For most people, November represents colder weather, remembering sacrifices and Black Friday sales. For those of us in the financial industry, November is also about financial literacy. In Canada, November is Financial Literacy Month – a month-long initiative to promote financial literacy created by The Financial Consumer Agency of Canada. This year’s overarching theme for Financial Literacy Month is “Invest in your Financial Well-being”. Typically when we hear the word “invest”, we think of its traditional definition: “to commit (money) in order to earn a financial return (Meriam-Webster Dictionary, 2018).” However, there is another definition of the word: “to endow or provide something with a quality (Meriam-Webster Dictionary, 2018)”. This Financial Literacy month, we are focused on providing Canadians with the knowledge they need to achieve financial well-being.
You may ask “what is financial well-being”? Financial well-being is a state of financial peace of mind that is achieved when you have the appropriate knowledge of basic money management practices to have control over your finances. This definition may seem vague or open-ended, and truthfully it is. This is because what you considered financial well-being is most likely different than what your neighbor or coworker believes.
While the goal of achieving financial well-being may vary with each individual, it is an important factor in bettering the overall well-being of Canadians. This is due to the fact that many Canadians experience a large amount of stress when it comes to their finances. This stress can cause anxiety, panic, depression, insomnia, high blood pressure and hinder personal and professional relationships.
Why are Canadians so stressed over their finances? One major reason is that Canadians have one of the highest levels of debt compared to other countries in the industrialized world. The Canadian Household Income to Debt Value is hitting all-time highs and currently sits at 171.31. What exactly does this mean? A value of 171.31 means for every dollar the average Canadian makes in income, they owe $1.71. Another way to look at it is if your take home income is $40,000 per year, on average your debt is roughly $68,500. This national financial issue is also becoming more and more concerning to consumers and professionals in the debt industry, such as Licensed Insolvency Trustees, because coincidentally, if national interest rates continue to rise in Canada, the interest and principal payments to service this debt increases as well, making it harder for Canadians to pay back their debt.
To help our clients and Canadians reduce their financial stress, the team at Grant Thornton Limited is participating all month long in Financial Literacy Month activities. Throughout the month we will be sharing tips towards financial well-being through our hashtag #GT2Cents and through weekly blogs coinciding with the themes of Financial Literacy Month. Those themes are:
- Have a plan to pay off your debt
- Make informed decisions
- Start good habits early
- Take control of your finances
By learning about each of these themes and embracing the concepts, you will gain knowledge that will help you achieve (or ensure you are working towards achieving) financial well-being; I believe that we can spend our entire lives working towards achieving it. The key is to ensure you are making positive choices and are in control of your financial situation, both today and in the future, as much as possible. Life happens and from time to time we may stray from our desired path and that is okay – don’t beat yourself up – just try to get back on track with your plan.