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Canadian Financial Literacy Database



Understanding your finances has never been so important

The impact of COVID-19 on Canadians and the economy is unprecedented. Canadians were already burdened by high levels of debt and, as a result of the pandemic, are increasingly facing financial pressures.


Financial literacy is defined as having the knowledge, skills and confidence to make responsible financial decisions. The complex and ever-changing world we live in means that people need to keep up with current information. It’s important to get help to make informed financial decisions any time, but especially now.


The Financial Consumer Agency of Canada is an authoritative source for practical tips and tools, including information on managing financial health in challenging times. Their financial toolkit includes information to help strengthen your financial literacy.


Financial Literacy Month, which takes place each November, is an opportunity to strengthen your financial literacy. Throughout the month, organizations from across the country host events and share resources to help manage money and debt wisely, save for the future, and understand your rights and responsibilities when dealing with financial institutions.


During this month and throughout the year, you can find educational resources at Canada.ca/financial-tools.


Keep track of your money with a budget

If your financial situation has been impacted by COVID-19, a budget can go a long way toward helping you. Creating and maintaining a budget is one of the most important first steps for managing your money.


A budget is the foundation of financial wellness, which means to be able to meet your financial needs, feel secure about your future, and make choices that allow you to enjoy life. Having a budget that lays out your income and monthly expenses is an effective way of managing day-to-day finances that has been shown to help people spend wisely. Also, remember that knowing the difference between your needs and your wants is key to making a smart budget.


If you don’t know where to start, there are plenty of free online tools to help you get started, including the Financial Consumer Agency of Canada’s new Budget Planner. This online interactive tool is free to use and designed to help Canadians start budgeting and keep it up. It is unique in the way it uses insights into how people make financial decisions to create an interactive experience that is tailored to the individual.


The Budget Planner also allows you to learn and improve your financial situation by providing budgeting tips, advice and alerts, along with suggestions and useful links. You can also view charts that show you where your money is going, and you have the option to compare your budget with those of other Canadians in similar life situations.


Find more information at Canada.ca/money.


Your financial goals may have changed – here’s how to reach them

During this trying time, your financial priorities may have changed. This could be an opportunity to reassess your financial goals and make changes to your savings plan.


The first thing to do is to identify and prioritize your goals. Then, set a dollar amount and a timeframe for each goal. The amount of time you have to achieve your goals can affect how you plan to save and invest.


If you're saving for a major purchase within a year or 2, your focus will be on building your savings. You'll want to keep your money protected and easily accessible.


If you’re putting money away for a long-term goal, such as your retirement or your child’s education, you may want to consider a broader range of investment types, including bonds and mutual funds. Keep in mind that some investments are complex and can be risky. Talk to an investment professional or financial advisor to find the investment options that are right for you.

If you can, consider setting money aside for an emergency fund to pay for future unexpected expenses, like a home or car repair. Start by figuring out what you can put aside every week. Whether it’s $50, $20, $5 or some small change, the important thing is to start. Eventually, your goal should be to save the equivalent of 3 to 6 months of regular expenses.


When it’s truly an emergency, don’t hesitate to use your emergency fund. It’s much better than costly options such as credit card advances or payday loans. It will also help you manage your finances during challenging times and prevent financial stress.


Find more information at Canada.ca/money.


Tips to help you pay down your debts during the pandemic

Too much household debt can cause financial stress and weaken your ability to manage your finances during periods of economic difficulty. On average, Canadian household debt represented 177 % of disposable income in 2019. Because of the pandemic, Canadians may even be experiencing higher levels of debt.


That is why it’s more important than ever to learn how to minimize your debts. A budget is especially important if you have trouble paying your bills and do not know where your money is going every month. It will help you figure out how much money you have coming in and how much you spend and save. It will also help you balance your income with your expenses and guide your spending to help you reach your financial goals, such as paying off your debts.

While it may be hard during these challenging times, try to avoid borrowing money as much as possible. If you do borrow, make sure you have a plan to pay it back. Working a plan to repay debt into your budget will help ensure that your plan stays on track. And make sure you understand the cost of different credit products. Shop around, do your research and choose credit products that meet your needs.


If you’re having difficulties paying for basic expenses or think you will have a hard time keeping up with regular payments like your mortgage or credit card charges, it’s a good idea to speak with your financial institution about possible relief options that may be available. Before deciding, weigh the pros and cons of these relief options.


Managing your debt is not always easy, but there are resources to help you. The Financial Consumer Agency of Canada provides unbiased and fact-based information you can count on.


Find more information at Canada.ca/money.


Protect yourself from fraud during the pandemic

The last thing you need in this time of uncertainty is to become a victim of fraud. And fraudsters are not slowing down. In fact, they are taking advantage of the COVID-19 pandemic to prey on consumers’ fears. But the more informed you are, the better you will be able to protect yourself.


You may get a phone call, email or text regarding COVID-19. If you do, be very cautious. If it seems too good to be true, it probably is.


In the online information age, financial fraud is becoming more complex. It’s easy to be taken in. Fortunately, there’s lots of good information online about how to protect yourself. The Competition Bureau of Canada’s The Little Black Book of Scams gives you important information about the different types of fraud that exist and great tips to help protect yourself.


The Canadian Anti-Fraud Centre also has a list of reported frauds and scams, including those associated with the pandemic. If you suspect a fraud, alert the centre, as well as your financial institution immediately.


It is also important to order a free copy of your credit report from Equifax or TransUnion to check for signs of fraud. This is something you should do at least once a year to make sure someone has not tried to apply for credit cards or other loans in your name.


Find more information at Canada.ca/money.


Tips to help students build good financial habits

As a result of the COVID-19 pandemic, this school year is looking very different for most post-secondary students. One thing that hasn’t changed, though, is the importance of building good financial habits early. If you’re a parent of a student in college or university, now is the right time to teach them how to understand their money.


A great way to start is with a budget. You can explain to them that it is like a map of their income, expenses and savings that will help them figure out how much money they have coming in and how much they will need to live. A budget can help them manage their money throughout the school year, so they’ll have money left at the end. It can also help them avoid taking on extra debt and save for financial goals.


A great tool to use is the Financial Consumer Agency of Canada online Budget Planner to create a personalized budget and get tips, advice and alerts to better understand personal finances.


An important first for many post-secondary students is getting a credit card. The average annual interest rate for student credit cards in Canada is over 18 %. Interest charges can add up quickly if they carry a balance, so make sure they choose a credit card wisely and pay their balance in full every month. The FCAC also has a credit card comparison tool to help.


Remind them that it’s important to review credit card statements regularly to see where their money is going. Paying their credit card balance in full and on time helps to maintain a good credit history, build their credit score, and avoid interest charges and other fees. If they can’t pay their balance in full, it’s important to pay more than the minimum whenever possible.


Keeping track of their money as a student will help them reach their goals now and in the future.


Article Source: Canada.ca

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