Welcome to week two of Financial Literacy month and the second challenge from Cariboo Chilcotin Partners for Literacy. Household debt in Canada is 167 per cent, which quite simply mean for every $1 that the household earns, it spends $1.67. Instead of saving for things, we take on debt and end up paying more for almost everything that we buy.
• Canadians are saving less and spending more, which is leading to historically high rates of household debt.
• Spending more than you earn makes you less resilient to economic surprises.
• Being smart about debt means understanding the difference between good and bad debt and how to manage both.
Here are some great tips from ABC Life Literacy on how to take control of your financial future and improve your own financial literacy.
Increase your knowledge, increase your confidence. When you feel good about your own money management skills, you will feel more confident talking about money with your children.
Create a spending plan and share it with your kids. Write down all anticipated costs — and talk about the difference between needs and wants.
Encourage your kids to journal about money. Have your children write down the cost of each and every purchase that they make. At the end of a week, use the journal to initiate a conversation about money and priorities. Start a tax-deferred RESP for your child’s post-secondary education right away. Explain to your child that money is being saved now for their future education. Studies show that children are more likely to attend university or college if they know that there is money earmarked for their education, regardless of amount.
Get children to save at least 10 per cent of their allowance. Talk to your kids about the benefits of the “pay yourself first” approach.
Spend and save your way to financial sustainability. For more information and free resources, email kirsten@caribooliteracy.com.