What Does It Mean To Be Financially Literate?
Planning For The Future To be financially literate is to have the knowledge, skills, and confidence to make responsible financial decisions that
suit our own financial situations.
This November marks the fifth year we’ve promoted Financial Literacy Month (FLM) in Canada, and the momentum for this popular 30-day event continues to grow. But what is “financial literacy,” and why dedicate an entire month to it?
To be financially literate is to have the knowledge, skills, and confidence to make responsible financial decisions that suit our own financial situations. Our individual financial circumstances usually change over time, so our financial knowledge and skills must evolve as well.
Understanding the fundamentals of handling money is as essential as basic numeracy. Paying for post-secondary education, buying a home, planning for retirement: these situations put to the test our abilities to plan and budget, to manage debt, and to choose financial products and services. FLM is a month-long opportunity for organizations across the country to engage all Canadians in strengthening their financial skills, no matter what their financial situation or age.
“Our individual financial circumstances usually change over time, so our financial knowledge and skills must evolve as well."
It is never too early to start teaching kids about money. Learning the basics in childhood can position young people to make good decisions about spending, to save for the future, to practise good financial habits that will last a lifetime, and to become financially responsible adults.
Young adults face increasingly complex financial decisions. Credit and debit cards are a fact of life for today’s youth, who shop online in an increasingly cashless society. In addition, many youths are taking on debt to finance their post-secondary education. While financial products can help young people achieve such goals, they represent a significant challenge when used improperly — overwhelming debt being of particular concern. With the right knowledge and skills when it comes to using a credit card and managing a loan wisely, youths can avoid costly long-term mistakes.
Preparing for retirement
Canadians approaching their senior years may be asking themselves questions such as, “When and how should I plan for retirement? How much do I need to save to support the lifestyle I want? How might age-related changes in my housing or health care needs affect my finances?” Financial literacy can help current and future seniors to prepare for retirement by building personal savings and other assets, choosing the financial products that best fit their needs, planning for and coping with major financial decisions related to life transitions, navigating and understanding how public programs and services can help them, and recognizing and protecting themselves against financial abuse.
These are just a few ways that increasing our financial know-how can help us to become more financially literate. I encourage you, over the next few days, to take part in FLM. This year, more than 120 organizations across Canada have added over 2,200 resources and events to the Canadian Financial Literacy Database, and the financial literacy conversation on Twitter and Facebook is loud and engaging. Join the conversation via #FLM2015 and #CountMeInCA! So, can we count you in?