Financial Literacy Month Can Help You Take Charge of Your FinancesPosted on: November 22, 2019
Canadians celebrate Financial Literacy Month every November. Created and launched in June 2015 by the Financial Consumer Agency of Canada (FCAC), this initiative sets out three basic goals to help Canadians understand their rights and responsibilities to be able to:
- Manage their money and debt wisely,
- Plan and save for their future, and
- Prevent and protect themselves against fraud and financial abuse.
The overall theme for this year is “Take charge of your finances: It pays to know!” There are weekly sub-themes throughout the month to bring specific focus on basic money management practices that are critical to help Canadians understand how to manage their money the right way. These weekly sub-topics will include:
- Week 1 (November 3 to 9) – Start with a budget
- Week 2 (November 10 to 16) – Set financial goals
- Week 3 (November 17 to 23) – Be a smart financial consumer
- Week 4 (November 24 to 30) – Borrow money wisely
During the month-long celebration, organizations from the private, public and non-profit sectors across the country share information and resources, in the form of hosting workshops, seminars and other events to promote financial literacy for Canadians of all ages and to help them think more about their financial well-being and how they can improve it.
We at Richard Killen are joining financial organizations all across Canada to help you become smarter about your money.
Why Do We Need to Be Financially Literate?
These statistics based on a survey conducted by Lowestrates.ca and Ipsos Canada, the country’s leading provider of public opinion research, will help you understand why:
- 50% of Canadians have no budget to define their short-term and long-term financial goals.
- 32% of Canadians don’t expect to have enough money to retire comfortably.
- Only 36% of Canadians understand how applying for a credit card can negatively affect credit score.
- 60% of millennials don’t have enough money to cover an emergency expense.
- 85% of Canadians agree that financial literacy in Canada is lacking.
- 87% agree that the lack of knowledge is contributing to Canada’s consumer debt problem.
- 85% wish they personally had the opportunity to learn more about finance and the economy while in school.
- 94% agree that Canada’s schools need to do a better job at teaching financial literacy skills to children.
- Only 16% of Canadians feel that they have strong personal financial literacy skills.
- 39% feel that they have poor financial literacy skills.
- Only 35% agree that Canadians overall have strong financial literacy skills.
Money touches all areas of our life, so it’s extremely important to be financially literate for our own financial well-being in life. If you know this knowledge and skills early on in life you will be able to develop good money-management behaviours in the long term. This will enable you to make wise financial decisions and actions all throughout life, and most importantly, if you do make poor decisions you will know how to fix them and take steps to plan better for the future.
Basic Financial Literacy Skills
Becoming financially literate doesn’t happen overnight. You learn gradually starting with the basics and build fluency over time.
Perhaps the most basic financial skill to start learning is knowing how to budget. Budgeting is the best way to see how money comes in and out of your life. It will require you to go over your income and expenses and analyze your spending habits, and likely make changes where you need to. It may sound too restrictive, but it will help you take control of your money, instead of your money controlling you. And when you have better control of your money, you are able to make sound financial decisions.
Ideally, this is what you want a basic budget plan to have:
- A breakdown of all your needs all of your expenses over the course of a month so you can account for each of them.
- Track every penny you spend weekly or twice a week, depending on how often you deem necessary, and compare your actual spending to the budgeted amount.
- Evaluate ways for lowering your monthly bills as your expenses can’t be more than your income.
- Identify some income left over at the end of each month to build emergency savings or put toward other financial goals.
The only way for budgeting to be effective is for you to be realistic and put together a plan that you can actually follow. The more time and effort you put into developing your household budget, the better understanding you will have of how you’re spending your money and, as a result, the better you will be able to identify where your financial holes are. The sooner you can see the gap between what you can afford to spend and what you actually spend, the closer you can get to stop living paycheck to paycheck.
Knowing how to manage money effectively is a valuable life skill to have and financial literacy equips us with the knowledge and skills we need. We can learn to be financially literate, and it’s never too late to start learning.
If you’re interested to know about your own financial literacy, take this Self-Assessment Quiz (insert link – https://itools-ioutils.fcac-acfc.gc.ca/FLSAT-OAELF/star-comm-eng.aspx) to help you find out.
We encourage you to also come and talk to us to get a free checkup of your overall debt and financial health. As Licensed Insolvency Trustees, we are government regulated debt professionals and can help you to improve your overall financial literacy and learn new ways to become more savvy with your money.