Financial Literacy Month 30-Day Check List

What is Financial Literacy Month?

Ben: Hello everyone and welcome to another Consolidated Credit video, where today we’ll be looking at Financial Literacy Month in Canada. If you’ve never heard of Financial Literacy Month, don’t worry, you’re not alone but it does happen every year in November and it happens all across Canada, and someone who does know quite a bit about Financial Literacy Month would be our executive director Jeffery Schwartz, who’s been kind enough to join us today. So, thanks for joining us. Let’s get started!

Jeff: Thanks Ben and yes, November is Financial Literacy Month, a great opportunity to introduce yourself to all the educational products and services out there and use it as a reminder to kick-start your good financial habits as we head into the holiday season.

Ben: All right, so that’s what we’re going to talk about today. Take a look at what financial literacy month is and what’s being done across the country in terms of financial literacy events, some resources that you can tap into and at the core of this video is really going to be our surrounding becoming financially literate. Financial literacy is really important, so because of that, that’s kind of the point of financial literacy month. It’s connecting Canadians to educational and financial tools so that they can take charge of their personal finances. So, we’re going to take a look at what you, as a consumer, can do to take control of your finances and if you’re part of the minority that already does control your finances then there’s probably a thing or two you could learn to further improve your financial situation. So, let’s start with the big question. What the heck is Financial Literacy Month? Well, to start with, we should have a basic understanding of financial literacy. So, what is financial literacy? Well, simply put, like other forms of literacy, financial literacy simply means having the strengths and strengthening your decision-making skills when it comes to choosing financial products or services. So, for instance, you know someone who would be completely financially illiterate when it comes to their personal finances probably won’t have a monthly budget. They might not know what their credit score is or even where to get it and they’ll usually have a hard time understanding the differences between financial products like an RRSP or an RESP, or even, what kind of insurance they’re going to need for their personal situation. On the flipside of that, someone who is financially illiterate probably has a working monthly budget or some sort of a spending plan. They probably monitor their credit. They know where to go to get unbiased information about those financial products and products that they’re interested in. Now Jeff, after all the financial literacy months that you’ve been through with Consolidated, the big question have is, do we need a financial literacy month?

Jeff: You know, that’s a great question Ben and yes, I would agree that we do need a financial literacy month. I mean, why? Well Canadians don’t appear to be getting any better with their finances and there are a lot of layers to that but the obvious monetary ones like the continued rising cost of living and Canadians living with higher and higher debt to income ratios but there are also other non-monetary causes too, such as financial technology or fintech, and fintech is a great example of something that has helped people improve their financial literacy in certain cases, but in others, it’s actually hurt people’s financial situation. On the one hand it’s great to be able to tap into your bank’s mobile app to track expenses, set financial goals, and start an automatic savings plan but on the other hand, being able to apply to fifteen different other online loans in a matter of a few hours can have a long lasting and damaging impact on a person’s financial well-being. So, underlying all of that and what connects with our topic here today is that there is a lot of confusion when it comes to the vast array of financial products and services that are out there. It really is buyer beware and if you don’t have the skills to choose the right products or worse, you choose the completely wrong products then you’re going to find yourself in financial trouble and that’s what financial literacy month is all about and that’s why I think it’s going to be around for a lot longer.

Ben: Okay good, so that leads me back to this million-dollar question, you know, what is financial literacy month. Well financial literacy month, as we mentioned, takes place every November and it involves a whole host of financial literacy events and promotion of financial education resources all across Canada. The idea of this month, focusing on financial education, is to help Canadians with the basics of financial literacy. Money management, debt management, and that sort of thing. So, to be sure that you tune in to our social media channels where we’ll be promoting our own events and resources that we’ve organized throughout November. Starting late October, our Twitter and Facebook pages will be updated with the information surrounding our awesome events and some of the newest tools we’ve developed, and they’re designed to help keep you or get you on track with your finances. So, when it comes to improving financial literacy, last month, I was lucky enough to attend the National symposium on financial literacy research, and yes that’s a real thing. It was hosted by the fine people at Bear, the Behavioral Economics at Rotman School of Business. Again, that’s also a real thing. Anyways, I was lucky enough to hear about some of the progression in the financial literacy month from, you know, its humble beginnings. It started sort of as a pet project of the federal government to address the growing issue surrounding the lack of financial literacy in Canada. When they started this literacy push, they expected that they would just put out some pamphlets, some workbooks, maybe an online calculator or two, and people would solve their own financial problems. Well after a few years it was pretty much official that it wasn’t working. Things had only gotten worse, in terms of the financial health of Canadians, so they adopted this empowerment model and that was a little bit more successful. They challenged organizations and financial institutions to try and find a way to measure the successes and failures of their financial literacy programs and educational initiatives. It was really the first look at what was being done and more importantly, was it working. So, fast-forward to 2018/2019 and they’d learned that they started, and they learned that they should start applying behavioral economic strategy to it. Why do some things work when others fail, especially when it comes to educating consumers? Well it comes down to the individuals, their biases, and a whole host of personal familial and cultural values that we really don’t have time to get into at much length today, and that’s where we are today. It’s sort of in financial wellness, and like other forms of wellness it comes down to how that a person adapts and reacts to financial situations. Now Jeff, I’ve only been doing this about three years. You’ve been in the industry a lot longer, so to someone who has no idea about the financial literacy landscape in Canada, how would you describe Financial Literacy Month?

