OTTAWA, ONTARIO--(Marketwire - Nov. 21, 2012) - With the holiday season and the end of the year just ahead, now is the time to make sure that you have a solid grasp of your finances. As part of Financial Literacy Month, the Financial Consumer Agency of Canada (FCAC) has released a new video Tip Clip to encourage consumers to budget first.
Before buying special gifts or making big-ticket purchases for the household, FCAC has suggestions that can help consumers' finances stay healthy through the holiday season-and after.
1. Make a budget and stick to it
Most people know how much money they make, but find it hard to keep track of where their money is going or how much their debts cost them every year. Taking some time now to plan your holiday spending can help you avoid regretting your credit card bill in January.
FCAC's online Budget Calculator can help you create a budget that will show you how much money you can spend on Christmas presents.
Having a budget also helps you see where you can cut expenses to have more money available for what really matters to you throughout the year, such as buying a house, saving for retirement or paying down debt.
You will be able to save the tool and your budget information on your computer so you can review and update your budget later.
2. Be smart with your credit cardà
Credit cards can be useful and convenient. But if you aren't careful about how you use them, you can put yourself on a path to serious financial trouble. You could build up debt that might take you years to pay off or even damage your credit score.
FCAC's Tips to Use Your Credit Card Wisely lists steps you can follow, such as: avoid impulse buys, pay off your full balance by the due date every month, don't take cash advances on a credit card and stop using your card if the monthly balance is growing until you get your finances under control.
If you cannot pay off your credit card balance in full by the due date, you can reduce the interest you will have to pay. FCAC's Credit Card Payment Calculator compares three different payment options to pay off your credit card balance, showing the impact on interest costs, total payments made and the time it will take to pay off the balance.
3. Know the costs and conditions of prepaid cards before you buy them
Prepaid cards have become popular as an alternative way to pay for purchases, or to give as gifts. While prepaid cards offer several benefits, they have costs and conditions that you should be aware of. FCAC's "Prepaid Cards: 10 Things to Consider Before Buying" tip sheet lists the things you should know before you buy one, such as the fees that may apply, what happens if the card is lost or stolen and how you can check the balance.
4. Check for new opportunities to save in the new year
By budgeting and using your credit cards wisely, you may find ways to save money. If so, consider opening a Tax-Free Savings Account (TFSA) to help you save to achieve your financial goals. A Registered Education Savings Plan (RESP) can help you save for your children's education, or a Registered Disability Savings Plan (RDSP) may also be an option.
A Registered Retirement Savings Plan (RRSP) can help you save for retirement. Money you deposit in an RRSP can be deducted from your taxable income on your next tax return, and you have up until the end of February 2013 to make contributions that can be deducted from your 2012 income.
Also, take the opportunity to plan ahead. Check to see how much you can contribute in the new year if you already have these savings programs.
5. Take some time to learn how to manage your money with confidence
FCAC offers free educational programs for consumers at different stages in their lives:
- Your Financial Toolkit has been designed for adults to help them learn to manage their personal finances.
- Financial Basics is a teacher-led workshop that helps develop money management skills for young adults between the ages of 18 and 29.
- The City is a learning program for secondary school-age youth that teaches financial skills that they can carry with them throughout their lives.
With educational materials and interactive tools, the Financial Consumer Agency of Canada (FCAC) provides objective information about financial products and services to help Canadians increase their financial knowledge and confidence in managing their personal finances. FCAC informs consumers about their rights and responsibilities when dealing with banks and federally regulated trust, loan and insurance companies. FCAC also makes sure that federally regulated financial institutions, payment card network operators and external complaints bodies comply with legislation and industry commitments intended to protect consumers.
You can reach us through FCAC's Consumer Services Centre by calling toll-free 1-866-461-3222 (TTY: 613-947-7771 or 1-866-914-6097) or by visiting our website: itpaystoknow.gc.ca.
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November is Financial Literacy Month (itpaystoknow.gc.ca/flm)
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