Does your debt stress you out? How much wiggle room do you have in your budget? A new survey shows that a lack of financial literacy may be to blame for your debt problem, financial stress and living paycheque to paycheque.
According to the MNP Consumer Debt Sentiment Survey:
- 50 per cent of respondents are less than $200 away from being able to make their debt payments every month
- 60 per cent don’t fully understand how rising interest rates will impact their debt load
- 50 per cent of respondents regret having accumulated so much debt
- 7 in 10 respondents don’t understand their credit scores
- 6 in 10 aren’t confident in their ability to pay down debt or set and stick to a budget
“It’s not surprising that there is a link between financial literacy, debt problems and debt stress. If you don’t understand the implications of your decisions to take on debt or know what steps you need to take to manage it effectively, chances are you’ll end up with a debt problem,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
“If you knew that learning about how credit products work and how to budget would provide you with the much-needed tools to tackle your debt problem, would you commit to being financially literate? It’s a small task that yields huge rewards,” says Schwartz.
Learning about your finances can be daunting, especially if you don’t know where to start. Here are some tips on how to get started.
Did you know what most people who have debt have in common? They don’t have a budget. Budgeting is a simple way to ensure that you spend within your means, keeping debt problems at bay. It is also a useful tool in keeping your costs down to avoid living paycheque to paycheque, so you can avoid the debt stress that comes when you run out of money every month.
The key is to find a system that works for you. Some people like worksheets, online calculators or apps to help balance their household budget. The key to successful budgeting is to stick to it every month.
Learn about credit
Do you read your credit card statement? Like really read it? Do you know how your interest is calculated? Did you know that there are likely different interest charges depending on what you are using your card for?
Not being aware of the items on your credit card statement could mean that you are accumulating even more interest charges that you do not know about.
Do you have bad credit? Do you know why? If you are trying to repair or rebuild credit, it is important that you know how your credit score is calculated. Addressing the factors that boost your credit score can help you be more successful.
Financial literacy breeds confidence
Don’t let debt cause you anguish and regret. Learning about your finances will give you the tools and confidence that you need to pay your debt down once and for all.