Roughly one in three Canadians on average have committed financial infidelity: they’ve lied to a partner about their income, spending or saving habits, maxed out a credit card or not told a partner about a major purchase. Over 1,000 people answered the Leger survey for Credit Canada and the Financial Planning Standards Council, which also found that respondents under 34 were more than twice as likely to do this than those over 65.
When you look at the financial landscape, it’s not hard to see why. With advances in technology changing the way we live daily life, to fluctuating economies and job markets creating instability for millenials, their financial futures are less predictable and what worked for their grandparents (and parents!) won’t necessarily work for them. Regardless of your age, it’s a good idea to brush up on your financial literacy to stay on top of changes in best practices.
Financial literacy is the process of learning and understanding concepts related to money and accounting. While often the basics are taught within families, it’s less likely that beyond how to budget the same advice still applies.
So what topics should your financial literacy education cover? We’ve broken the concepts down into beginning level and intermediate skill sets to make it less overwhelming and provided a brief overview of what’s included in each idea. We hope this inspires you to explore some of the financial concepts you don’t currently have a good grasp of--you don’t know what you don’t know!
Financial Literacy 101
These are the topics everyone should know, and know early. Everything listed has extensive internet coverage, but make sure to fact check what you’re reading with additional sources.
Banking Basics
Opening up a bank account seems obvious, but there’s still something to learn. What ID is acceptable? Does the bank require a specific balance? Which chequing account is right for you? How will you be able to make that decision?
This also includes learning to read statements, setting up savings, understanding interest, and making sure your accounts balance.
Budgeting Basics
Do you have a budget? If not, you need to learn how to make one. Otherwise, your ability to set and achieve financial goals is hindered if not nonexistent. In this category you’ll also find lessons on establishing and using credit, identifying assets and liabilities, staying out of consumer debt, and recognizing potential scams like cheque cashers, predatory lenders, payday loans, and rent-to-own setups.
Taxes
Everyone has them. The earlier you learn the basics of what you need to file, the better off you’ll be. For most people it’s not a complicated process, but always ensure your accuracy before filing them yourself. Standard lessons should include student loan interest credit, earned income credit, child credit, and how to have taxes withheld appropriately from your paycheque.
Financial Planning
This is different from financial literacy and includes thinking ahead about your finances so that future you isn’t caught flat-footed. It’s different for every life stage and should be a fluid thing, evaluated and adapted to changing circumstances. This includes learning about different kinds of life insurance and the risk of being uninsured, owning a long-term liability like a car, and writing a will.
Financial Literacy 201
Okay, so you can probably survive as an adult with everything you learn exploring the concepts in Financial Literacy 101. But we want you to thrive, so let’s move onto the nevel level of instruction. You may be familiar with the concepts or have at least heard of what they’re talking about, but now it’s time to dig deeper.
Being A Good Financial Citizen
More than ever today, the economy is interconnected--with every aspect of our lives, between nations, everywhere. You need to know how to discuss it and understand basic economic and financial vocabulary--what’s the difference between net and gross income, for instance? You need to know your community’s resources and how to access them. In addition, you need strong communication skills around finances.
Investing
There’s a misconception that investing is only for rich people with money to lose, but this isn’t the case. Smart investing can be a way of saving money and making a return on that money. Financial literacy should at least include understanding basic investment principles, if not also some accessible options.
Financial Technology
We’re not saying you should take up bitcoin mining, but it may be a good idea to know what bitcoin is and how it’s impacting the global economy. Staying on top of emerging economic and financial trends is not only smart, it can help you adapt to new technology and make your personal finances more streamlined. Even something as simple as exploring savings and accountability apps could make a huge difference to your finances.
Homeownership
We mentioned owning a car back in Financial Literacy 101, but homeownership is more advanced. You need to know how to choose a realtor, deal with mortgage lenders, how to decide on a house, what programs you may qualify for to help with the purchase, and how to protect your investment, like with mortgage life insurance.
It’s Never Too Late To Learn
If you aren’t informed on these topics, how are you sure you’re making the soundest financial decisions? While you don’t need an MBA or a degree in finance and economics, taking the time to watch videos or do an online course could remind you of tips you already know or give you advice you didn’t have before. Here at 20/20 Mortgage Life Insurance, we strive to bring you articles on all topics related not only to mortgage life insurance, but personal finances and holistic wellness. While we’ve already covered some of these topics more in depth, add our blog to your RSS feed and watch for us to explore others in the future.
Contact Us
If you’re looking into homeownership, consider mortgage life insurance to protect against default and foreclosure in the event of an untimely accident. Learn more about our range of products and contact us with any questions or to see which options are right for you.
