.g., 4%) to the bond holders. Bonds can change
hands after they are issued and before they “ma-
ture.” A bond will have a maturity date when the
amount borrowed will be paid back to whomever

Lea rn About
owns the bond on that date. For example, you can
buy and sell bonds just like stocks – but in the bond
market rather than the stock market.
You can also lend a government money by buy-
ing Treasury Bills, which is the way the government
Next time you are in a financial borrows funds for periods of less than a year (they
institution, look for the posted use bonds to borrow funds for periods of more than
interest rates. Examine the interest one year).
rates. How do the rates offered Interest, then, is the income you earn by deposit-
to savers compare with the rates ing your money in an institution, and lending money
charged to borrowers? Why do they to others, for a period of time.
differ? Are different interest rates
available to savers? If so, why do
these differences exist? Are there
different interest rates for different
kinds of loans?

56 MODULE 5
 Inheritance
At some point in their lives, many Canadians receive The will usually indicates one or more people to
inheritances. An inheritance is money or something be the “executors” of the will. That is, that person, or
of value you receive from the estate of someone who persons, has the responsibility for making sure the
dies. At times, these amounts can be quite large requests made in the will are carried out properly.
because they may come from parents or guardians or This is a significant responsibility. If you are ever
other relatives who have spent an entire lifetime build- asked to be an executor, make sure you learn about
ing up their savings, assets, investments, and so on. all that is involved.
For many Canadians, it is becoming harder to Inheritances can often be in the form of assets,
hold on to assets and pass them on to the next rather than money – assets such as houses, cars,
generation. More and more Canadians are having to cottages, and furniture. These may be passed on to
use up their savings, or large portions of their sav- others – or, may be sold for money. Sometimes things
ings, during their retirement. With fewer pensions can get quite complicated if some family members
available, as people live longer, and as many people want to sell an asset (e.g., cottage) but others want
require care in their elder years (in some cases very to keep it. It can often help if such decisions can be
expensive care), savings can be used up. made before the person dies so that there are no
When a person dies, what they leave behind in serious conflicts or disagreements afterwards.
terms of money and other assets is referred to as Although it is difficult to factor any income you
their “estate.” If the person made a wise money de- may receive from inheritances into your financial
cision, he/she will have prepared a legal will, usually planning, it is a form of income that affects many
with a lawyer, indicating what is to be done with the peoples’ lives.
estate. Their estate may be divided among a number
of people. Each person that receives something
from the estate is a “benefactor.”

At some point in their lives,

many Canadians receive
inheritance.

MODULE 5 57
Government Transfers Lotteries and Gambling
Many government programs provide money or goods Good luck if you try! There are more and more
and services. The Child tax benefit is an example opportunities, it seems, to gamble. Lottery tickets
of a government transfer paid to many parents with can be bought in many places. Slot machines, video
children under age 18. There are other government lottery terminals (VLTs), and casinos seem to be
transfers, such as welfare, that go to those who are in popping up all over the place.
particular need and who are able to provide evidence One thing to keep in mind is that they wouldn’t
to the government that they are in need of financial be so popular if they didn’t bring in lots of money.
assistance. Governments also provide employment If they make a lot of money, that means a lot more
insurance to help with income if a person becomes people lose than win. The odds are usually against
unemployed. Workers and employers contribute to you winning – sometimes very much so.
Employment Insurance and if a person becomes So be very careful of gambling to try and make
unemployed, that person has to qualify for payments. money. The risks favour losing rather than winning.
Governments will also subsidize (pay part of the And, there is the added risk of “addiction.” There
cost of) such things as education and health care. are people who lose thousands of dollars, tens of
This helps to lower the costs for people who qualify. thousands of dollars, and even life savings by getting
It is, however, important to note that income or hooked on gambling. If you ever gamble for fun,
goods and services that are received from govern- make sure it is for fun. There are better ways – and
ment do not fall mystically out of the air. Canadian less risky ways – of making money than by gambling.
taxpayers pay for those programs through the
money that they pay in taxes. Taxes are something
you probably already know a lot about (because you

How About You?

already pay them – e.g., provincial sales tax and/
or federal sales tax) and will likely learn a lot more
about them in the future.
So money and benefits received from govern-
ment are another possible source of income. Do you know people who have trouble
with gambling? Do you think you may
have a problem with gambling? If so,
check out the web site of gamblers
anonymous
http://www.gamblersanonymous.org

There are many sources of help for

those with gambling problems.

