When I hear one of my kids singing a commercial jingle, I cringe.¬† It’s not that I don’t enjoy their high pitched, bouncy voices; but rather, I resent the ease with which a giant corporation can brand their unblemished minds with a typically useless product.¬† As many parents can attest, a catchy tune and a few special effects is all it takes for a child to turn their glazed eyes toward Mom and Dad to plead, “Can I have it?”¬† Until the multi-million dollar marketing campaigns shift their power of persuasion to benefit, rather than burden, parents, the desire to shelter kids from advertising will persist.¬† In today’s age of the glowing screen, however, that effort is bound to grow more challenging.

Mobile phones have become the latest vehicle for product promotions

When my kids were toddlers, their TV viewing was limited to commercial-free stations, like TVO Kids, where advertisements are limited to a quick thank you to their sponsors.¬† As they’ve drifted away from The Wiggles and toward SpongeBob, the ban on ads is gone and kids are exposed to a slew of new toys and sugary cereals that they’d otherwise never know about.¬† Parents may take some solace in their children’s replacement of television with video games which have fewer, if any, commercial interruptions; however, advertisers have crept into those forums, as well.¬† In fact, the smallest, most personal screens – mobile phones – have become the latest vehicle for product promotions.¬†

According to a recent article in Advertising Age, companies like Kraft and Nike are offering interactive applications, such as dinner menu planning or ski reports, on mobile devices to better engage consumers with their top brands.¬† Rather than force-feed their audience an ad, they provide free online (logo-heavy) programs that conveniently integrate into recipients’ daily lives.¬† It’s an interesting concept and even die-hard anti-corporate crusaders will be hard pressed not to use a product if it makes their life easier. Parents should be concerned, however, that as more children join the population of mobile device owners, companies that sell children’s products will be salivating at the prospect of reaching them through those mini screens.¬† ¬†¬†

Advertisers are also likely to engage in tactics that are more intrusive and less welcome than the voluntary downloadable programs.¬† Last week, AT&T sent a large portion of their 75 million customers a text message promoting the season premier of the reality show, American Idol.¬† It’s sort of like having a telemarketer join your phone conversation with your spouse to let you know of a sale on ventilation cleaning.¬† It’s no wonder the backlash by its customers was swift and fierce.¬† However, this experimental effort by AT&T to promote its offerings via texting will likely become a regular occurrence as more companies discover the ease with which they can capture the eyes of millions of consumers.¬†

It’s a shame there are no profits to be earned by encouraging children to be more obliging of their parents’ requests.¬† Every kid in North America would be getting a mobile device for his next birthday if that were the case.¬† But that’s the stuff of fairytales.¬† In reality, parents who want to limit the forces competing for their children’s hearts and minds may want to dim some of the screens in their lives.¬† One added benefit?¬† Fewer targets on your wallet.

It’s January 2009.¬† And, do you know where your money is?¬† I’m guessing it’s not in your wallet, and worse, it may not even be in your savings account.¬† In fact, if you’re like the average Canadian, your money is tied up in paying off debt and you owe $9,000 on a line of credit and $2,400 on credit cards.¬† If we’ve learned anything over the past two decades, it is – spend now, pay later.¬†

In 1984, household debt (including mortgage and credit cards) equalled 71 cents of every dollar of income.¬† Fast forward to today and the debt has increased to $1.27 for each dollar of income.¬† The average Canadian today saves about 3% of their earnings (versus 20% in 1982.)¬† It’s no wonder new debt gets shovelled onto old debt.¬† With no savings to cushion unexpected expenditures (anything from car repairs to your pre-teen kid’s braces) the only option is to use a line of credit or charge it – and pray that somehow you’ll be able to pay it off… one day.¬†

TFSAs allow you to withdraw your money anytime with no penalty

The Canadian government is now offering an incentive to rebuild the savings that were lost over the past three decades with the new Tax Free Savings Account or TFSA (pronounced tifsa).¬† According to National Post Wealthy Boomer columnist, Jonathan Chevreau, TFSA’s “were the biggest innovation and tax break since the registered retirement savings plan (RRSP) was introduced a half-century ago.”¬† And if you haven’t heard about it yet (it’s been written about in every newspaper), you probably also don’t know that you should stop buying $5 lattes at Starbucks and settle for a home brewed cup of java.¬†

As of now, January 2009, Canadians can open a TFSA and start earning money, tax free.

The plan is similar to a Registered Retirement Savings Plan (RRSP), so if you understand how they work, the TFSA is even simpler.  Here are the major features:

• You must be at least 18 years old to own a TFSA.
• You may invest in anything, such as a savings account, bonds, stocks, mutual funds, GIC’s.¬† Like RRSPs.
• All dollars earned – either through interest or capital gains – are not taxed when withdrawn.¬† Unlike RRSPs (a tax-break is given when you contribute, then you are taxed on withdrawal.)
• The contribution limit is $5000 per year, regardless of your income.¬† Unlike RRSPs (contribution room is based on income.)
• If you do not contribute the full $5000 one year, the remaining amount is carried forward every year for the rest of your life.¬† So, if you put $4000 into a TFSA in 2009, you can put in an extra $1000 in 2010, or whatever year you have that extra thousand dollars to save.¬† Unlike RRSPs (there is an age limit to contributing.)
• You can withdraw your money anytime you want with no penalty.¬† Need to purchase snow tires one particularly blustery winter?¬† Have to pay for your son’s speech therapy?¬† No problem.¬† Just dip into your TFSA and withdraw your necessary funds.¬† Unlike RRSPs.
  • The amount withdrawn is added to your contribution room the next year, so you can replenish that tire money later, in addition to your annual $5000 limit.
• If you are in a single earner family because one spouse is at home with the kids, any income earned in a TFSA by the stay-at-home parent is not attributed back to the working spouse.

It’s so simple.¬† For families, the main benefits of a TFSA appear to be the steady availability of funds (versus RESPs and RRSPs), the income splitting opportunity, and the tax-free earnings to help save for big purchases (think house, car, private schooling.)¬† For more detailed and professional guidance on how to make the most of TFSA’s, you can buy a book written by Gordon Pape called (surprise!) Tax Free Savings Accounts.¬†

Now – how to cut back on your spending and actually acquire enough money to put in a TFSA?¬† You’ll have to figure that one out by yourself.

Financial Post has a number of online interviews with author Gordon Pape to further illuminate Canadians on the qualities of the TFSA.

Sources: National Post New TFSAs change a guru’s game plan by Jonathan Chevreau, MoneySense December/January 2009 issue