If you’re a financial flunkie, you are not alone. Find out what it takes to be a money master – and how to get there if you’re not.
Do you know:
- What information your credit report includes?
- How credit cards work and what the average interest rate they charge today?
- How much money you should save for emergencies and where you should park it?
- How to balance your cheque book?
- The implications of paying off your mortgage faster?
- How to pay less income tax?
- What benefits – such as a pension plan – your employer offers?
- How much money you’ll have after you retire? How much money you’ll need?
- When interest rates drop, what happens to bond prices?
- Over many years, which will likely go up more in value: housing prices or the stock market? Stocks or bonds?
Many Canadians would not be able to answer these questions. So, it’s really no surprise that many struggle with unmanageable debt. They fail to save adequately for emergencies, college or retirement. And they generally make poor financial choices. It all comes down to one thing: financial illiteracy.
At least, that's what Finance Minister Jim Flaherty said in May 2008 at a conference in Washington on the subject. He linked the global financial crisis to a need for increased financial literacy among households.
But what is financial literacy? Why do you need it? How do you know you’ve got it? And how can you get it if you don’t?
You’d be surprised at how many different answers you can get to these questions. To learn more read:
- What is financial literacy?
- Why is financial literacy so important for Canadians?
- What can you do to improve your financial literacy?
Did you know?
- For every $1.00 of disposable income, Canadians owed $1.16 in 2005.
- The personal savings rate in Canada fell to less than zero in 2005. It was 20% in the 1980s.
- From 1982 to 2001, consumer debt increased by 152%, while disposable income went up just 42%.
- Canada’s debt-to-income-ratio rose from 55% in 1983 to 105% in 2003*
Worse than the dentist? A 2005 Royal Bank survey found that people considered choosing the right investments to be more stressful than going to the dentist.
Take a few minutes to watch this funny money cartoon video which will teach you a few basic concepts about building wealth. It shows you the difference between things that lose their value and things that grow in value and why you should care.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.