5 Financial Literacy Tips to Better Understand Your Finances
November is Financial Literacy Month across Canada.
Put on by the Financial Consumer Agency of Canada (FCAC), Financial Literacy Month encourages organizations to share resources to help empower Canadians by strengthening their understanding of finances.
The 2021 theme for Financial Literacy Month focuses on the importance of building financial resilience in challenging times and working within a digital economy. To play a part in helping improve the financial literacy of our members, here are five financial literacy tips you can act on today to help improve your financial situation.
Tip #1: Have the right account for your needs
Are you paying too much in service fees for your day-to-day chequing account? Are you earning enough on your savings deposits?
Consider what types of services you use. For example: Do you usually do your banking online or on a mobile app, or do you stop at an ATM frequently?
How many transactions do you do in a month? Which features do you need? Is an environmentally friendly account important to you? Everyone’s priorities are different, so be sure you have the right account for you!
Talk to your local branch or call our Member Solutions Centre for a comprehensive review of your account to ensure that you have the right type of account for your needs.
Tip #2: Know your needs vs. wants
If you are trying to save funds, ask yourself whether the item you are considering is a need or a want. A need is something that is essential, whereas a want is something that is nice to have.
Your needs and wants may change over time, and each person’s needs and wants will be different from the next. It’s important to have spending priorities so that you have money for the items you need!
To do: Make a list of your wants and needs and associated costs with them. Prioritize them based on urgency and make a savings budget to accommodate. Consider not only the material impact these things will have on your life, but the emotional and mental impact as well.
Tip #3: Make a holiday spending budget
The holidays can be a very exciting time of the year but also very stressful if you don’t have a spending plan or budget. Here’s how:
- Make a list of all the holiday expenses you will have such as gifts, higher grocery bills, traveling expenses, etc.
- Determine how much money you have available to spend. This may be money that you have set aside all year in preparation for the holidays or extra money you can find in your budget.
- Assign a monetary amount to each of the holiday expense categories according to your overall budget amount.
- Keep track of your spending to ensure that you are not overspending.
To do: To cut down on gift expenses, set dollar limits with family and friends or initiate a single gift exchange; draw names so each person buys for only one person from that group. It’s fun, more personal, and fiscally beneficial.
Tip #4: Plan for unexpected expenses with an emergency fund
Life is full of surprises! Make sure you can afford unforeseen events like car repairs, job loss, being unable to work due to health issues, etc.
Planning for the unexpected means that you won’t have to go into debt and pay interest on loans to cover those expenses. You will have peace of mind knowing you have the funds to cover these costs.
How? The general rule of thumb for emergency funds is to save between 3-6 months of your regular expenses. But any funds saved is better than no funds saved.
Tip #5: Small changes can make a big difference
Whether your goal is to pay off debt or save money for the future, there are small changes you can make today that will make a big difference in the future!
How? Consider these small steps:
How? Consider these small steps:
- Set up an automatic transfer from your chequing account to a savings account every payday.
- Pack a lunch instead of going out to eat.
- Make a meal plan and grocery list and stick to it.
- Review monthly expenses to look at what could be changed or removed such as TV or cell services that aren’t regularly used.