For those that are not aware November is Financial Literacy month here in Canada. If you think this is not a big thing, the Federal Government’s Financial Consumer Agency of Canada is pushing this concept very hard (and I applaud their efforts). Of course, many financial bloggers will be trying to help out, and I will do my part as well, so check my Twitter feed and here for some of my views on what is important in terms of Financial Literacy.
What am I talking about with Financial Literacy? That’s a good question since I know many folks who seem quite smart. However, they make very odd financial decisions, and it seems they don’t understand what they are doing. What do I mean?
- Buying stock with little or no understanding of the companies they are buying stock in, usually acting solely on a hot tip they got from a friend. Now, yes, I know a few folks who have had success with this, but for every person who strikes it rich, there are 100 who lose money on a hot tip.
- Those who buy mutual funds on the advice of a bank employee, an insurance agent, or some other person may not be telling you everything you know. Yes, you can get Mutual Funds that can be profitable in that situation, however, you (yes YOU) need to understand how the Mutual Fund works (their investing goals) as well as how much you are paying them (the Management Expense Ratio
n(MER)). - Carrying balances on Credit Cards, instead of on lower interest rate loan vehicles. You shouldn’t be buying more than you can afford in the first place, but if you are paying interest on your credit card, you are digging a deep hole that will be very hard to get out of.
There are many other examples, but as you can see, Smart Folks can get themselves into financial trouble, and many times, it is because they have not spent enough time understanding the Financial Services and Vehicles they are using. Simply saying, “It’s too complicated,” or “I don’t have time for this,” is foolish and asking for trouble.
You don’t have to take financial training or such, but you do need to read and you cannot assume others will help you, you have to understand these things. Financial Literacy sounds daunting, but it is your money and you are the custodian of it, so go and learn. You wouldn’t start rewiring your house without training on how electricity works, would you?
This blog will give you advice about Debt, and Debt reduction, however, there are many great blogs out there about investing and such as well.
Odd thing happened… Your blog was in English, but everything around it was in Spanish, even the button to send this comment. I checked my settings, and did not find anything to ensure that it was in one of the Canadian standard languages (please don’t ask me to write in French but I can read it! One of those use it or lose it things and I lost it!)
Just thought is was interesting that I have not heard ANYTHING about it being Financial Literacy month in Canada until I read your blog. I guess the US election was bigger news on TV. I would think they should be having some articles in the paper as well…
O-la signior! Buenos dias! I have no idea about the spanish stuff, but if you look on Twitter for the tag #FLM2012 you should see more posts about financial literacy month.