As you may know, November is Financial Literacy Month, when Canadians are encouraged to focus on their financial health.
But what is financial literacy? And why does it matter? Victoria Clark, ATB’s Director of Payments, shares her advice on what you need to know, how you can educate yourself and how to use that knowledge to your advantage.
What is financial literacy?
“Financial literacy is having a good understanding of your personal finances,” says Victoria.
Financial literacy includes everything from taking control of your finances, to building a budget, to understanding savings and debt-reduction, and knowing your financial rights and responsibilities.“This understanding is what will get you to your financial goals and what you want to accomplish in life.”
Why is financial literacy important?
“No matter what stage you’re at in life, financial literacy should be important to you,” says Victoria. “The ability to understand and be in control of your finances is fundamental to accomplishing the important things in life.”
The important things in life are different for everyone. They may be small, yet significant, or large investments such as a down payment on your first house, paying for your children’s education, going on a dream vacation, or enjoying financial independence in your retirement.
“It’s also about understanding the financial options and alternatives that are out there.” Victoria adds. “It’s about knowing people who can discuss those options with you.”
Ways to improve your financial literacyTalking to a professional at your bank is a great place to start improving your financial literacy. People often call or go in to their bank when they need a specific product, however, banks are there to help you make good financial decisions every day.
“Finding unbiased and trustworthy advice is a good way of improving your financial knowledge,” says Victoria. “The Financial Consumer Agency of Canada’s (FCAC) website is also an awesome place for financial literacy support.”
FCAC’s site has financial learning programs for adults, youth and schoolchildren. Modules cover budgeting, debt management, investing, saving and retirement planning.
Understanding the importance of your credit score is also an essential step in financial literacy. “The Equifax and TransUnion credit bureaus also offer great financial literacy information,” says Victoria. “Especially relating to understanding your credit report and what it means to you.”
The impact of financial literacy on your finances
“Having greater financial knowledge will mean you’re better equipped to make a budget and stick to it,” says Victoria. “This leads to making and reaching financial goals.”
“Once you fully understand what is coming in and going out of your accounts, you will know exactly how much you can spend and how much you’ll need to save,” she continues.
Having a complete picture of your finances will allow you to plan for emergencies as well as short and long term goals such as retirement and other big-ticket items.
Greater financial literacy means a more positive financial mindset
“Many people are scared to even think about finances,” says Victoria. “For some it is a taboo subject that they don’t want to discuss with their friends or family. But it doesn’t have to be this way.”
Having better financial knowledge can move this mindset from fear and loathing to calm understanding.
“Talking to a financial professional is the best way to overcome any financial issues,” says Victoria. “They will discuss ways to work through your finances and find your best options.”
Let’s get started
Being curious and asking questions is the first step toward atching greater financial literacy—and you’re well on your way! Explore the links that we’ve shared, and find more helpful information at atb.com/learn. Schedule time to talk to a financial professional. Be transparent and open about your situation and where you want to be. Visit your local ATB branch, who can provide you with the advice and knowledge you need for better financial health.