Canadians are very well educated and intelligent. But money is still a topic that many of us tiptoe around, mostly because the majority of Canadians have never received a basic education about how to handle money beyond a middle-school level home economics class, but need to deal with it on a day-to-day basis.
The Financial Consumer Agency of Canada (FCAC) aims to change that with the recent appointment of Jane Rooney as Financial Literacy Leader, the Financial Literacy Month initiative, and year-round resources dedicated to improving the financial literacy of Canadians. The campaign features a calendar of financial literacy events in many Canadian communities during the month of November, some speaking to the theme of 2014 Financial Literacy Month which is Strengthening Financial Literacy Through Collaboration.
What is Financial Literacy?
Financial literacy refers to how well you understand your own personal finances. This covers everything from knowing how to budget and save to understanding your insurance policies. It’s a wide topic area to wrap your head around. You can take a quiz to find out on the FCAC website to find out how financially literate you are. At the end of the quiz, you are given resources to help improve your understanding of particular areas of financial literacy, including budgeting, making ends meet, planning ahead and more.
How Financial Literacy can Impact Your Life
After dealing with money for a certain period of time, one can fall into some incorrect patterns and ways of thinking. An example of one of these traps is “I make such-and-such amount of money, so I can afford to do this.” In this particular example, the individual is only taking their income into account, rather than both income and expenditures. If you change this to “My budget allows for me to do this, so I can” – you have the correct way of thinking about the concept of affordability.
Canadian Seniors Declaring More Bankruptcies
Bankruptcies among Canadian seniors are on the rise. According to Bruce Caplan, senior vice-president and trustee in bankruptcy with BDO Winnipeg, there are several factors contributing to this, including:
• Longer life expectancy
• Having to financially bail out adult children and grandchildren
• Supplementing income with credit they have an inability to pay off
Canadian seniors aren’t the only demographic in trouble; 51 percent of employees report that they would be in financial trouble if their paycheques were delayed by a week.
The problems outlined here don’t just involve financial literacy, but financial literacy is good preventative medicine for them. For example, if an adult child comes to their parents for financial help, the parents would be able to look at their budget and see what they can do for their children, rather than just giving them what they need and suffering the financial consequences later.
If you want ongoing tips on personal finance, FCAC offers a financial literacy monthly email newsletter. There are also a number of books and blogs that offer additional insight into personal finance for Canadians.
If you have run into situations that are making your retirement difficult financially, contact Horizon Equity for information on a reverse mortgage.