These, then, are ways to get money. The most com-

mon ones for young people are usually income from
employment and self-employment. Career planning
and decisions will help chart a course towards jobs
and future income. Let’s look more closely into career
planning. We’ll then look at the self-employment
option – and being an entrepreneur.

58 MODULE 5
 Understanding Deductions from
Your Pay-cheque
For most people, it is a bit of a shock when they receive their
first pay-cheque. They look at it and see all kinds of deductions
from their “Gross Pay” reducing the amount of their final “Net
Pay” – that is, what you actually get to take to the financial insti-
tution for deposit. What is the money that is being subtracted?

• Income Tax: Your employer will be obligated to withhold, and

submit to the government, the amount of federal and provincial
income tax that you are likely to owe at the end of the year.
• CPP or Canada Pension Plan: If you work, and contribute

Thi nk About I t
over the course of your working life to the Canada Pension Plan,
you will be able to draw an annual pension from the government
when you retire. You can start to collect the CPP pension when
you’re 60 at the earliest or defer taking the pension until you’re
70 at the latest. The amount of your CPP retirement pension
you receive will depend on how much and how long you have
contributed to the plan over the years.
When you are young, Be aware that the pension received is not an amount that is
thinking about likely to support a majority of the retired Canadians at the life-
retirement is not a style they have become accustomed to. The maximum amount
common thing to do. that a person could receive from the Canada Pension Plan in
But, if you can, take five 2018 was about $13,600 if CPP was taken as of age 65.
minutes to just think • EI or Employment Insurance: This is an amount deducted
about the kind of life from a pay-cheque that is available to provide support for Cana-
you would like to live dians who become unemployed through no fault of their own. It
when you eventually is something that you might benefit from some day – but most
retire – and the level of Canadians would hope they do not need it. But it is a program
income you may need that exists to provide help to those who become unemployed,
to live that life. How are and those who are working contribute to the program as a sort
you going to get that of insurance in the event they lose their job.
level of income? • Group Insurance Programs: Many companies will have
group insurance plans to cover things like health, life, and dental
payments. If you are eligible for these benefits, you will likely pay
towards the cost of providing them. This is often a shared cost
between the employer and the employee. Such benefits can be
important and should not be overlooked when considering em-
ployment opportunities and negotiating employment agreements
and contracts.

MODULE 5 59
• Company Savings Plans: The common rule in managing money is to
pay yourself first, if you can. That is, put some savings aside and then
spend the rest rather than spending and then hoping you have some
money left for saving. Saving before spending can be challenging for
some. One way to save is to set up an automatic savings plan. That is,
an amount will be deducted each month and deposited into a savings
instrument as soon as you receive your pay. It is a way of having “forced
savings” – that is, you set it up with your employer at the outset and
each month the savings portion is looked after automatically before
you can spend it. Sometimes the company matches a portion of the
savings you put away. Such arrangements may be able to help you save
for retirement.
• RRSP – Registered Retirement Savings Plan: One way of building
up savings for your retirement is to open an RRSP and start depositing
funds to the RRSP at a young age. This enables the savings in the plan
to grow over time so that you can hopefully reach the level of savings
that you need or want for retirement. Some companies will provide you
with an opportunity to have funds deposited automatically to an RRSP.
Some companies will actually contribute to the RRSP as well on behalf
of its employees.

So there you go. These are some of the deductions that you may see
on your pay-cheque. It is important that you understand what makes
up the difference between your gross and net pay each month. Note
that some of these deductions can provide you with benefits and some
allow you to save over time for your use in the future. Understanding
the benefits that are available and how the savings programs work may
allow you to maximize the personal value that you can get from partici-
pating in the various programs offered by your employer.

$ Ti p

Don’t overlook or ignore insurance. You likely will work hard to obtain things you want in life
– car, home, boat, etc. You also want to protect your health and well-being – as well as those
who may depend on you. Don’t be caught unprepared or unprotected. Avoid buying too much
insurance but aim to have enough so that you have peace of mind.

