November is Financial Literacy Month! Every November since 2011, the government group known as Financial Consumer Agency of Canada (FCAC) works to bring Canadians resources to help them manage their financial well-being. This is the second year Financial Literacy Month has taken place during the pandemic. This means the emphasis on understanding and managing our money is stronger than ever, as many of our finances have taken a hit. In preparation for this year, let’s review what exactly Financial Literacy Month is, and how it affects you.
What is Financial Literacy Month?
Every November is Financial Literacy Month in Canada. FCAC’s goal is to educate and improve the financial knowledge of Canadians. They work with all kinds of organizations, including those in public, private, and non-profit sectors, to encourage the sharing of information and resources that can help improve financial literacy amongst Canadians.
Last year, the overarching goal of Financial Literacy Month was to help Canadians feel more confident about their financial decisions, in light of the pandemic and how it affected their finances. Topics Canadians could find information on included debt management, budgeting, retirement, business ownership, renting and buying, all in the form of apps, books, calculator tools, reports, brochures, and so on. You can read more about Financial Literacy Month here.
What is considered “financial literacy?”
What exactly does it mean to be financially literate? In its most basic form, financial literacy means having financial skills like budgeting, saving, investing, and general financial management to improve or further your own financial situation. The economy is always changing and our finances are at the core, so it’s important to understand how our money affects our lives. We need to know what the best decisions are for us in every area, from real estate to legal services to debt management. Of course, all of these involve money management.
Why is it important?
Often, people who are in good shape with their finances do their research and take action to ensure they can stay in a strong financial condition. Meanwhile, people in financial trouble shy away from looking for help. This comes from reports on the Government of Canada website, which suggests the people in need of financial literacy assistance are the ones who avoid it. This means, in Canada, we have one group of people with high financial literacy, and one group of people with poor financial preparedness. It’s important not to fall into the second category, because debt management is essential in Canada.
According to Statistics Canada, Canadians have one of the highest debt levels worldwide. In fact, over 70 per cent of Canadians are in debt. While some debt can be good in the long run, like buying a home or continuing one’s education, others can quickly overwhelm us with no clear benefit, like excess credit card debt. FCAC found that not only do Canadians have lots of debt, but they also have lower savings and minimal plans to deal with debt. In fact, many people don’t even know the best ways to go about paying it off. It’s important to have plans and understand how to handle our debts. The more advice we seek and knowledge we collect, the less anxiety our finances bring us.
How can you improve your financial literacy?
Government of Canada database
On the Government of Canada website, there is a financial literacy database that is tied to Financial Literacy Month, but is still accessible year-round. It allows you to filter fields to determine the topic you want information on, what you want help with, the format you prefer to find it, what your goals are, and so much more. You will see results with studies, reports, graphs, and all kinds of tools to help you on your search. These results are submitted by organizations to be included in Financial Literacy Month resources.
Follow financial organizations
One of the best ways to keep yourself informed is to follow trusted organizations or businesses that provide useful information. For example, you could use social media, subscribe to newsletters, listen to podcasts, etc. You can follow banks, the Government of Canada, individual professionals, or websites like the Canadian Real Estate Association. You will learn things you may never have thought about, which will broaden your financial knowledge.
Track your spending
How can you improve your literacy skills without applying them to your own situation? Budgeting and debt management are hard if you don’t know where to begin. Start by simply recording all your spending for a month. See where your money goes, and if there’s anywhere you can cut or readjust. You will learn a lot about budgeting, and about your own wants and needs. Creating a realistic budget includes knowing where you can and can’t trim your spending, and tailoring it to your situation.
Talk to a professional
This is especially important if you’re thinking about entering the market in any form in the future! If you plan to buy or sell a home, refinance your mortgage, apply for a new credit card, start planning for retirement, or buy an investment property, there’s a professional who can help you. As a broker, I can guide you through many of these processes. I can connect you with lenders, take care of paperwork, and give any advice you might need.
Financial Literacy Month may only officially be in November, but taking care of your money is essential year-round. If you have questions about buying a home or refinancing, get in touch with me!