You’re Less Aware of Financial Traps and How to Avoid Them
Let’s be real, most of us don’t sit down with the goal of improving our money skills. However, without a little effort in this department, we could be heading straight for a financial trap and not even know it. Here are a few common money traps and why it’s important to avoid them:
Without a clear understanding of how to manage your money and what influences your spending choices
, you may find yourself living beyond your means. Credit makes it easy to spend more than you earn, which can lead to mounting debt and financial stress.
What Are Your Bad Habits Really Costing You?
Credit Card Debt
Our credit cards don’t come with instructions, so learning the ins and outs of how to use them wisely can be painful. If you’re using credit cards, inform yourself about the terms and conditions that come with each card, including interest rates for purchases and cash advances
, how minimum payments
and fees work, if collecting reward points is worth it
, and how you can use your credit card without paying any interest ever – before you find yourself racking up high balances that you can’t afford to pay off.
Myths About Debt Payments
A Low Credit Score
A lack of insight into how we should spend and save our money to achieve our goals can lead to less than healthy financial habits. These habits, over time, can negatively impact your credit score
. A low score can make it difficult to rent an apartment and obtain loans, a new cell phone contract, and even some types of insurance. A poor credit score will lead to higher interest rates and tighter terms and conditions, which will cost you more money in the long run.
Credit 101: The Basics About Scores, Reports & Ratings
No Emergency Savings
A rainy-day fund is key to managing an unexpected expense, like a car repair or medical bill, or tying us over if we lose some or all of our income. Learn from the most successful people
– build up your emergency savings account little by little, until you have about 6 months of essential living costs saved up for a rainy day.
How to Avoid an Unexpected Financial Crisis
Lack of Retirement Planning
A lack of financial literacy
can also impact your long-term financial health. Without understanding the importance of retirement planning, you may find yourself unprepared and struggling to make ends meet when the time comes. Treat preparations for the end of your working years like a marathon, not a sprint, and start as early as you can. Save a little from each paycheque in your RRSP and/or pension, and max out any employer-sponsored matching programs to get the biggest bang for your buck.
10 Steps to Retire Without Debt
Tips for Improving Your Financial Literacy
It’s never too late to improve your level of financial literacy and doing so doesn’t have to break your budget. Keep an eye out for free or low-cost resources, look for free courses within your community, and reach out to a trusted, professional organization to get the information and resources you need without breaking the bank!
The Pros and Cons of Budgeting Apps for Canadians
Reach Out to Us for Trusted, Professional Help When You Need to Improve Your Money Management Skills
Reaching out for professional help from a credit and debt counselling organization is not limited to helping you pay down debt. Our financial educators
are happy to answer your questions during friendly and engaging webinars and workshops. Our credit counsellors
are able to provide you with free resources and guidance, in addition to help with your debts if you need it. Contact us
now to start filling your toolbox with what you need to build a stable financial future for you and your family.