60 MODULE 5
Module Summary
Say What? Possible New Terms!

1. Financial independence: having access to 13. Capital gain: is earned when an asset is bought at
enough income to enjoy life without having to work one price and sold at a higher price.
if you do not wish to do so. You are not reliant on 14. Dividends: the shares of a company’s profits that
others for the money you need to live. are given to shareholders.
2. Compound interest: when savings earn interest, 15. Stock exchange: where buyers and sellers come
and the interest is added to the savings, this enables together (not physically) to buy and sell stocks with
the savings to grow and earn more interest. Over the the help of stockbrokers.
years more and more interest is added and this helps
16. Broker (or stock broker): a person trained and
to build up the value of savings.
licensed to buy and sell stocks.
3. Wage: the hourly rate paid to a worker.
17. Estate: the money and assets left by a person
4. Salary: the annual amount paid to a worker. upon death.
5. Stocks or shares: represent part ownership in a 18. Benefactor: a person who receives money or
company. “Shareholders” will receive a share of assets, as indicated by a will, from someone who
company profits based on the number of shares has died.
they own – if the company makes a profit and prof-
19. Executor: the person or persons responsible for
its are distributed.
seeing that an estate is settled according to a will.
6. Bond: a way in which governments and companies
can borrow money. A bond can be sold for a period
of time and bondholders will be paid a set amount
of interest. On the maturity date, the money will be
Thinkabout... or Discuss:
repaid to the bondholder.
7. Minimum wage: the lowest wage that an employer • How can you determine if you are a prospective
can legally pay an employee. entrepreneur?
8. Disability insurance: protection you can buy to • How feasible is it to achieve “financial indepen-
provide an income in the event of a long-term illness dence” today? What are the keys to being able to
or disability. achieve financial independence?
9. Registered Retirement Savings Plan (RRSP): • What are some of the jobs/occupations where
a means of saving for retirement. Money deposited demand is likely to increase over the next decade?
each year is tax deductible up to a certain maximum. Decrease?
Money is taxed when it is taken out of an RRSP.
• How can young people get the best guidance and
10. Registered Education Savings Plan (RESP): advice in making education, training, and career
a means to save for children’s education. Money decisions?
deposited to the plan is not tax-deductible.
• Why aren’t more young people going into skilled
11. Defined benefit pension plan: a pension plan trades where there are jobs and good incomes?
where the provider (company, government, etc.)
• Is it true that more and more young people aim to
commits to providing a certain amount of income live the lives they lived with their parents/guardians
each year when the employee retires. as soon as they leave home? Why? What are the
12. Defined contribution pension plan: a pension consequences of this?
plan where the provider commits to contributing a
• What factors are leading young people to take on
certain amount each year to the plan. There is no more debt at younger ages these days?
commitment to an annual payment in retirement.

MODULE 5 61
Did It Stick? Can You Recall?

1. What are the different possible sources of income? 8. What are some of the factors that affect your
2. What are the different ways of looking at retirement? job prospects?

3. What is the difference between (a) wage, (b) salary, 9. What are some of the “benefits” you might be able to
and (c) benefits? receive from an employer?

4. Why is Canada experiencing a skilled 10. Why is it becoming more challenging for Canadians
labour shortage? to be able to save for retirement?

5. What are the things most important to you as you 11. What kinds of income can be made
consider your career and the kind of jobs you want? from investments?

6. How can the forces of demand and supply affect job 12. Why are opportunities to gamble becoming more
opportunities and wages and salaries? and more common?

7. What is “LMI”?

Tech Ta l k
In addition to the education and training you receive, work on developing your employability skills –
the skills you need to enter, stay in, and progress in the world of work – whether you work on your
own or as part of a team.

EMPLOYABILITY SKILLS

Communicate Manage Information Think And Solve Problems

• Read and understand • Locate, gather, and • Assess situations and identify
information presented in a organize information using problems.
variety of forms (e.g., words, appropriate technology and • Seek different points of view
graphs, charts, diagrams). information systems. and evaluate them based
• Write and speak so others • Access, analyze, and apply on facts.
pay attention and understand. knowledge and skills from • Recognize the human,
various disciplines (e.g., the
• Listen and ask questions to interpersonal, technical,
understand and appreciate arts, languages, science, scientific, and mathematical
the points of view of others. technology, mathematics, dimensions of a problem.
social sciences, and
• Share information using the humanities). • Identify the root cause of
a range of information a problem.
and communications Use Numbers • Be creative and innovative in
technologies (e.g., voice,
• Decide what needs to be exploring possible solutions.
e-mail, computers). measured or calculated. • Readily use science,
• Use relevant scientific,
• Observe and record data technology, and mathematics
technological, and using appropriate methods, as ways to think, gain,
mathematical knowledge tools, and technology. and share knowledge,
and skills to explain or solve problems, and
clarify ideas. • Make estimates and
verify calculations. make decisions.

