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What is Financial Literacy?

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 ┬ámy 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 Ration (MER)).
  • 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. ┬áSimply 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!

 

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Are Canadians Financially Stupid?

An interesting comment was left on my post yesterday about Instant Income Tax Refund systems, which made the bold statement, “…the average Canadian is stupid about money…”, and I don’t think I like or agree with that statement, but I do wonder are Canadians financially stupid ?

While I have berated folks for using Pay Day Loans, Carrying Credit Card Debt, and various other “financial running with scissors”-type issues, I hope I haven’t made my readers feel “stupid”.

Are Canadians financially stupid ? I think we have many different issues with our money, and I might describe them as:

Dunce Hat
All Those Who Agree I have a Hat for You too!
  • Naive, would be a good adjective, since a lot of folks I have met, really don’t know much about the “science of money”.  What worries me is that they don’t want to know or learn about what they don’t know. You wouldn’t do this if you had a major disease, would you?
  • Mad Cap, or Whimsical, given that this generation (or at least the one behind me) really can’t remember the bad days of the 70’s and 80’s when interest rates for loans were over 20%. There is a naive belief that interest rates of 4-5% is actually high, and I can assure you, this is very much not the case (from a man who’s first mortgage interest rate was 12% for 5 years and it was a good rate (for a while)).
  • Indiscreet, I have been told a lot of really personal financial information by a lot of folks, and more than once I have told them that divulging this information to an acquaintance might not be a very good idea.
  • Uneducated, that really sums it up nicely. Many Canadians just have not taken the time to read, or learn about the “science of money”. I think high schools really should teach more about money, because the financial parasites try to catch folks very early.

I hope that if I have used the word “stupid”, folks have not taken it to heart. Think of it more of an aggravated utterance by a friendly teacher (yes, I am not friendly and I am a crappy teacher, but you can see where I might be coming from). I don’t think my readers are “stupid”, but if you are doing those things that I constantly rant about, you really need to get Educated!

Are Canadians financially stupid?

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Teaching Kids About Money

I tripped across this very interesting report from our friends at PBS Newshour (seems to be the de facto news source these days) about Sesame Street and it’s new program to teach kids about money, but it is about other things as well, which is worth watching.

Lots of interesting comments on the American populous and their ability to understand money and saving.

As part of his continuing coverage of Making Sen$e of financial news, business correspondent Paul Solman reports on how “Sesame Street” friends Elmo, Grover and Cookie Monster are teaching children smart ways to save and spend money — and how many adults could use a refresher on the basics of saving for the future.

Grover and the Marshmallow Test

I love the interview with Grover about where he learns about money, and he learns about the Marshmellow Test too. This is teaching kids about money .

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An interview with…


Me, surprisingly. Over at Canadian Dream: Free at 45I did a short interview, which is interesting and hopefully enlightening to folks who aren’t sure what to make of me. It was the first time someone asked me for an interview, so I was kind of taken aback, but I figured what the heck? Read it over and see what you think.

This whole dream of retirement, I have said before, is a pipe dream. Only 2 generations have been able to retire EVER; it is an anomaly; my generation will work ’til they drop!

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A Change In Lifestyle?

Yes, any kind of financial plan for investing and debt reduction is going to be a lifestyle change. Why not follow the father of Einstein Finance ?

How can I say that? How did you get into the situation you are in currently, that you are now creating a plan to get out of? Let’s ask Mr. Einstein what he thinks:

Insanity: doing the same thing over and over again and expecting different results.
–Albert Einstein

You cannot expect to change things, by doing the exact same things. Change is necessary and maybe should be embraced when you want good things to happen.

Don’t be afraid of a lifestyle change, it doesn’t have to be something big, it can be something simple. Don’t buy your coffee for a month, and see how much money you save. That really is a lifestyle change.

I know the importance of lifestyle changes to get where you want. I lost 80 lbs. about 3 years ago, and I have managed to keep it off. No it wasn’t easy, no it wasn’t fun, but I also realized, that I couldn’t go back to my old eating habits, if I wanted to keep the weight off. Don’t make me post a picture of me in a swimsuit BEFORE I lost my weight!!!

Remember this is from the man who started Einstein Finance !

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