Financial Knowledge & a Financially Secure Life

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Financial Knowledge & A Financially Secure Life

Learn to Manage Your Finances

“There [are] a lot of things I didn’t know about [financial management], such as credit. I am learning how to manage and budget the money better. Most of my pain comes from the unmanageability of my finances. I almost didn’t come back [to the Financial Literacy workshop] because of the pain around it. That is probably why a lot of people didn’t come back; they felt shame and guilt around their finances.”

- Attendee to Financial Literacy Workshop

If you are struggling with managing your finances, you are not alone.

Many people find controlling their finances to be a series of complicated tasks, so they pay less attention or sometimes avoid it. There are many reasons for this and human behavior can play a role. The good news is that anyone can work on having more financial knowledge by being open to learning new things.

When a person has financial knowledge, they tend to have much better financial outcomes. Particularly if they have knowledge in several areas such as investments, budgeting, debt, and retirement planning.
If you don't know where to start, let's review some of the top 6 steps to make progress towards achieving your financial freedom

1.Budgeting & Being Aware of Spending

An essential tool of your financial management strategy is to follow a budget that tells the truth about your needs & financial commitments. Take the time to get organized and know how much you earn and spend.

For example, create a comprehensive document that lists all your accounts. With this proactive approach, you are better prepared for any financial crisis or difficulties.

 

2. Debt

Forty-nine percent of low-income and seventy-four middle-income Canadian households carry debt (primarily consumer debt, not mortgage debt).
Having a debt is not always bad. There is what’s called “Good Debt”. In all scenarios, debt is the basically “the borrowing of money”, but when the money borrowed is for investment that creates value or produces more wealth in the long run, it is considered a “Good Debt”. Examples of that are; mortgage on a home, student loans, or a loan to launch a business. “Bad Debts” are money taken to purchase something that will reduce in value over time or a balance owing that you are paying high interest on.

3. Investments

There are many ways you can “invest” money. An investment is typically the purchase of something that is anticipated to grow in value over time. In a typical financial context, investments are part of every good financial plan. However, first, you need to identify your risk tolerance to determine the best type(s) of investments for you. Some options include;

• Annuity                                                                                                               

• Segregated Funds

• Mutual Funds

• Securities (Stocks, Bonds & Futures)

• Exempt Market Securities

• Stocks

• Treasury Bills (T- Bills)

• Guaranteed Income Supplement (GIS’s)

4. Creating a Will & Your Estate

An estate holds all of the money and property owned by a person, usually at their death. Creating a will & planning
for your estate will help ensure all of the proceeds are managed and distributed the way you want after your death.
What are the benefits of creating an estate plan, seeking legal advice (if necessary) and creating a will?

• Ensures your wishes are put in writing.
• Sets your loved ones up for a simpler process.
• Makes you feel confident about the future with a plan in place.

5. Insurance

Even though we don’t think about it too much, we encounter many risks in our lives. These may include illnesses, accidents, injuries, disabilities, hospitalization, and more… Obtaining different kinds of insurance products can be very helpful because they here to help us avoid those major risks and overcome life’s setbacks. Here are few Insurance options you may want to consider;

Personal Health Insurance - Helps pay for health expenses not covered by your workplace or healthcare plans.
Critical Illness Insurance - Provides a lump-sum payment to help you manage the financial impact of a life-altering illness.
Long-term care insurance - Helps cover the cost of care and support if you are unable to care for yourself.
Permanent life insurance - Lifetime protection with the advantage of growing cash value over time.
Term life insurance - Flexible, affordable insurance that protects the people that matter to you most if you pass away, for a specific period of time.

6. Retirement Planning

If you are in your early 20’s, 30’s and 40’s, it might be hard to think about retirement; however, keep in mind that saving for retirement is easier when you start as early as possible.
It is essential to have a strategy that sets the stage for your retirement. Some retirement income sources include:

• Annuity                                                                                                               

• Segregated Funds

• Mutual Funds

• Tax-advantaged Retirement Income Plans

• Canada Pension Plan (CPP)

• Old Age Security (OAS)

• Guaranteed Income Supplement (GIS’s)

When planning your retirement, consider your dream life after retirement, your lifestyle goals, and your time horizon. Because government programs only provide a portion of what you'll need, and the amount will vary based on your income and how long you worked.

More Resources to Become Financially Literate

 

Financial Wellness Assessment

Did you know you can assess your Financial Wellness easily?
Manulife Insurance offers a free online resource to determine your financial position. Financial Wellness Assessment tool helps you understand the rating of your wellness for different financial aspects such as budget, investment, retirement planning, debt management, and financial protection.
Click Here to start your assessment and find out about your situation!

If you are looking for extra resources and learn more about how to be financially literate, please check out these
resources below;

Investments at Glance
Sources of Retirement Income
Identifying Your Sources of Retirement Income
Types of Insurances
Million Dollar Journey
The Financial Consumer Agency of Canada YouTube Education Channel
The Financial Consumer Agency of Canada Website
Checklist to Manage Your Debts & Myths About Bankruptcy

Financial management seems complicated, and needless to say, very stressful.

Make it a habit to read and learn more and be open to learning more about your finances. And, please forget about the shame and guilt around it. Educate yourself because your financial knowledge can create good outcomes in many areas of your life.

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