Building a Foundation in Financial Literacy


This week, children across the country are starting a new school year. Whether it is the first day of kindergarten or the last year of High School, every family approaches this new beginning with the sincere hope that these lessons are leading to a successful future. Financial literacy education, or the lack of it, continues to be a hot topic. Across the country, Provincial governments are working to include more financial literacy lessons in their school curriculums, and the Federal government continues to implement a national strategy for financial literacy. With Canadians’ debt-to-disposable income ratio at 168% (down from a record 170% in the third quarter of 2017[1]), it is a pertinent concern.

Financial literacy is a foundational skill that affects all areas of our lives. More than ever, we need to understand how money is made, spent, and saved. In my experience, I have seen firsthand that building financial literacy begins with four simple lessons: budgeting, debt payment, savings, and giving.


Contrary to popular belief, budgeting doesn’t begin with planning where you will spend your money. It starts with tracking where you are spending your money. Unless you know exactly where each penny is going, a budget will be little more than guess work. Track your spending for at least a month. Write it all down. This sounds easy, but it takes a lot of courage to honestly look at your spending and do something about it. It is also very empowering. Once you have figured out where your money is going, you can begin to adjust how you want to allocate it. You might choose to cut back in some areas to free up funds for other things that are a higher priority for you. You’re the boss – take control of your money. Of course, some people are legitimately under-employed or are lacking resources, and although the principles remain the same, I am not suggesting that their financial issues are solved merely through tracking spending and disciplined budgeting.

Don’t Forget to Give

As part of your budgeting, take time to decide what causes or charities you want to support, and how you want to go about it. Giving is easier when you plan for it. In time, giving fits comfortably into your lifestyle, and because it is a planned expense, it doesn’t feel burdensome. In addition, research shows that people who budget for their giving donate much more than those who only give spontaneously. Practice generosity often. Giving is like a muscle, the more you exercise it the stronger it gets.

Control Debt

Not all debts are created equal. A mortgage or a student loan may likely prove to be an investment, whereas running up a credit card or line of credit for consumption items like restaurants, clothes, and other fun will only get you into big trouble. Get your debt under control. One effective way of doing this is to ‘snowball’ your debt payments. Start by lining up all your debts and make minimum payments on each one. Then, prioritize the debt with the highest interest and use any extra funds to pay it down. Once it is paid off, re-evaluate which debt has the highest interest, and concentrate your extra funds on that one. Eventually, all the debts will be paid off (perhaps with the exception of a mortgage). Being debt free is incredibly freeing.


Saving money is important, and it is a good idea to set aside two separate funds. The first is for emergencies. How much you choose to put into this fund varies from person to person depending on their situation. To determine the amount of emergency savings you need, consider a likely situation where you might need to access the funds (a major home or car repair, a sudden need to travel to see an ailing relative), then ask yourself what it would cost and what you would need to afford it. Aim to keep that amount in the account at all times. The second savings fund is for when you no longer want to work or are unable to work. There are many options for retirement savings, ranging from mutual funds and RRSPs to self-directed investments. Each individual will have unique savings goals based on their particular situation. It is usually best to investigate your retirement savings options and make arrangements working with a skilled advisor that you trust.

Put into practice, these four pillars of financial literacy provide a strong foundation upon which Canadians of all ages can start to build a successful future.

Whether you’re an individual, family or business, our goal is to support you with your generosity planning. With regional offices across Canada, Abundance Canada offers confidential free consultations, with no obligations. To learn more, connect with us today or call 1.800.772.3257 to arrange to meet with a Gift Planning Consultant in your area. 

Contributed by Darren Pries-Klassen

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