Financial Literacy – A Beginners Guide to Financial Education #Finance

did you learn about money in school i’m learning did your parents teach you about money you want that money come and find it because i don’t know where it is yet baloney today’s CashNews.co will be a beginner’s guide on financial literacy so if you want to know how

to properly use money to make the best financial choices to live a more comfortable life and accomplish all your financial goals then make sure you watch this CashNews.co till the end november is financial literacy month and this november is the 10-year anniversary here in canada this year

it’s never been more important to educate yourself on financial literacy a lot of canadians are struggling financially because of the effects of the pandemic financial literacy month helps canadians better understand their bold; color: #1a73e8; text-decoration: none;">Finances and help to make better financial choices with that being said let’s get into the CashNews.co what is financial literacy financial literacy is the ability to make smart financial decisions that help you achieve the lifestyle

you want this mainly includes earning Income Budgeting paying off Debt saving investing protecting yourself financially and overall managing your text-decoration: none;">Finances why is financial literacy so important the more financially literate you are the better decisions you will make with your none;">Finances so the more money you’ll have and the more effective you’ll be with your money you could have the best paying job in the world and still be broke just because you make more money doesn’t make you better at managing it you could also have a low paying

job but still build wealth because you have good money management skills without financial literacy money gets wasted so that means working more wasting more time and building less wealth don’t you want to afford the better things in life without getting yourself into Debt

traveling buying a home having children your dream sports car are you going to have enough money when you retire being more financially illiterate helps you get closer to your financial goals are you able to cover emergency funds when you know how to manage your money an emergency expense can be

stress free okay so how does money work money is an accepted payment for goods and services when you work you’re either providing a good or service for most people working takes up all your time so essentially you’re trading your time for money you can make all the money in the world

but you can only have so much time so why are people so inefficient with their money because they’re financially illiterate let’s begin with earning Income earning Income is the foundation of your personal

style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finances this is the money coming in types of earned Income include hourly wages salary commissions tips and bonuses when considering a job or a career you should also consider the lifestyle you want to

live and will you make enough money to afford that lifestyle you should also consider the benefits you get pension benefits rsp matching union benefits or dental plan dental plan lisa needs braces room to grow what’s the highest position you can reach what’s the most money you can make

also is there a high demand for this career will you have trouble finding a job will you need to get a student Loan to pay for education for this career and lastly is this job actually something you’d like to do or do you just like the money since earning

Income is the foundation of your personal Finances the better your foundation the easier the rest of your personal

href="https://cashnews.co/finance" style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finances will be but don’t just limit yourself to one source of Income if you really want to increase the money coming in then consider other streams there are

seven different types of Income streams you should know earned Income this is what we just talked about usually your 9 to 5 job this type of Income is the most common and usually a primary source of Income but earned

Income is limited to the skills you have and the amount of time you can work a day then there’s Profit Income this is when you sell a good or a service for more than what it costs you to produce this is your business owner or entrepreneur

this kind of Income is scalable and your earning potential is unlimited but with this reward there’s much more risk if you don’t want to take that risk then take a look at interest Income this is when you get paid to lend out your money for example a

high interest Savings account Bonds or gics now usually you need a lot of money to make a significant amount of interest Income but the pros are that it’s risk-free and it’s very passive another passive way to earn

Income is through dividend Income dividend Income is Income received for being a shareholder of a company all you need to do is buy Shares of a company that pays a dividend and you’ll receive a dividend

payout usually quarterly the next type of Income is rental Income this is when you have an asset and let someone rent it for money this could be anything from a house to your car to equipment another type of Income is Capital gains

this is when you buy an asset and sell it for more than what you bought it for two examples would be stocks or a house this is why investing in the Stock Market and in Real Estate is so popular and lastly royalty Income this is the

Income received from allowing someone to use your property types of royalty Income include music books pictures patents and even the use of a franchise this type of Income source requires the work up front but usually once it’s produced it

can become passive the more of these seven Income streams you have the more money you’ll make if you happen to lose your job you wouldn’t be screwed because you have other sources of Income these seven Income sources are either active

Income or passive Income active Income requires you to actively perform a service to get paid while passive Income can make you money while you sleep there’s only so much time in a day if you really want to grow your

Income you’ll need Income sources that pay more and require less time many of these Income sources can be considered investing investing in a business that can pay you Profit Income investing in Real

Estate that can pay you rental Income or Capital gains and investing in a Stock Market that can pay you dividend Income and also Capital gains so one essential part of financial literacy is investing one

of the easiest barriers to entry in investing is in the Stock Market this is where a lot of wealth has been built by Capital gains dividend Income and the power of compounding two ways i suggest you invest in the Stock Market is

self-directed investing or with a robo advisor self-directed or do-it-yourself investing is when you open a Brokerage account and do the investing yourself before you pick a Brokerage company to go with think about what kind of investor you are growth investor

dividend investor etf investor what Markets you want to invest in the u.s market the canadian market international then watch my CashNews.cos on the many different Brokers i

reviewed to see which one best suits your needs once you’ve found a Broker the three main accounts you can open is a cash account tfsa or an rrsp you’ll want to contribute to your tfsa first as all Capital gains in this account are tax-free the catch is

you could only contribute so much every year plus there’s lots of other rules you’ll need to learn with the tfsa contributing to your rrsps should only be done in certain situations so you’ll need to do some research before considering an rrsp account and your cash account is used

once you’ve maximized your tfsa account once you know what account to open then you can start doing research on what stocks and ETFs you want to invest in keep contributing to your account

and keep doing research to know if you should keep holding your stocks sell or buy more but if this is too much work and you just don’t have the time you can invest with a robo-advisor with a robo-advisor all you need to do is answer a few questions like Risk Tolerance and

goals with your money then the robo-advisor will pick a Portfolio for you based on your answers add money to your account and set up automatic contributions and that’s it the robo advisor will handle everything for you including investing your funds rebalancing your

