What is Financial Literacy ?

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What is Financial Literacy ?

Did you know that November is Financial Literacy Month ?

This month, organizations from across the country are encouraged to host events and share resources to help Canadians learn how to better manage their personal finances.  This year’s theme is “Take charge of your finances” and it’s aimed at encouraging Canadians to learn how to better manage their money and that includes making a budget, having a savings plan and understanding their financial rights and responsibilities.

So what is financial literacy ? In short, it’s the education and understanding of the various financial areas. It allows you to make informed decisions about personal finance such as investing, insurance, real estate, saving for education, budgeting, retirement and tax planning.

It’s not about becoming a financial expert and not having to rely on any financial advisors. I’m a certified money coach and I still have a financial planner and an accountant ! Financial literacy is about having enough knowledge to understand what the bank or your financial advisor is talking about when they’re discussing financial matters with you so you can make efficient decisions.

Financial literacy is crucial because it helps you become self-sufficient so that you can achieve financial stability. On the other hand, the lack of financial literacy can cause people to become victims of financial fraud  or it can lead to owing large amounts of debt and making poor financial decisions.

To give you an example, I was doing a seminar last month to a group of teenagers and someone from the audience told me that he used his credit card to withdraw money to pay for his monthly metro pass. It made me cringe because he had no clue what the impact is, he didn’t know that he starts getting charged 20% interest the second that money is taken out of the ATM.

Learning how to manage money is a skill that can be learned just like any other skill and you can start educating yourself today. Luckily, we live in an age where information and free resources are constantly within our reach.

This online course, for example, was created by the Financial Consumer Agency of Canada. It has 12 modules and it covers all areas of personal finances: budgeting, saving, mortgages, credit cards, investments, taxes, retirement… It’s like Money 101! And the best part is it’s completely free and you can do it at your own pace, in the comfort of your home. I find it extremely well done and very informative


Other things you can do to improve your financial knowledge is to listen to a money podcast while stuck in traffic in the morning. You can always borrow personal finance books from the library .

In addition, I encourage you to subscribe to 2-3 money blogs and read the newsletters. Some of my favorites are GetSmarterAboutMoney.ca and Moneysense.ca

Start educating yourself today and you will be better prepared to make informed and efficient financial decisions !

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