November is Financial Literacy Month in Canada - PART 1

Today is the first day of Financial Literacy Month here in Canada.

I have a personal interest in financial literacy that comes from my previous life as a Certified Financial Planner when I worked for one of Canada's big five banks. I believe that we all need to understand and take control of our personal finances since no one has more of an interest in our financial security than we do. 

One of the greatest gifts we can give ourselves is financial freedom, and to that end I would like to discuss a few topics that will help you achieve that goal. However, before we can even consider the end-goal, we need to know where we are today. We need to have a crystal clear understanding of our current financial health. 

As a financial planner, I would often ask people to tell me "approximately" what their current expenses were on a monthly basis. You might be surprised to hear that most people couldn't really give me a ballpark estimate of what they needed in order to pay their bills every month. Even more worrisome is that most people didn't want to take the time to sit down and figure out what that number might be. Do you think they instictively knew that the news would not be good? I think that must be the case, since recent reports tell us that our consumer debt is  more than 163% of our annual income. This rate has been rising slowly over the years, and like a slow-moving train it's coming straight at us as we stand on tracks like the proverbial deer in the headlights. Get off the tracks!! You just need to take a few steps in the right direction to take you to safety.

The first step is admitting that there is a problem. The second step is sizing it up. To me that means, making a budget. I know that's not a popular activity, but I haven't found a better way to handle it. If you know of one, PLEASE let me know. 

To begin, just make a list of all your monthly expenses. Mortgage, property taxes, hydro, insurance, food,  etc.   and add them all up. Let's start here, at the beginning. It doesn't need to be perfect, or overly complicated. We just need to start.  It's a easy enough to do, but easier not to do.