Are you financially savvy?
By Susan Karpman, Director, Community Services and Immigration
If you save a penny and double it each day, how much will you have at the end of the month? Don’t peak; the answer is at the end of this article. This piece of trivia may help you make small talk, but it’s the same principle that explains why it will take 317 months to pay off your $1000 credit card bill if you pay the minimum 2% each month. We at Ometz want to help people, especially young people, learn financial basics. But as a social service agency, we want to help you achieve much more. Financial capacity building provides the foundation for making decisions, understanding values and priorities and helping you get where you want to go. Ometz wants to help you gain knowledge which can lead to changes in behaviour which can lead to changes in life.
What does this mean? Let’s look at 5 strategies towards being financially savvy.
- Make a budget – know what it costs you to live. This exercise alone is an enormous first step to understanding how to manage your financial life.
- Pay yourself first – once your very basic needs are covered, save! Force savings through payroll deduction, automatic withdrawals, etc. Read “The Wealthy Barber”. David Chilton’s message is simple and very effective: pay yourself first, start now, live within your means.
- Pay down debt. Canadians owe $1.64 for every dollar they earn. The cost of this debt is enormous and crippling. Lower credit card limits. Try to stick to cash-based spending. Distinguish between what you need and what you want.
- Invest in yourself. Education, training can move you to a new place on the road to financial success.
- Plan your retirement and estate. 58% of boomer-aged women have less than $10,000 in retirement savings! Make sure you have a will and that you have designated beneficiaries for your RRSP’s or other assets.
Knowledge plus skills plus support can lead to change and healthier individuals and families. And that’s the definition of what Ometz does. Oh yes, the trivia answer: its one million dollars!
