MEAGHAN DALY is the President at Boxx Media. A former Bay Street equity trader, she specializes in capital markets, advanced trading and financial literacy. She is currently developing a line of computer game software to teach financial literacy in the public school system. I interviewed her near her Toronto home. This interview was published in the Fall 2012 edition of the Journal of Aboriginal Management.
WKS: Tell me about your background.
MD: I have a degree in finance, and I’ve always had a passion for numbers and business. For about seven years I was a trader on Bay Street, for big investment firms and Canadian banks. And then things began to change in the Canadian marketplace, and I had to follow my passion and just take that fork in the road. I knew I had a passion for financial literacy, and I had to figure out some way I could add that value.
Within what’s often called financial literacy there’s what I consider consumer affairs: “Five ways to save five bucks.” It helps people, but it’s not teaching you anything other than how to save a little bit of what you’re already spending. I prefer that people focus on saving. I don’t care what you’re spending your money on. I’m more worried about whether you’re saving ten percent every month. Actual financial literacy, in the true sense of that term, has two components. There’s what I call the financial toolkit, which is the math skills. How to calculate bond yields and interest payments and mortgages. I’d say over 90% of true financial literacy focuses on this toolkit.
If you look at language, the toolkit is the spelling. Nobody understands the grammar. That’s where I am. To me the grammar part of financial literacy is learning how to make financial decisions. That’s where I think I’m a bit different.
WKS: When I went to school they didn’t teach you how to raise a family and how to manage money, the two most important jobs I’ve had. It seems bizarre to me now. Why is financial literacy important?
MD: Because it’s how you’re going to achieve all of your goals in life. You have to be in a unique financial situation to have money be irrelevant. It’s the vehicle to most goals, whether that be a house, a family, travel, or education. Everything has some kind of price tag attached to it. Even if you just want some free time, you need to have money being generated in some aspect of your life to pay for that free time.
WKS: I find that people often think of financial literacy as a luxury: “only rich people have someone who counsels them on money and finance.”
MD: Absolutely. The financial industry has gotten better in the last ten years at trying to help the consumer. But in hindsight they should have been doing it twenty years ago. I worked for banks, and they’re not these big horrible beasts – but it’s like turning around a steam ship trying to get that message out.
WKS: The reason I think my generation wasn’t taught financial literacy was that it was taken for granted you’d get a job at the local factory, get a paycheck every two weeks, and do that your whole life. Then you’d retire on a pension. Why would you need to know about interest rates and mutual funds? You’re just going to move along through the system. That world doesn’t exist anymore, but back then it was assumed.
MD: It’s easy to teach the toolkit components, but to teach someone how it fits into their life is difficult, because each life is different. In the 1940s and 1950s, most people went through the same mechanics of life. That’s not the case any more. Everyone is doing different things, having kids at different times, getting married at different times — or not getting married. So you’re seeing a lot of different lifestyle choices, and longer life spans. There isn’t a framework that everyone can follow and it will all work out.
Back in the 1950s, the lifespan was maybe seventy-something. You had maybe ten years after retirement to support yourself. If you had a chronic illness, it probably didn’t linger that long. People now have chronic illnesses in their old age for twenty or thirty years, which is expensive and limits other aspects of your life.
WKS: Demographics are very important in this. Let’s talk about your own experience.
MD: I’ve always had a passion for aboriginal issues. I tried to involve that in my education. Any time I had an opportunity to make this part of my life, I did. When I went into financial literacy, I really wanted to find a financial literacy solution for aboriginal communities. The biggest reason that brought me into this was that aboriginal people have such a high chance of becoming a community leader. Somebody told me that if a youth grows up in a First Nations community, they have a sixty percent chance of working at a band council at some point in their life. So the reality is that you might have someone who is twenty-eight years old, with a high school education, sitting across the table from Gold Corp., and they’re making long-term decisions for their community. If the average non-aboriginal person messes up their finances, they might hurt their household. And that’s the framework of the damage or prosperity when you look at aboriginal youth, who are not only growing in numbers exponentially but who can really affect their whole community.
WKS: The stakes are higher.
