The financial health of individual Canadians is affected by rising lending interest rates and personal debt and a lack of planning for future financial needs.
The issue becomes more acute when combined with fewer cash and more debit and credit transactions, online shopping and a plethora of credit and investment products.
Financial literacy is the knowledge that is necessary to make financially responsible decisions that are an integral part of everyday life.
This includes developing a spending plan, understanding how a chequing account works, learning how to use credit cards to avoid service charges and interest and understanding how to avoid debt and the fastest way to reduce debts.
In addition, it addresses identifying ways to save for future financial goals, like a home, children’s education or retirement and an understanding of where to get reliable information on investment options, consumer fraud and financial planning.
A well-informed financial consumer is critical to a strong and stable economy and for reducing personal financial worries and stress.
Any improvement in financial literacy will have a profound impact on consumers and their ability to provide for their future while avoiding the pitfalls of debt. Recent trends are making it all the more important that consumers understand basic finances.
A September 2017 survey conducted by the Canadian Payroll Association indicated that 47 percent of working Canadians are living pay cheque to pay cheque.
The data highlighted that many Canadians are challenged by debt, are not saving enough for retirement and worry about their local economy.
Half of the employees felt that financial stress was impacting their work performance. About 52 percent indicated that they budget frequently and of these, 31 percent said they kept their budget in their head.
Statistics Canada reported in June 2017 that Canadians owed $1.67 in consumer credit, mortgages and non-mortgage loans for every dollar of household disposable income in the first quarter of 2017.
At a time when Canadians are carrying this large debt, interest rates are rising.
This requires consumers to make higher monthly payments on credit products and loans such as variable interest rate mortgages, personal loans and lines of credit. Interest rate in-creases could also impact loans that are up for renewal such as fixed rate mortgages.
When people are living from pay cheque to pay cheque, increased debt payments could prove financially disastrous.
Today cash is rarely used. Banks and credit card companies are inundating consumers with credit opportunities and the ability to apply for credit cards or to use credit cheques to pay off other credit balances.
Without understanding the interest rates and payment balances, it is easy to get into high interest credit debt.
Online shopping has become the shopping choice, especially for young shoppers, and has created an opportunity for accumulating debt.
Credit card debit can potentially impact an individual’s finances for many years as well as affecting his ability to apply for mortgages or loans in the future.
For the past seven years, the federal government has designated November as financial literacy month. Its goal is to provide information and tools that will help strengthen the financial well-being of Canadians and their families, and ultimately the Canadian economy.
This year’s theme, “taking charge of your finances: It pays to know,” encourages Canadians to take concrete actions to better manage their money and debt, including making a budget, having a savings plan and understanding their financial rights and responsibilities.
The Financial Consumer Agency of Canada helps to co-ordinate the efforts of and increase collaboration between organizations from the private, public and non-profit sectors to strengthen financial literacy.
During November, organizations and individuals from across the country are encouraged to host and participate in events and share resources aimed at helping Canadians learn how to manage their personal finances better.
FCAC’s website offers free resources to help individuals learn about a wide range of financial products and services.
The resources include selector tools to help people identify the bank accounts and credit cards that best meet their needs and plain-language information on consumer rights and responsibilities in financial matters.
It is never too early or too late for individuals to improve their financial literacy. By taking steps to develop a spending plan and control credit spending, financial anxiety can be reduced and financial goals can become attainable.
Anyone can fall victim to financial fraud. Older Canadians, in particular, are frequently targeted for certain types of fraud and may also be vulnerable to financial abuse.
New fraud scams emerge constantly, aiming to trick people into taking actions that result in losing their money to fraudsters. The Canadian Anti-Fraud Centre is designed to help identify the signs of fraud and what actions to take to minimize the possibility.
If anyone feels they may have been a victim of fraud, they should contact the centre at www.antifraudcentre-centreantifraude.ca/index-eng.htm.
Betty Ann Deobald is a home economist from Rosetown, Sask., and a member of Team Resources. Contact: firstname.lastname@example.org.