Envision Financial

Envision Financial

November 14, 2013 12:21 ET

Financial Literacy Key for Young Families as One Third Fail Financial Literacy Assessment

LANGLEY, BRITISH COLUMBIA--(Marketwired - Nov. 14, 2013) - November marks Financial Literacy Month in Canada and this year's theme-Financial Literacy across Generations-encourages Canadians of all ages to prepare for a brighter financial future by increasing their knowledge and confidence in the area of personal finance.

According to Envision Financial expert, Stephanie Monk, financial literacy is especially important for busy young families, but for many, it's hard to find the time to make finances a priority. "When you're juggling careers, kids and other responsibilities, personal finances can easily fall to the bottom of the list," says Monk, a personal account manager. "But taking the time to ensure to make a plan and focusing on saving and reducing debt can make a real difference in your financial future."

Educate yourself-and make a plan

Recent information shows 90 per cent of Canadians gave their financial acumen a passing grade. However, when given a financial literacy assessment, over a third of those who had given themselves an A failed the test.

"If your understanding of your personal finances isn't where you'd like it to be, book a meeting with an expert at your financial institution," says Monk. "Most will work with you to prepare a comprehensive and complimentary financial plan to get you started on the right foot. They'll help you understand where your money is going every month and give you the tools you need to reach your financial goals. If you don't understand the terms or concepts that are outlined in your discussions be sure to ask questions to gain clarity and understanding. Knowledge really is power."

Focus on debt reduction

A recent study by RBC shows that personal debt, which is debt that does not include mortgage debt, is on the rise-particularly in Western Canada. The average personal debt load level in B.C. increased from $11,262 in 2012 to $15,549 in 2013-a whopping 38 per cent increase. The same study shows that 38% of Canadians feel anxious about their personal debt levels.

"When taking on debt, it is important to understand the true cost of that debt over the lifetime of the loan," says Monk. "Credit cards in particular come with steep interest rates that can cause a small purchase to become a large one once interest costs are factored in. Make a list of your debts and focus on paying them off-making sure you pay off the debt with the highest interest rate first."

Save for a rainy day and the everyday

Although 66 per cent of Canadians feel they have enough savings to handle a rainy day, a recent study found that over half have less than $10,000 saved for the unexpected and an additional 17 per cent have saved less than $1,000.

"This falls short of the suggestion of most experts which is emergency savings of 3-6 months of household expenses," says Monk. "By saving for the unexpected, like a new hot water tank or major home repairs, you'll be better prepared to face the unpredictable without having to take on additional debt. It's equally important to put aside money each month for the larger ticket items that come up only once a year, like property taxes, car insurance and home insurance. By saving for these items throughout the year, you won't be surprised when they come due and you won't have to borrow to pay for them."

Prepare for retirement while there's still time

When it comes to saving for retirement, Monk stresses that young families need to start now while time is on their side. Especially given a new survey from Angus Reid that shows that only 26% of Canadians think they're saving enough to reach their future retirement goals.

"Young families have a lot of financial priorities-it's an expensive stage of life-but saving for retirement needs to be one of the top priorities," says Monk. "Realistically, you'll need 60-80% of your pre-retirement income during your retirement years and saving up that amount of money requires regular contributions to a retirement plan-the earlier, the better. I recommend that people open an RSP account and start putting money away every month as soon as they start working to build a savings habit."

Pass it on to your children

"Studies show that only a third of young Canadians have regular talks with their parents about money and finances and approximately 30 per cent feel that their parents have financial problems," says Monk. "Children are very aware of their parents' actions and are likely to repeat their parents' spending habits. Talk to your children about your finances to increase their financial literacy and-most importantly-set a good example to help set them up for success."

About Financial Literacy Month

This is the third year Financial Literacy Month has been held in Canada. Throughout November, events will be held across the country to raise awareness of the need for financial literacy and encourage Canadians to seek information to help strengthen their financial knowledge.
To learn more and to find events in your community, please visit www.financialliteracymonth.ca.

About Envision Financial

Envision Financial is a division of First West Credit Union, B.C.'s third-largest credit union, with 40 branches and 29 insurance offices throughout the province operating under the Envision Financial, Valley First and Enderby & District Financial brands. Led by Launi Skinner, First West has $7.1 billion in assets under administration, more than 171,000 members and close to 1,300 employees. For eight years running, Envision was named one of the 50 Best Employers in Canada. For its extensive community involvement, Envision Financial is designated a Caring Company by Imagine Canada. For more information on Envision Financial, visit www.envisionfinancial.ca.

Follow Envision Financial on Facebook and Twitter.

Contact Information