What Is Financial Literacy?
According to the Wikipedia definition, Financial literacy is the possession of the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources. Which at its core is basically the ability to understand how money works.
Importance of Financial Literacy
Financial literacy is important because it’s one of the things that will impact just about every aspect of a person’s life. Whether young or old, single or married, our finances play a key role. Developing financial literacy involves learning and practicing a variety of skills related to budgeting, managing and paying off debts, understanding the importance of savings and understanding credit and investment products.
Creating and maintaining a budget is one of the most basic aspects of staying on top of your finances. And the good news is you don’t need to be a math wiz to make this happen. With the prevalence of online resources and apps to help make budgeting easier, the hardest part might just be picking which budget resource to use.
Importance of Savings
Saving plays an important role in long term financial planning but for many it often becomes low on their priority scale. When you are young, it can be easy to ignore things like retirement since it seems so far off in the future. The reality is saving money is important because it helps protect you in the event of a financial emergency. Additionally, saving money can help you pay for large purchases, avoid debt and reduce your financial stress.
Credit and Debt
Credit can be an extremely useful tool, if it’s managed correctly. Making the wrong decisions when it comes to finances could end up costing you more than just dollars and cents. A number of studies have demonstrated a cyclical link between financial worries and mental health and in turn poor mental health can negatively impact on physical health. It’s important to grasp the concepts of good credit practices as early on as possible, whether it’s understanding The making of a credit score and why it matters or recognizing the difference between good debt and bad debt.
Want to Improve Your Financial Literacy Skills?
Using financial tools and calculators can help you stay informed and engaged in your financial outlook. Among these tools there are some great Budget Planners where you can create your budget and receive personalized tips and suggestions to improve your financial situation. A Financial Goal Calculator is designed to help you manage your debt and savings goals by understanding how different pay down amounts will impact the timeline for your goals. A Credit Card Payment Calculator can help you find out how long it will take to pay off your credit card and explore options to pay it back faster. As I often say with mortgages, the right credit card can also make a difference so I would also recommend checking out a Credit Card Comparison Tool to compare credit card interest rates, annual fees, rewards and other features.
While I recommend speaking with a mortgage professional for expert advice, if you are looking for general information these Mortgage Calculators can help you:
- Get an idea of the maximum mortgage amount you qualify for based on your income.
- Compare payment frequencies (weekly, bi-weekly, semi-monthly and monthly).
- Discover how many years you can shorten your amortization and how much interest savings you will realize by making a prepayment (lump sum) on your mortgage.
- Compare renting and buying based on your current monthly rent, funds towards your down payment and your desired monthly payment if you purchased a home.
Have more mortgage questions or concerns? Call our office today at 250 753 2242 and we can help with all of your mortgage questions!
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We are open Monday to Friday from 9 am to 5 pm. Kevin Decker can also be reached after hours at 250 619 2262 and Jason Barudin can be reached at 250 668 2203.