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By Laurie Campbell
Special to the Financial Independence Hub
November is Financial Literacy Month, a month in which Canadians are encouraged to focus on their financial well-being. I’ve worked in the non-profit credit counselling industry for over 25 years. One thing that is as true today as it was more than 50 years ago, when credit counselling was first introduced in Canada, is that financial literacy benefits everyone: and everyone can use a refresher.
As the CEO of Canada’s first and longest-standing credit counselling agency, I’m always asked who our clients are, and to be honest, you only need to look in the mirror to understand the people we help.
Our agency sees people from all walks of life and all income levels, as debt can affect anyone and we can all run into financial difficulties. At Credit Canada, we see professional athletes, celebrity personalities, teachers, lawyers, medical professionals and actors. We see millennials dealing with student loan debt and credit-card debt, trying to buy their first home and build a family; we see couples heading into retirement with little-to-no savings, still dealing with debt while financially supporting their adult children; we see single parents trying to make ends meet while saving up for their child’s education, and in many cases, handling their elderly parents’ finances as well.
Many people might think debt problems and financial difficulties only affect those with low income, and while that might be true to some degree, not only do higher-income earners experience financial difficulties too, but they can also be more severe as their debt loads are typically higher. The math is simple: The higher your income is, the more credit you are granted: and the likelihood of spending beyond your income becomes much greater. Unfortunately, more money usually means more debt.
Also, having a higher income doesn’t necessarily mean you have better money management skills or spending habits. In fact, some of the best money managers and budgeters are those living on low or fixed incomes, simply because they can’t afford to lose control. Whereas people earning higher incomes might think to themselves that they have the money, so they might as well spend, spend, spend.
Regardless of income, anyone can run into financial difficulties if they do not practice sound money management and budgeting, because they won’t know what their financial limits are, and we all have them.
Sadly, financial literacy isn’t a skill typically taught in most schools or homes, so people from all income levels can struggle with financial management and control. Additionally, sometimes it’s more difficult for higher income earners to admit they need help, and much less seek it, because of the stigma around debt. Many people think they should know better, but the reality is many of us don’t.
It’s never wrong to admit you need help, but it is important to get the right kind.
If you are beginning to struggle with maintaining monthly expenses and other financial obligations, additional credit is, at best, a short-term solution, because you’ll end up having more debt to pay back. Plus, acquiring additional credit doesn’t come with budgeting and money management support, which are necessary for understanding how to balance income with spending to achieve future goals. Without that knowledge and support, you will be up a creek without a paddle.
Debt often begets more debt, and the only real solution to resolving debt problems permanently is to eliminate the debt altogether. So, if you have debt, your first step is to pay it off. Then once that’s taken care of, you can explore different options for building up savings and other investments that are in line with your income and goals.
Free, confidential, non-judgemental help
Many people often feel they can’t face their financial struggles on their own, but the good news is they don’t have to.
At Credit Canada, we offer free, one-on-one credit counselling with certified non-profit credit counsellors who won’t judge your spending habits. Instead, they will help you organize your finances and explore different options for dealing with whatever financial issues you are facing, whether that’s bad debt, collection calls, living paycheque to paycheque, or insufficient savings.
A credit counsellor might suggest speaking with your bank about refinancing your debt into more manageable payments. They might also advise you to stop using credit until your finances are back under control, and help you establish a realistic spending plan to help you get out and stay out of debt problems. Or they may suggest a Debt Consolidation Program (DCP) to pay off your debt, stop interest, and still meet your monthly expenses.
A certified credit counsellor will give you all your options for becoming debt-free and rebuilding your credit. They will also explain the pros and cons of each option, help you determine the best solution depending on your goals, and then provide next steps, all for free.
Regardless of your income level, it’s important to get the right help when dealing with financial issues, because they won’t go away on their own. Acting from a place of empowerment begins with knowledge—knowledge is power, after all. Non-profit credit counselling is a great place to start because it’s free, unbiased, customized information that can help anyone and everyone.
Here’s to Financial Literacy Month and to empowering all Canadians through sound money management.
Laurie Campbell is the CEO of Credit Canada Debt Solutions, Canada’s first and longest standing credit counselling agency. For more than 50 years, the non-profit and charitable organization has helped over two million families and individuals overcome crippling debt, improve their credit, and build their personal money management skills. Laurie is recognized as one of the nation’s leading experts in personal finance, financial wellness, and consumer protection, and is known as an advocate for bringing signicant positive change to Canada’s financial education landscape. She was also a member of the Task Force on Financial Literacy, later known as the Financial Steering Committee.
