5 Things You Can Do To Improve Your Financial Literacy

Understanding the Importance of Financial Literacy

Financial literacy is a crucial skill that everyone should strive to improve. Many individuals find themselves facing financial challenges simply because they lack the necessary knowledge and understanding of personal finance. By enhancing your financial literacy, you can make informed decisions about managing your money, setting goals, and building wealth for the future.

Why Don’t People Know About Financial Literacy?

Knowing about financial concepts is one aspect but being able to interact and put them into use is quite another thing entirely. So don’t feel ashamed if you don’t know how it’s something a lot of people struggle with. Most people feel capable of managing their bills and budgeting but when it comes to reducing their loans and choosing products like insurance and investing, that confidence falls away.

But why do most people feel incapable of managing their money? For starters, there is a lack of financial education in schools. You get taught to solve for X but not how to pay taxes, get a car or buy a house. Secondly, most people don’t like talking about their money problems so they don’t reach out for help. They are unaware of the kind of help and resources available to them. A survey from Maru Public Opinion found that only 21% of Canadians considered themselves financially literate, and only 15% consider themselves financial literacy when it comes to life insurance, investments and stocks.

Assessing Your Current Financial Knowledge

Before embarking on the journey to improve your financial literacy, it is important to assess your current knowledge. Take time to evaluate your understanding of budgeting, saving, investing, and debt management concepts. Identify the areas where you may have knowledge gaps or need to update your understanding. Additionally, evaluate your relationship with money. Write down your first experience with money and ask yourself how that experience has affected your perception of money.

Setting Financial Goals

Before you write down any financial goals you want first take the time to evaluate your numbers. What is your income? What are your fixed and variable expenses? Just like how you know your birthday by heart, you should know these numbers off the top of your head.

Setting clear and achievable financial goals is crucial to improving your financial literacy. Start by identifying short-term, mid-term, and long-term goals. Whether it’s saving for a down payment on a house, paying off debt, or planning for retirement, having clear goals will help guide your financial decisions and motivate you to stay on track.

If you’ve never set goals before use the SMART framework. It is important to use the SMART framework to ensure they are Specific, Measurable, Achievable, Relevant, and Time-bound. SMART goals provide a clear and structured approach to goal-setting that increases the likelihood of success. Specific goals clearly define your goal, avoiding vague or general objectives. Measurable goals provide a way to track progress and determine when the goal has been accomplished. Achievable goals are realistic and within your capabilities, avoiding setting yourself up for failure. Relevant goals align with your overall objectives and values, ensuring they are meaningful to you. Time-bound goals have a specific deadline, creating a sense of urgency and commitment. By applying the SMART framework to your goal-setting process, you can set yourself up for success and increase the likelihood of achieving the outcomes you desire. Here are some SMART goal examples:

1. By the end of the next six months, I will complete at least three online courses or certifications on personal finance topics, such as budgeting, investing, and debt management, to significantly enhance my financial literacy and understanding.
2. Within the next year, I will consistently save 20% of my monthly income towards an emergency fund, aiming to accumulate at least six months’ worth of living expenses. This will provide me with a financial safety net and improve my money management skills.
3. By the end of the current quarter, I will create and stick to a detailed monthly budget, tracking all expenses and income. I will allocate specific percentages for areas like housing, transportation, groceries, and entertainment, ensuring that I clearly understand my spending habits and actively manage my finances.

Educating Yourself: Resources for Increasing Financial Literacy

Fortunately, there are numerous resources available to help you increase your financial literacy.

Books and Publications

Numerous books and publications delve into various financial topics, offering comprehensive information to help you increase your financial literacy. Look for books by renowned authors and experts in the field of personal finance. These resources often cover subjects such as budgeting, investing, debt management, and retirement planning. By reading widely, you can better understand financial concepts and develop practical strategies for improving your financial well-being. Additionally, feel free to take a look through our blog posts! We have blogs that cover a wide range of topics.

Online Courses and Webinars

The internet provides a wealth of online courses and webinars dedicated to enhancing financial literacy. Many reputable organizations and educational platforms offer courses tailored to different skill levels and interests. These courses cover a range of topics, including basic financial principles, investment strategies, and tax planning. By enrolling in online courses, you can learn at your own pace and gain valuable insights from industry professionals.

Financial News and Publications

Staying informed about current financial news and trends is crucial for developing financial literacy. Subscribe to reputable financial news outlets or follow finance-related blogs, websites, and podcasts. These resources provide updates on economic developments, analysis of markets, and insights from financial experts. Regularly engaging with financial news and publications helps you stay informed about the latest trends, allowing you to make more informed financial decisions.

Local Workshops and Seminars

Check your community for local workshops and seminars focusing on personal finance. Financial institutions, nonprofit organizations, or community centers often organize these events. Attending such workshops can allow you to learn directly from experts, ask questions, and engage in discussions with other individuals seeking to improve their financial literacy.

Financial Apps and Tools

Utilize financial apps and tools available for smartphones and computers, designed to simplify financial management and increase financial literacy. These apps help with budgeting, expense tracking, saving, and investment tracking. Some even offer educational resources and personalized recommendations to help you make better financial decisions.

Developing Good Money Management Habits

Improving your financial literacy goes hand in hand with developing good money management habits. Start by creating a budget that aligns with your financial goals. Track your expenses, save consistently, and make conscious spending decisions. Implementing these habits will improve your financial literacy and contribute to your overall financial well-being.

Taking Steps to Invest and Grow Your Wealth

Once you have a strong financial literacy foundation, exploring opportunities to invest and grow your wealth is important. Understand the different investment options available, such as stocks, bonds, real estate, and mutual funds. Consider consulting with a financial advisor to develop an investment strategy that aligns with your risk tolerance and goals.

Empowering Yourself Through Financial Literacy

Improving your financial literacy is a lifelong journey that can profoundly impact your financial well-being. By assessing your current knowledge, setting clear goals, educating yourself through available resources, developing good money management habits, and exploring investment opportunities, you can empower yourself to make wise financial decisions and build a more secure future. Start today and embark on the path to financial empowerment.

CanFi Money Myth 1

Many people are surprised to learn that it’s not about how much money people earn that determines if someone reaches their goals or becomes wealthy, its about their money choices. By making a few “smart” choices wealth can begin to accumulate that overtime builds a life that most never imagined. We teach these kinds of money skills at CanFi.