It’s no secret that finances are stressful. Discussing money, taxes and budgets can make people anxious – especially in 2020, where more Canadians feel worse off financially this year than last year. But there is good news! Staying on top of your finances is important and with the right tools can be pretty easy to do.
This November marks the 10th anniversary of Financial Literacy Month in Canada. Financial Literacy Month is designed to help Canadians gain financial confidence and make informed financial decisions relevant to their circumstances by equipping them with practical tips and tools.
We thought we would get into the spirit of Financial Literacy Month by highlighting some of the basics that can help you make the most of your finances.
What is Financial Literacy?
What exactly is Financial Literacy Month all about? It’s not as scary as it seems and can actually be interesting to learn. It’s the understanding of different areas of finance including credit, debt management and investing. Financially literate people understand how to make informed decisions to manage money and prepare for the future – all good things!
Why Is Financial Literacy Important?
Keeping What You Earn
You’re earning money from your job, which is great. Learning financial literacy can help you reap the rewards for all of that hard work. That’s why understanding finances is so important.
It also can take some of the stress away from daily life, and who couldn’t use that? Not everyone has the perfect job or the ideal salary but having financial literacy can help you avoid major financial struggles both now and in the future. It can also help protect you from predatory lenders or scams, keeping that hard earned money where it belongs – in your pocket!
New Technology Makes It Easy To Spend Money
In the past, we mostly used cash to make purchases, where you physically knew how much money you had and spent. That has become a thing of the past. With the simple tap of a card or click of a button, anyone can make a major purchase. Credit cards have become increasingly convenient to get and to use, which means that if you aren’t careful with your spending it can get out of control in no time.
Our Debt Is Growing
It’s true that our debt is growing. However, the good news is that young people want to learn about finances. A survey of young Canadians found that 93 per cent thought it was important to learn about finances. Financial literacy needs to be taught to everyone, so that each of us can be prepared for the future and make the most of our money.
Tips to Improve Your Financial Literacy Skills
Create A Budget
A budget is a great place to start. It helps bring some balance by knowing exactly how much money is coming in and how much can go out. You may be a paper and pen type of person or an Excel spreadsheet wiz, but if you want to be able to always have your budget with you it’s a great choice to use an app. Mint, PocketGuard and You Need A Budget are just a few that are easy to use.
Plan for Emergencies
As much as we try to live in the now, it’s important to think ahead with your money. It’s important to try to have an emergency fund if anything unexpected comes up that will affect your budget. This year more than ever, people have been dealing with uncertain times when it comes to finances. Try to save enough to cover living expenses for a few months. Even putting a small amount away at a time can make a big difference.
Manage Your Bills
Technology has made it easier to spend, but it has also made it easier to pay your bills. Set up automatic withdrawals as a payment option so you know your bills have been taken care of. Some banks also offer services where you can automatically transfer money each month into a savings account or RRSP, taking the thinking out of saving. They also offer online budgeting tools, low balance alerts and mobile chequing deposits. All of these things can be crucial to helping you better manage your money.
Manage Your Debt
Debt can feel overwhelming, but with a plan, you can work towards paying it off. Once you’ve got a budget set, it’s time to review your debt and decide on a payment strategy – which debts you’ll pay off first, how much you’ll pay per month and when you hope to be done paying it off by.
Save For Retirement
Retirement can seem like a lifetime away, especially when you have bills piling up and debt to pay off. But don’t forget about it! The more you save now the better off you will be once you retire. There are lots of different ways you can save, but a good way is through investment or a registered savings plan.
Financial literacy is something we all need to know. Whether you’re young or old, have your first job or are retiring – finances are important. There are plenty of tools and support you can find online. So make sure you take the time this Financial Literacy Month to become financially literate!