Study after study has shown that many Canadians lack basic money skills, but how exactly do you get people interested in setting up a family budget, wrestling down debt or mapping out their retirement?
Casey Cosgrove, director of the Canadian Centre for Financial Literacy, struggles with this dilemma every day. Despite an avalanche of smart, useful and readily available financial tools, everything ranging from books to websites to worksheets, people are not taking steps to seek out and use this information.
"There is not enough focus on engaging people to see that these financial tools are relevant. A lot of people just don't pay much attention to them," he said.
Mr. Cosgrove says the trick is to get people interested in the topic, to start them on the learning curve. "Part of it is demystifying all these financial terms. We are not talking about hedge funds and complex concepts like that; we are talking about people taking control of whatever money they have."
To help start that process, Mr. Cosgrove gave us these tips for improving basic financial literacy:
1 Create a personal budget Many people would like to have more money at their disposal. The first step to achieving this is pinpointing where the money you make actually goes. Tracking expenses and developing a budget can help you identify spending habits that you may want to change in order to save.
2 Set a savings goal Once you identify what you can trim from your daily spending, set a target of how much you want to save weekly. Every little bit counts. You may, for instance, avoid buying a morning coffee and instead make your own, saving about $10 a week.
3 Use credit cards wisely Borrowing can be a positive investment toward your future, if planned and managed wisely. To avoid problems, learn about how interest is calculated, the grace period, annual fees, transaction fees, cash advances and balance transfers. Fight the temptation to use a credit card to live beyond your means.
4 Tap public savings programs In addition to the Tax-Free Savings Account, there are other government products designed to help people save. Through the federal Canada Learning Bond, families who have an income below $36,378, who are receiving the National Child Benefit Supplement and have a child that is born after 2004 can access up to $2,000 to invest in their children's Registered Education Savings Plan. RESPs qualify for a government grant of up to $500 a year per child, to a lifetime maximum of $7,200.
5 Find independent financial information Becoming money savvy is a lifetime quest. There is no shortage of excellent information available out there - websites, workshops, seminars, books, courses. Frankly, the volume and complexity of it can be overwhelming. The key to locating what may be useful to you is to have a solid understanding of your own situation. Some people can get what they need from a book or website, while others prefer a workshop experience or one-on-one advice.
. Weigh in on whether you would stash some extra money into an RRSP, RESP or a TFSA.