Are You in a Healthy Financial Mindset?
Financial post has a viable reason for the low savings rate and the record high debt of Canadians: lack of financial literacy.
With the present generation comfortable with the idea of immediate gratification, evidence points to the fact that the financial state of the average Canadian is about to get worse.
Craig Alexander, TD Bank Financial Group’s chief economist, blames this on the invaluable financial information unavailable to Canadians. Despite the relatively strong economy and laudable educational system of Canada, Craig Alexander’s reports shows that around half of his respondents do not have sufficient financial literacy.
Equipped with Numeracy Skills
There’s no value to your inability to solve simple math questions, is there? After all, you don’t need to understand numbers in your 8 to 5 job. Wrong. You encounter these numbers on a day to day basis, whether you like it or not. From the monthly bills to your mortgages, you have to be able to face the numbers and work your way through them – not around them. In any case, financial literacy starts with an actual familiarity with numbers.
Sounds simple enough? Surprisingly, a lot more Canadians than you think care less about numbers.
Future-Forward Mindset
A necessary factor in financial literacy is the ability to think about the future. Recent generations are more concerned with what they have and what they can do with it. Thinking about tomorrow is, unlike generations past, not a very popular trend.
This is both a dangerous and careless way of thinking. Financial literacy is largely about what you do with your money now and tomorrow. This involves retirement, saving enough for future payments, and many other financial obligations that will come in a few months’ time – even years.
With a future-forward mindset, you get a clear perspective of what you should be spending your money on, and keeping the rest for later.
Responsibility of Parents
A concrete way of equipping financial literacy is by teaching them to your children. Alexander says that it is, more than anything, learned behavior that may even be inherited.
Parents should take it upon themselves to teach their children about basic financial concepts such as loans, including the benefits and considerations of the home equity loan, refinancing and even debt consolidation, as well as mortgages and recession.