62 MODULE 5
• Evaluate solutions to alternative ways to achieve • Lead or support when
make recommendations goals and get the job done. appropriate, motivating a
or decisions. • Be open and respond group for high performance.
• Implement solutions. constructively to change. • Understand the role of
• Check to see if a • Learn from your mistakes and conflict in a group to
solution works, and accept feedback. reach solutions.
act on opportunities • Cope with uncertainty. • Manage and resolve conflict
for improvement. when appropriate.
Learn Continuously
Demonstrate Positive Participate In Projects
Attitudes
• Be willing to continuously
And Tasks
learn and grow.
And Behaviours • Plan, design, or carry out
• Assess personal strengths
• Feel good about yourself and
and areas for development.
a project or task from start
be confident. to finish with well-defined
• Set your own learning goals. objectives and outcomes.
• Deal with people, problems,
and situations with honesty, • Identify and access learning • Develop a plan, seek
integrity, and personal ethics. sources and opportunities. feedback, test, revise,
• Plan for and achieve your and implement.
• Recognize your own and
other people’s good efforts. learning goals. • Work to agreed-upon quality
standards and specifications.
• Take care of your Work Safely
personal health. • Select and use appropriate
• Be aware of personal and
tools and technology for a
• Show interest, initiative, group health and safety
and effort. task or project.
practices and procedures,
and act in accordance • Adapt to changing
Be Responsible requirements and information.
with them.
• Set goals and priorities • Continuously monitor the
balancing work and Work With Others
success of a project or task
personal life. • Understand and work within and identify ways to improve.
• Plan and manage time, the dynamics of a group.
money, and other resources • Ensure that a team’s purpose
to achieve goals. and objectives are clear.
• Assess, weigh, and • Be flexible: respect, and be
manage risk. open to and supportive of
• Be accountable for your the thoughts, opinions, and
actions and the actions of contributions of others in
your group. a group.
• Be socially responsible and • Recognize and respect
contribute to your community. people’s diversity, individual
differences, and perspectives.
Be Adaptable
• Accept and provide feedback
• Work independently or as in a constructive and
part of a team. considerate manner.
*Source:
• Carry out multiple tasks • Contribute to a team Conference Board of Canada.
or projects. by sharing information http://www.conferenceboard.ca/
• Be innovative and resourceful: and expertise. topics/education/learning-tools/
identify and suggest employability-skills.aspx

MODULE 5 63
How About You?
How are your “employability skills?” Think about each of the skill areas below and do a
little self-assessment as to where you think you are at the moment. Review the details for
each employability skill on the previous page as you complete your personal assessment.

1. How is your ability to solve problems? 7. Do you work well with others and work well as part
   of a group or team?
1 2 3 4 5
1 2 3 4 5
NEEDS LOTS A REAL STRENGTH
OF WORK OF MINE NOT REALLY YES, VERY WELL

2. Do you generally demonstrate positive attitudes 8. Do you participate positively and productively in
   and behaviours?    undertaking projects and tasks?

1 2 3 4 5 1 2 3 4 5
NOT REALLY MOST OF THE TIME COULD DO YES,
MUCH BETTER VERY WELL
3. How responsible a person do you think you are?
9. What do you see as your five most positive and well
2 3 4 5    developed skills and attributes that would enhance
1
   your chances of getting a job?
NEEDS TO BE VERY    1.
MUCH BETTER RESPONSIBLE    2.
   3.
4. How adaptable are you?    4.
   5.
1 2 3 4 5
10. What do you think are the five skills or attributes
NOT VERY VERY    that you could likely improve upon to enhance your
ADAPTABLE ADAPTABLE    future employment prospects?
   1.
5. Are you a “continuous” learner – looking for new    2.
   opportunities to learn and taking advantage of them?    3.
   4.
2 3 4 5    5.
1
NOT LEARNING 11. Would you hire you for a job? If so, for what kind of
REALLY ALL THE TIME    work? If not, why not? What can be done to
   improve your prospects for building a successful
6. Do you generally act in a safe manner and respect   future in the workplace.
   your health and the health and well-being of others?

1 2 3 4 5
COULD DO YES, MOST OF
MUCH BETTER THE TIME

64 MODULE 5