Financial literacy starter kit
November 26, 2021
Are you looking to become financially literate and navigate difficult but crucial steps to successful personal financing? Congrats, you’re on the right path! Educating yourself on money matters can seem intimidating, but it will strengthen the foundation of your relationship with money and promote personal financial stability the more you learn.
So, what does financial literacy mean?
Money terminology can be overwhelming, but we are here to help you feel comfortable and understand the basics. Our call centre, Sunova Help HQ, offers all kinds of support for any questions you may have about finances.
The definition of financial literacy is “the ability to understand and effectively use various financial skills, including personal management, budgeting and investing.” – Investopedia.
The earlier you start, the better you set yourself up in the long run to support numerous life goals, such as education and retirement savings, understanding loans, paying off debt, or running a business.
We strongly recommend educating yourself to avoid financial illiteracy and the damage that comes with it. You’ll be less likely to collect unmaintainable debt loads, poor spending decisions, and lack of long-term preparation. These pitfalls can lead to bad credit, bankruptcy, and other negative consequences.
The good news is, there are tons of resources for everyone to learn or teach themselves strategies to improve their position in the finance world, like government-sponsored financial literacy programs and courses.
Strategies that lead to strong financial literacy skills
Here are some strategies and skills to help you build your wealth and put yourself in a secure financial position.
Create a budget
Budgeting is one of the key skills to master your financial well-being. A budget is all about balancing the money coming into your account and the money coming out.
If your expenses are more than you make, you will have to look for areas to decrease your fees or cut them out completely. Your end goal should be to have extra funds after you pay your bills, so you can have breathing room to spend and feel confident in your financial state.
Plan for emergencies
Emergencies are usually unexpected, but when they do happen, they are often expensive and stressful. It’s a good idea to prepare ahead of time with an emergency funds account.
You can set up automatic payments to this emergency account on payday. It doesn’t matter how much you put away each paycheque. Make sure it’s enough to feel secure if an emergency unexpectedly comes up and you need to cover bills or access extra funds.
Emergency funds can assist you through things like job loss, illnesses or vehicle repairs. If a situation comes up where you dip into these funds, ensure you work on building them back up as soon as you can.
Manage your debt
Pay off your credit cards, auto loans, mortgages, and personal loans. Before taking out a loan, make sure you aren’t taking on more debt than you can comfortably handle.
You should make sure your debt payments still leave room for other expenses in your budget like savings and investing for the future.
Remember, every amount of debt you owe is technically already spent from your paycheque. Although you want to have a bill amount you’re comfortable with, you should try to pay it off as soon as possible, so you don’t collect too much extra interest.
Save for retirement
Though it seems intimidating and far away, retirement doesn’t have to be that stressful. As soon as you start your career, you should begin saving, since it will assist you when you’re no longer working.
Check with your work to see if they offer a match program to help you prepare your savings for retirement. Many companies will supply the equivalent amount you put away for retirement off each paycheque.
Find out if your retirement account offers tax advantages, so you can grow your money tax-free until retirement.
To make sure you can retire when and how you want, follow our handy checklist, and you’ll be sailing off into the retirement sunset before you know it.
Pay the important stuff first
Are you saving for a down payment on a house? Is your car insurance due? Whatever your savings goal is, set aside money for it first so you can divvy up the rest of your budget with the remaining money. This will also stop you from dipping into your credit or loans. You’ll have enough money to pay for everything since you’ve planned and budgeted ahead of time.
Pay bills on time
Don’t miss payments. This is where budgeting comes into play. Make sure you have enough money for your monthly payments. Paying your bills promptly will help avoid late fees and additional interest. If you find yourself forgetting to pay your bills on time, try setting up the automatic or a reoccurring payments feature.
With the Sunova GO app, we offer reoccurring payments for your bills and other regular payments.
Though credit cards are a helpful tool, it’s easy to fall into credit card debt if you aren’t paying attention. Luckily, we’ve outlined a few helpful tips that will help you avoid unnecessary debt and how to get out of it.
Get Your Credit report
You should check your credit history and scores regularly. Having a better understanding of your standings will make you more aware when spending credit and uncover any inaccurate information.
Is your credit score lacking? Don’t worry. We’ve put together a list of ways to build your credit in Canada. Having good credit can help you get a loan to go back to school, start your dream business, support your family, and more.
Invest for your future
Investing is crucial. It’s an effective way for the money you’re saving to build wealth. Investments can increase the value of your money throughout the years. The earlier you start investing, the more time your money has to grow in value.
Our term deposit or guaranteed investment certificate (GIC) is a low-risk and secure investment that guarantees 100% of the original amount you’ve invested while earning interest over a fixed period. They are safe and secure, offer a pretty competitive interest rate, and give you some flexibility in choosing the term length and interest payment frequencies you’d like.
We are here to help
Contact your local branch or Help HQ if you require any additional information regarding your finances, accounts budgets or loans. Our staff are a very valuable source when it comes financial literacy. We are happy to help our community and members.