MD: Right. And when people gain financial literacy skills, they tend to have gains in decision making in general. If financial literacy were solely a matter of math, then everyone who was great at math would have great financial lives. That’s just not true. It’s not just a math skills issue, it’s teaching people how to make decisions. I had this big desire to teach people the financial decision making skills in the communities in a way that wasn’t telling them what to do. I feel there’s a lot of helpful groups, but they try to guide aboriginal people and communities into one area that these groups think is right. I want them to get the tools so that when the economic environment changes, it can snowball into something positive.
The history I was seeing in First Nations was that they were paying someone outside the community a lot of money over the last twenty to thirty years to help them with the financial decision making. They would pay for a 200 page report, and would follow the directions but not have a deep understanding of them. So when the situation on which that report was based changed, they weren’t able to adapt. Because they didn’t understand the mechanics, they would follow the recommendations and wonder why things were beginning to fall apart. No other segment of Canada is placed in this situation.
WKS: How do you begin then to acquire this thing called financial literacy?
MD: In Ontario, financial literacy is going into the schools from grade four all the way up to grade twelve. It’s starting in the educational component. If you’re looking for the toolkit knowledge, you can get information from your bank. Bookstores have lots of books on this. You have to zone in on the math part of it, and sort of push aside the messages about five ways to save five bucks. But a lot of books have good technical information. The program I’ve developed, that I’m trying to get implemented starting with aboriginal communities, is a computer-based software program in which the teacher is the facilitator and the students work in groups of two or three. The first is for grades nine and ten, and I’m calling it the “General Store Business Game.” The game goes on for ten weeks, where every week represents a year in the life of their general store. Every week they get to make financial decisions, and they get to see those decisions play out in theory over ten years. They can’t change any decision, and every week the game will pose new problems.
It’s not so much about teaching students how to run a general store. There’s a lot of personal finance stuff, aspects of the game that they will encounter in their daily life. It would tie into community leadership, giving them an understanding of how interest rates work, how bonds work, how mortgages work. Learning how savings can affect you.
The technical term is “financial sensitivity” — what will make you more secure versus what will make you financially more precarious. The goal is to teach the student about what is going to make them financially secure in life. It’s okay to take risks, if you have goals and a plan, and you understand that you are making a risky decision. You can take out a loan that’s maybe bigger than you wanted. There’s things you can do to balance out the risks, like having savings. It’s teaching the basics using a game.
The game I’m doing for the grade eleven and twelve students is called the “Band Economic Business Development Game.” It’s the same concept, two to three players and every week is a year in the life of your band office, etc. In this one they really get to understand financial sensitivity, and how to come up with and fund the goal of financial security. Again, it’s not telling people what to do: it’s showing them the ways they can get where they want to go. There is more than one way, and as the game moves on each team will look different. As long as they do things that have foresight, and they have a plan, everyone can win. You can learn from your own decisions, as well as from the decisions of other teams in your class. Because it’s all done on computer, they can compete not only within their own school but also with other communities.
WKS: When will these games be available?
MD: If I can get my funding solidified, I can build them over the winter. My goal is to be testing them in January to February of next year. So it would roll out as a product in September 2013, and that would correspond to the launching of the financial literacy components of the provincial curricula. In three years, I expect math in high school to be thirty percent financial literacy. But it’s all going to be focused, as far as I can see, on the toolkit. I’m curious to know how the plans of the provinces will roll out. I feel it’s one thing to say we’re going to put this large component of financial literacy into curriculum. It’s another to implement it and give teachers — who are great people, but by no means more or less literate than the average person — the support they need to teach that content. The financial world has changed, and were not changing how we teach it. I think that’s where the product I’ve developed does reflect financial changes.
WKS: The idea itself that the world of economics changes is probably the biggest change of our generation. It’s a powerful idea, and I wasn’t taught it. Nobody forty years ago thought there was any need to adapt to a world where the financial decisions you were making could change radically within a matter of years.
MD: People in the 1950s made one tenth the financial decisions we need to make today. Here’s an example. The credit card wasn’t invented until the 1950s. Most people couldn’t have one until the 1970s. And they couldn’t carry a balance on it until the 1980s. This whole idea of a generation of entitlement is bullocks. People haven’t changed — the finance behind what is happening in our society has changed. That’s why we need to adjust how we teach.