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What is Financial Literacy?

Financial literacy is a topic that we have always taken very seriously and a subject of great interest as Canadians reach record high personal debt loads. Defined, financial literacy is having the knowledge, skills and confidence to make responsible financial decisions, so as to prevent financial problems from accumulating too much debt. It is the ability to understand money, how it works within the world, how it is earned, spent and how it affects each individual directly.

In order to achieve complete financial literacy and overall financial health, you have to be able to do more than simply manage your household budget on a daily basis. You should be able to look at your finances from a long-term standpoint, have an on-going debt management plan that allows for unexpected events and be working towards future goals that allow you become debt free and financially ready to support a good retirement.

The concept of financial literacy was born approximately in the mid-1990s, as global debt loads started to soar, saving rates started to decline and many countries started to recognize the poor financial decisions that their citizens were making for themselves. Canada began the process with review and public consultation, resulting in the creation of Financial Consumer Agency of Canada (FCAC).

The FCAC works towards a goal of helping consumers understand the critical importance of debt management and household finances to their families overall health and quality of life.  It is understood that for many people, dealing with money is an overwhelming task and they simply don’t always know where to begin or to seek professional help. Gaining financial literacy can help you get out of debt and keep your finances on the right track.

November is Financial Literacy Month in Canada. There will be a variety of events and activities happening all across the country to help promote healthy financial awareness. The theme this year is Strengthening Financial Literacy through Collaboration, highlighting the need to have organizations all working together to provide programs, resources, information and services to Canadians so that they can improve their financial understanding. The National Conference on Financial Literacy takes place on November 6 and 7 in Vancouver and is following the same collaborative theme.

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