Financial Literacy Month: You & Your Money

November is financial literacy month in Canada and there is no better time to talk about money concepts. Far too many Canadians lack the knowledge and understanding of basic money principals. This can cause future financial problems to occur.  In 2018, over 125,000 consumers used the Federal Bankruptcy & Insolvency Act (“the BIA”) to get debt relief in the form of consumer proposals or consumer bankruptcy proceedings.  Furthermore, for many, this was not their first time at the rodeo. It was their second or third insolvency. How does this happen? While some debt issues do happen as a result of events beyond someone’s control such as job loss, marriage breakdown and health-related issues, many are caused by financial mismanagement.

Over the last 22 years, as a Licensed Insolvency Trustee, I have met with many great people who have gotten into debt and admitted they didn’t have good money role models. They watched their parents “rob peter to pay paul” and live paycheque to paycheque.  Money wasn’t discussed at home or in school. No one taught them important money concepts. These deficient money behaviours were copied and followed them into adulthood repeating the cycle.  Also, life too continues to be more expensive. Many Canadians use their credit cards to supplement their income.  If the car needs repairs, the credit card pays for that. Have one credit card maxed? Apply for another and use it too. As long as lenders will continue to lend, consumers will continue to spend.          

It’s time that we start being less naïve about money. We need to start asking questions. Be inquisitive.  We know the minimum payments don’t pay off the cards in a reasonable time yet we don’t pay more. We take for granted that lenders will explain in the simplest terms every nuance of what we as consumers are signing. This is simply not the case. We must do our research on where we spend money, take the time to read the fine print and when in doubt, ask questions! We sign paperwork without really understanding what we are signing. We are afraid to ask questions for fear of being judged or ridiculed. Don’t be afraid to say  “I don’t understand”.  Remember, no one should care about YOUR money than you!

This month make your goal to be better with money. Create a budget if you don’t already use one. Review monthly bills and consider if you can reduce fees/costs in a certain area of your budget.  Talk to your family about money and make them a part of the plan. Teach your children money concepts so their tomorrows will be financially solid.