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Happy Financial Literacy Month (#FLM2020)! This year marks the 10th anniversary of FLM and throughout the month of November, the Financial Consumer Agency of Canada (FCAC) engages with Canadians and works together with organizations from the private, public, and non-profit sectors to help strengthen the financial literacy of individuals and families to empower them to manage their money and debt wisely, save for the future and understand their financial rights and responsibilities.
To kick off Financial Literacy Month, we’ve asked our debt experts to share some simple tips on how to be financially responsible (maybe even a little savvy!) in your day-to-day life.
Use numbers and dates — not just words — to describe what you want to accomplish with your money. Exactly how much debt do you want to pay off, and when? How much do you want saved, and by what date?
Before you put that new pair of shoes on your credit card or subscribe to Disney+, stop and ask yourself if it’s a “need” or a “want”. Get into the habit of asking this question before each and everyone of your purchases. If you focus too much on satisfying your wants, one day you won’t be able to satisfy a need.
Lock them up, cut them up, or throw your credit cards away. It’s been proven that it’s much easier to save money and stop unnecessary spending by using cash only. This way, you can actually see your finances dwindling with every purchase and you’re more aware of the dollars you’re spending every day.
It can be pretty scary seeing that you’re $60,000 in debt when you only have $2,000 in the bank – but it can be the motivation that you need to stick to your budget and start saving.
Make sure you keep track of not only the total amount of debt, but also the interest rates, amount of the minimum payments, loan length, etc. You can use this information to prioritize which debts should be paid down first.
Once you have established a budget and have clear, short and long term goals, one easy way to get in the habit of saving money toward those goals is to simply automate it.
Set up regular and automatic deposits into your investment and savings accounts, either directly from your paycheck or from your checking account. This is such a simple practice that will pay huge dividends in the future.
If the borrower — your best friend, family member, significant other, whoever — misses payments, your credit score will take a hit, the lender can come after you for the cash and it could seriously damage your relationship. Plus, if the bank can’t trust the person to make the payments — can you?
Before you pay your bills, buy your groceries or before you splurge on date night, make a commitment to set aside a minimum of 5% of your salary for saving – and budget with what’s left over. If you don’t pay yourself first, chances are you’ll never have a healthy savings account or investments.
Pro Tip: Have money automatically deducted from your paycheck and deposited into a separate account.
Employment benefits like medical and dental insurance, health savings accounts and paid vacation are worth big bucks! Make sure you’re maximizing yours and taking advantage of the ones that can save you money by reducing taxes or out-of-pocket expenses.
It may seem financially savvy to buy a trendy $10 shirt than a basic $30 shirt — but you’re ignoring the quality factor! When deciding if the latest tech toy, kitchen gadget, or clothing item is worth it, factor in how many times you’ll use it or wear it.
We get too wrapped up in comparing our own financial status with our friends, family or coworkers – we all have different situations and not everything you see is as glamorous below the surface. Stay focused on your progress.
For even more financial tips from our debt advisors, check out our Instagram account @smytheinsolvency.
And for more information about Financial Literacy Month and some tips and tools to help understand your finances, click here.
Licensed Insolvency Trustee
Greg Best enjoys working with clients to create solutions for their financial needs.
CPA, CA, CIRP
Licensed Insolvency Trustee
Chris Sinclair believes a practical approach is required to solve serious financial difficulties.
Cynthia’s goal is to ensure that every client feels respected and understood and to instill hope that they can get their life back by giving them the fresh start they deserve.