November is Financial Literacy Month in Canada and with consumer debt dominating the news, there has never been a better time to improve financial knowledge and take steps to build a better financial outlook.
As Canadians, we are faced with an endless number of financial decisions in our day-to-day lives. In order to make these decisions, we need to be financially literate.
In other words, we need to have the financial life skills and knowledge to make informed financial decisions.
We all gain financial life skills as we use money for different things in our everyday lives. As a result, most people improve their financial literacy through trial and error - only learning something new about money management when there is a financial issue or need.
Learning money management skills through trial and error can be dangerous.
Not only are you putting your money at risk, you may face problems paying bills, covering monthly expenses and making sound investments. Uninformed financial decisions may also ruin your credit, which can prevent you from reaching other financial goals.
Instead of learning through trial and error, take steps to improve financial literacy today.
Learning more about how finances work can help you avoid problems so you can maintain a healthy financial outlook.
Having a good understanding of these essential areas of money management can help you make more educated choices about how to achieve your financial goals:
Budgeting: Household budgeting is the foundation for building better financial life skills. Writing things down, setting budget goals and tracking spending are essential to financial stability. Effective budgeting also helps you achieve your financial goals.
Saving: In order to live a financially healthy life, it is important to save money and have an effective savings plan in place. Making savings an important part of your budget, no matter your income level, helps you plan for your family’s future and reach your financial goals.
Debt: Not all debt is bad debt. In fact debt can be an important part of a financially healthy life. Debt allows you to build credit, purchase assets, shop online and achieve your financial goals.
Credit: Understanding your credit score is an important part of financial literacy. Excellent credit allows you to find the best deals on credit cards and get the lowest interest rate on things like mortgages and auto loans. On the flip side, bad credit means you may face higher interest rates and will likely pay more for your debts.
Whether trying to balance a family budget, buy a home, purchase a car, fund an education or plan for retirement, we can all gain by learning more about money.
This November, take some time to improve your financial life skills and build a healthier financial future.
Jeffrey Schwartz is the Executive Director of Consolidated Credit Counseling Services of Canada and President of the Credit Association of Greater Toronto (CAGT). Consolidated Credit is a national non-profit credit counselling organization that teaches consumers about personal finance through web-based budget and debt analysis tools, financial literacy community outreach programs and in-person or telephone counselling. Visit www.consolidatedcredit.ca for more information on credit counseling, debt management and budgeting.