Jeff: Well Ben, I first heard about it in 2011, and it started with about 75 or so organizations scattered across the country, and they are attempting to put together a coordinated effort to help improve the financial situation of Canadians by promoting financial literacy events and resources that were designed to educate and motivate people to make the best of their financial situation, and by all means it was a success. They had over 200 events across Canada that year, and the ball started rolling, and it’s been picking up momentum over the last eight years, but I still think there’s more that can be done, and as we’ve mentioned earlier it’s not just the objective side of money that’s at play here. There’s a lot to do with the subjective side the touchy-feely part. As much of financial literacy is grounded in basic math, there’s a whole side of it that’s much more difficult to quantify. So, when we took– take a look at the four dimensions of financial wellness, there we see that budgeting, debt, saving, and protection are the core concepts. It’s easy to say that annual income and credit scores are great financial health markers, but it’s much more difficult to look at the subjective side of that chart and measure or find some of these same concrete answers. Just because one person feels secure when thinking or developing a budget or savings plan, doesn’t mean that’s the same for everyone. Often, the financial stressors are ruined in that subjective side of the chart. A top stressor for many of our clients are their feelings towards debt or really, the lack of control that they feel they have. Take retirement for instance, both baby boomers nearing retirement and young workers entering the job force are constantly reporting that they are worried about saving enough for retirement. Most personal finance concepts don’t require an advanced degree in math. Simple addition and subtraction will likely get you most of the way. However, understanding why people make the decisions that they make financially is a whole lot more complex than just subtraction in addition from your income and expenses. There’s a human and psychological side to it.

Ben: Right, so those are some great points and something that’s been talked about at great length with the National Symposium is the research and behavioral finance. You know, it’s not all doom and gloom. Actually, Gerry Brookland or sorry, Gerry Buckland, a professor at Meadow Simmons College, in Winnipeg actually found some promising results in his research. He found that Canadians and their budgets. You know 43% of Canadians have a budget and I agree with them in that fact but of that 43% you see there that 98% of them are sticking with it.  So, I mean that really is promising, how many Canadians can continue and stick with a budget, and really that’s the first step, whether it’s financial literacy, financial empowerment, or financial wellness. So, how do we improve personal finances or your situation? Well like we talked about, it’s really just some simple math. There are a ton of great tools and resources out there, that are designed to help you. No matter what your situation is, the first thing you need to address when trying to improve your finances is to know where you are. Start with a money management system that works for your situation. Money management usually starts with a budget or a spending plan, so start managing your paycheques first. You can check out our website for other videos and some really great tools and resources to help you start your budget or improve the budget that you have now. They’ll also help you develop some financial goals, look at ways to start savings plans, and the other side of that coin is managing debt. You need to be a smart consumer and borrow money wisely, understanding the products, and its terms, and its agreements because we’ve talked about in our other videos there are actually some good reasons for taking on debt. Mortgages, business loans, and student loans. You know, those are some of the best sources of debt that you could have reporting on your credit reports. However, if it’s bad debt; high credit card balances or maxed out lines of credit maybe there’s accounts in collections. If there’s financial problems, then that’s where you need to start, but underlying everything, you always need to have room for savings, so we always recommend trying to pay yourself first, as much as you can. So, just trying to figure out what percent of each paycheck you can realistically save is a great first step. Figure out what that percentage is and start putting that away. Maybe it’s 5%, 7%, or 10%, but having it done automatically is even better. That’s money that you can use for your emergency savings or any other financial goals that you have. The rest of the paycheck after you’ve paid yourself first, is for all of your bills and expenses. So, the final part of improving your personal finances involves all the facets of financial literacy that we’ve talked about. Understanding your rights and responsibilities is a huge part of that. So, I’ll turn things over to Jeff, just to kind of outline how important it is to understand your financial rights and responsibilities. So, unlike those Terms of Service on your smartphone that you just click and submit without reading, you might actually want to read your loan or credit agreement a little bit more closely.

