November is Financial Literacy Month

17 Nov
November is Financial Literacy Month

This year marks the 10th anniversary of Financial Literacy Month, promoted by The Financial Consumer Agency of Canada. 2020 is also a challenging time for many Canadians who may be struggling financially due to the COVID-19 pandemic.

Browsing the website for Financial Literacy Month, I see articles related to making a budget, setting aside emergency funds and minimizing debt. These are all aspects of my advice to clients on the skills and knowledge that allow them to make informed and effective decisions with all of their financial resources.


Budgets are great in theory but they don’t work for today’s busy families and individuals who are strapped for time, using electronic means of payment and subject to as many as 5,000 ads per day encouraging them to spend their money rather than save it. Economic theory states that people will make rational, efficient decisions with their money all of the time. In contrast, a cash flow plan which is based on advances in understanding human behaviour, provides strategies, tools and tips for you to successfully manage your cash flow and resources. It provides armour against the bombardment of advertising algorithms which constantly seek to get into your wallet.

Takeaway – budgets are often doomed to fail before they start, leaving you feeling defeated and prone to bad choices. Money management via a behavioural cash flow plan empowers you to make smarter decisions. Contact me to get started.

Emergency Savings

Emergency savings are a vital component of financial security. The last six months have clearly demonstrated that the unexpected can occur at any time. We should all ideally have at least two to three months of emergency savings in a bank account that we can access for any of the following types of unexpected expenses:

  • Unexpected car repair
  • Emergency dental work not covered by insurance
  • Pet’s vet bill
  • Temporary loss of job, or time off work because of illness

Set up an automatic contribution to a separate savings account which cannot be accessed by a debit or credit card to save up funds for the unexpected. This type of savings can also be useful for setting aside funds for expenses that come up annually, such as:

  • back to school supplies and clothes,
  • holiday or birthday gifts,
  • property taxes, etc. 

You always want to avoid going into debt to pay any of these. Contact me to find out how a Cash Flow Plan can help you find money to put into emergency savings.

Minimizing debt AND interest charges

Interest charges are often invisible. For example, if you have a credit card which you do not pay off monthly, you may realize that you are paying interest on the unpaid balance. However, do you also know that while the month-end balance is not paid, interest is charged daily on each new purchase made? The result of this is that even when you pay off your new purchases at the end of the month, you’ve accumulated more interest charges. OUCH! 

I often find that Canadians have money in their savings accounts which they could use to pay off the credit card but prefer to keep in savings. That doesn’t make financial “cents”. Consider the following:

  • One year of interest paid to you on savings of $10,000 in typical “high interest” savings account = $100
  • One year of interest you pay to the bank on unpaid credit card bill at $10,000 (charged at roughly 20%) = $2,000
  • Cost to you: $1,900; Profit to the bank: $1,900

Contact me if you want to pay off your credit card or other debt using a smart, low effort Cash Flow Plan.

It’s just good advice!