Essential tips for building your financial literacy, protecting your financial identity and investing in your best financial life.
Far too many Canadians have learned the hard way that years of late-night cramming for math tests back in school didn't do much to prepare them for managing their personal finance or protecting themselves against fraud and identity theft.
Even though Canadians' professions and work styles have changed from previous generations (full-time freelance, anyone?), it turns out that our milestones have not. We still dream of homes with yards large enough to lounge in, cottages up north and bi-annual trips in the sun.
But the truth is, financial literacy is an essential skill Canadians must develop if they want to grow wealth and build financial stability in order to achieve those kinds of goals.
In celebration of Fraud Prevention Month, which runs throughout March, we've done the research and identified four of the most impactful steps to building financial literacy, protecting your financial identity, and investing in your best financial life.
Step 1: Claim ownership of your credit score once and for all
Whether you want to apply for a mortgage or start a small family business, knowing where you stand financially is the most powerful place to start. Knowing your credit score and keeping it healthy will be enlightening. Can you believe that only 39% of Canadians know their credit score and only 27% have a good understanding of how it's calculated? Keeping tabs on your credit score can also help you identify any unusual activity on your account and potentially flag when you have been a victim of fraud or identity theft. This should be motivation enough to find out your credit score and learn how it works.
Pro Tip: Discover your financial starting point — learn your credit score with Credit Keeper™, a free online tool from Capital One. This tool offers Capital One cardholders access to their TransUnion® credit score, and updates it bi-weekly, which can help you monitor your score for unusual activity. Score checking is fast and easy, and Credit Keeper's new Key Factors feature gives insight into what affects your credit score and what adjustments you can make which could have a positive impact on your overall credit score. Credit Keeper is currently unavailable to customers who live in the province of Quebec, or who have a Capital One Mastercard, exclusively for Costco members.
Step 2: Commit to removing stress from your financial diet
Aren't you tired of feeling stressed about money? When you take the steps to become financially literate, you'll be freed of the stress of not knowing what to do, or whose advice to take. As an informed consumer, you'll become confident in your decisions because you'll be sure you're making the right moves for you and your household. The added benefit: Knowing your financial situation will help you feel more relaxed and be less afraid of tackling issues head-on.
Pro Tip: Subscribe to financial newsletters or try following personal finance bloggers to learn more about how to get good at managing money and balancing your budget. There's always something new to learn!
Step 3: Take stock of all your financial options
The world of financial products is filled with many different options to choose from: Should you have one credit card or multiple cards? A business line of credit or a personal one? A TFSA? A GIC? A balanced stock portfolio? Think of financial products like any other products you'd shop for and choose according to your needs and preferences. Having a basic understanding of your options is your first step to making sound financial choices that are better for you. The added benefit: you will boost your confidence with practical knowledge about money.
Pro Tip: Demonstrating responsible use of a credit card can be one way to improve your credit score as credit card payment information is sent to credit reporting agencies regularly. When you show responsible credit use, like making your payments on time, credit reporting agencies recognize that you're building a strong credit history. Consider checking out the Guaranteed Mastercard® from Capital One, which is geared to those looking to establish or repair their credit.
Step 4: Create a budget for your financially intelligent household
Taking control of your finances through budgeting and learning about money will empower you to enjoy money for real. Even more, budgeting can motivate your family members by offering them a stake in the game. Set a goal together, like affording a family trip to France, then work together to reach your goal. After all, there's no greater feeling than setting goals in life and actually achieving them. The added benefit: you will soon begin living your best life (and can celebrate with that dream trip to Europe!).
Pro Tip: Include family members when drafting a budget and obtain agreements from all “teammates” before it's completed. Schedule weekly meetings to check-in on your progress. Hold each family member accountable for the successes and setbacks (there will be some!) and celebrate accordingly when your family reaches its goal.
Whether you're a self-employed digital marketer or a hospital staff surgeon, knowing how your finances work is crucial to staying afloat or, better, thriving and living your best life.
Fraud survey stats provided by Capital One Canada. Survey responses were collected from 1,514 randomly selected Canadian adults. The margin of error is +/- 2.5%. Read the detailed study here.