Financial Literacy 101

Nov 5th, 2020 | By FCT

Did you know that 48% of Canadians have lost sleep because they are worried about their finances or that 44% are living from paycheck to paycheck?

November is Financial Literacy Month and throughout the month, we will be providing our readers with information, tools and resources that will hopefully help to bolster their knowledge about finances and its impact on our lives.

So what exactly is financial literacy?

Simply put, financial literacy is the knowledge that allows you to manage your money effectively. It means knowing how to build and adhere to a budget, taking the steps necessary to create an emergency fund, understanding how to invest effectively, knowing how to plan for retirement, knowing how to manage debt or more importantly, understanding how to avoid getting into debt.

It also means that you are less likely to become a victim of financial fraud.

Why is financial literacy important?

Having a good understanding of financial literacy will help you to build a foundation that will support your life goals. With this knowledge, you can make informed decisions about your children’s educational future, plan for your retirement, run your business more effectively and invest your money wisely.

Understanding finances is important for day-to-day life and overall health. It’s even more important during a time of such deep uncertainty when financial emergencies seem to pop up every day.

How well do Canadians understand financial literacy?

Compared to other countries, Canadians score fairly well on measures of financial literacy. That said, Canadians are still carrying incredibly high debt loads and often overestimate their understanding of financial issues. The good news is we have a myriad of tools and resources at our disposal to help us cope with emergencies, stay on track, or if necessary, change course.

Why knowledge is key

Financial uncertainty can take a toll on many areas of our lives. A sound understanding and a well-constructed financial plan can mean the difference between fulfilling a lifelong dream or living with unrelenting anxiety. The more you know, the better off you’ll be.

The Financial Consumer Agency of Canada has put together a quiz that allows Canadians to take their financial pulse. This quiz will test your financial literacy expertise and compare how you fare with other Canadians. It’s a great place to start on your journey to good financial health. Good luck!

How did you do on the quiz? Let us know in the comments.

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