For those that are not aware November is Financial Literacy month here in Canada. If you think this is not a big thing the Federal Government’s Financial Consumer Agency of Canada is pushing this concept very hard (and I applaud their efforts). Of course many financial bloggers will be trying to help out, and I will do my part as well, so make sure you check my Twitter feed and here as well for some of my views on what is important in terms of Financial Literacy.
What am I talking about with Financial Literacy? That’s a good question, since I know many folks who seem quite smart, however they make very odd financial decisions, and it seems to be that they simply don’t understand what they are doing. What do I mean?
- Buying stock with little or no understanding of the companies they are buying stock in, usually acting solely on a hot tip they got from a friend. Now yes, I do know a few folks who have had success with this, but for every one who struck it rich, there are 100 that lose money on a hot tip.
- Those who buy Mutual Funds on the advice of either a bank employee, an insurance agent or some other folk who may not be telling you everything you know. Yes, you can get Mutual Funds that can be profitable in that situation, however, you (yes YOU) need to understand how the Mutual Fund works (their investing goals) as well as how much you are paying them (the Management Expense Ratio
- Carrying balances on Credit Cards, instead of on lower interest rate loan vehicles. Really, you shouldn’t be buying more than you can afford in the first place, but if you are paying interest on your credit card, you are digging a deep hole that is going to be very hard to get out of.
There are many other examples, but as you can see, Smart Folks can get themselves into financial hot water and many times it is because they have not spent enough time understanding the Financial Services and Vehicles they are using. Simply saying, “it’s too complicated” or “I don’t have time for this”, is foolish and asking for trouble.
You don’t have to take financial training or such, but you do need to read and you cannot assume others will help you, you have to understand these things. Financial Literacy sounds daunting, but it is your money and you are the custodian of it, so go and learn. You wouldn’t start rewiring your house without training on how electricity works, would you?
This blog will give you advice about Debt, and Debt reduction, however there are many great blogs out there about investing and such as well.
It’s your money, take care of it!