Jeff: Thanks Ben and you’re right. You really need to read that fine print and not just read it. You need to understand it. There could be a lot more hidden in there than just the interest rate in terms. There can be penalties and fees charged for not meeting them. There can be confusing Commission fee structures when purchasing or withdrawing investments, and you can get roped into buying insurance coverage that you don’t really need. So, that’s why financial literacy matters so much. When you’re making financial decisions, big or small, you need to be one hundred percent sure of what you’re buying into. It needs to make sense in regard to your financial goals, whatever they might be. So, this is Financial Literacy Month. Let’s set some financial goals. The first week, you should start developing a budget. Use our budgeting tools or speak to a nonprofit credit counsellor, and start assessing how much money you take home, how much your bills and expenses are, and what’s left over for saving and reaching your goals, which is something you should take some time on in the second week of November. Come up with some smart goals. Something that is specific and that you can measure. Also make sure it’s actually attainable and relevant to your current situation. Finally, put a time limit on it. Do you want to do it this month, or by November 28^th? Put a date on it, and that way you know it’s approaching and more importantly you’ll know when you fail a financial goal. If it’s December 1^st and you have no budget or financial goal set, don’t wait until next financial literacy month. Do it right away and don’t wait, because that never helps.

Ben: Right, I definitely agree. Waiting is not going to help, but there are somethings that you can do. So, what can you do? Well, you can start looking into the various events that are taking place. The government of Canada’s Canadian financial literacy database is a great place to start. Look at some of the workshops or other events that are taking place and head out to them. Many credit unions are taking place or taking part in what they call the “Each One Teach One” program. That’s organized by the Canadian Credit Union Association, so take a look at some of the credit unions in your area, or your neighborhood, and see what they’re offering. They might have a workshop on anything, from basic budgeting to buying a home. The chartered “Professional Accountant’s Financial Literacy Series” is also quite active during the Canadian or during the Financial Literacy Month, so take a look and see if there’s something put on by them in their area. They’ve got a ton of great topics and of course, you can always look at our website and our Twitter accounts, as we’ll regularly be promoting Financial Literacy Month and our very own in-house workshops that are running throughout Financial Literacy Month, and if you wanted to go digital, then there’s some excellent videos on our YouTube channel that can help you in pretty much every area of personal finance and there seems to be no shortage of online webinars that you can sign up, uh, sign up for. You know, they cover everything like I said, from home buying, basic budgeting, spending, and saving. So, be sure to just to take a look. Webinars are a great way to participate and get answers from industry experts. Of course, a lot of financial literacy events are also listed on sites, like Eventbrite and Meetup. So, if you’re looking for something local, like a workshop or a seminar, you know those are really great places to look too.

Jeff: Fantastic points, Ben. I think the big takeaway from this video is that you need to do something. Not doing anything is often the wrong choice, so maybe this is the year for you to take charge of your finances. Get some help. There are so many great tools and resources out there for everyone, no matter their situation. You can also get help at work. Financial stress is real, and more and more Canadian workers are going to work less focused and more worried about their finances than ever. So, speak to your wellness ambassadors at work and someone in HR, and start asking about financial wellness supports at work. It will help you, your coworkers,  and your employer in addressing financial stress, absenteeism, loss of productivity, and so much more. Often, marital problems are cited as a top stressor that impacts employees well-being, but when our counsellors dig a little deeper, it turns out it’s really a financial issue, not a marital issue.

Ben: That’s right, Jeff. Financial stress touches on so many aspects of our life. I’m amazed more isn’t done in the workplace or the community in general to address it. Financial Literacy Month is entering its ninth year, and the majority of our clients, and my workshop attendees have no idea it’s even a thing. So, you may want to start in your community. You know, help promote an event. Better yet, participate in one through our own train the trainer program we’ve helped 16 different organizations develop and deliver their own financial literacy programs, so reach out to your neighborhood community or employment center and get the ball rolling. We do hundreds of workshops across the country every year, and it’s still not enough. The biggest challenge that our community service partners have when it comes to financial literacy events is capacity, so why not offer to help them out? You might not be a financial expert yourself, but you can always offer to volunteer or help make the right connections. As I mentioned before, our website or the Canadian financial literacy databases are great places to start, or you can always connect with us so you might want to you know speak with someone about the educational resources and services that we offer and you know, if you need help getting a budget started or you wanted to look at some strategies for achieving your financial goals then you might want to speak to one of our counsellors. The assessment’s free, and by the end of it you’ll have a clearer picture of your financial situation. So, feel free to contact by phone or email. We’re here to help!