Portfolio and reinvesting your Dividends all for a small fee once you reach your goal withdraw your money and set a new goal maybe your goal is to get into Real Estate investing this type of investing requires a lot more money usually at least 20

of the purchase price in Real Estate you can grow your money in a few different ways you could rent out your property for more than the mortgage and Profit the difference and while doing this building Equity in your home and the value of your home

increasing or you can purchase a property and do renovations and sell for a higher price sounds easy enough but there’s a lot to learn about this type of investing and you’ll need a team of experts to help you achieve it like property managers building contractors realtors lawyers and a

mortgage Broker if you don’t have the funds or the time to invest in Real Estate but you want to invest in Real Estate you could always invest in reits aka Real Estate investment trusts reits are companies that invest in

Real Estate and can be purchased like a stock in the major Stock Exchanges and lastly you can invest in a personal or private business there’s a few ways to do this privately invest in someone else’s business buy an existing business or start a new

business when deciding to invest in a business you’ll need to do research first what kind of business ideas do you have do you want to sell a product or offer a service will your business be local or global will your business even be Profitable you’ll need to create a

business plan and most likely fund your business yourself it’ll be hard to get a Loan for a business within your first two years of operation you will also need to do things like register your business name decide whether you can be a sole proprietorship or do you need to

incorporate register for hst ght or phd will you need a business license will you need Insurance will you need employees if you want your business to be successful you’ll need to improve your financial literacy so far we covered earning Income and investing

the next essential part of financial literacy is saving like i already mentioned you can earn all the money in the world but if you don’t save any of it you won’t be able to reach your financial goals or build wealth and if you can’t save you won’t be able to invest so your

money can’t grow so how do you save money easy spend less money than you make that difference is called saving money but easier said than done dad i need 300 it’s hard to spend less money than you make when you don’t know how much money you spend that’s where

Budgeting comes in a budget is a spending plan for your money there’s four main categories in a budget your needs your wants Debts and Savings slash Investments there’s many different budget templates out there and

there’s many different ways to track your budget one of the easiest ways is to do your spending on an account that has money managing and Budgeting tools one of the best would be coho it’s a reloadable prepaid visa with all the tools to help you manage your money and

most importantly save your money this CashNews.co isn’t sponsored by coho i just think they have the perfect product for people who struggle with managing their money once you start tracking your spending you can see where all your money goes so you can try and decrease these categories to

increase your Savings another sneaky but effective way to save money is to pay yourself first as soon as you get paid put money into Savings then spend the rest if you do the opposite get paid spend money and save what you have left you might find yourself saving

less so pay yourself first and if you happen to have money left after your spending save some more to make paying yourself first easier make it automatic set up your account so when you get paid money will automatically transfer from your checking to your Savings and speaking of

Savings accounts you’ll want to try and earn the best interest rate you can Inflation in canada is around two percent annually meaning your 100 dollars will have the buying power of 98 after one year Inflation is the cost of goods and

services increasing year after year so everything gets more expensive so you’ll want to try and earn a decent interest rate to counter this another thing you should consider is when to save and when to invest Savings are reserved for emergency funds and short-term goals with

any long-term goals like retirement or your children’s education investing will be your better option because of better returns this is where Risk Tolerance comes in let’s say you plan to buy a house if you can save for a house in two years this would be considered

short term you wouldn’t want the short-term Savings goals invested because of short-term volatility now if you need five years to save for a house this would be considered long-term so it’s more reasonable to have these Savings invested because if

anything happens in the Stock Market like a global pandemic you’ll have time to recover so you don’t incur a loss and as for emergency funds you’ll want to first save for a 1 000 to 2 000 emergency fund then slowly build up a fund of 3 to 6 months of living

expenses the amount of your final emergency fund will depend on many factors like what line of work are you in how easy will it be to get a new job if you lose your current one how healthy you are you might be unable to work because of health complications how many dependents you have someone with

five kids will need a way bigger emergency fund versus someone with no kids but don’t get too carried away with your Savings once again Savings don’t earn a whole lot and you will lose value due to Inflation and make sure you’re

not saving just for the sake of saving have Savings goals and have investing goals the next financial literacy lesson is what most people are good at spending sold to the gentleman who bought every item in today’s auction well good in a bad way now you can’t just save

and only buy Assets with your money you will also need to spend money to survive like housing transportation food clothing and whatnot so in this battle what’s your weapon of choice cash a debit card a Credit card or a prepaid mastercard or visa with cash you

get the benefit of not getting yourself into Debt once your cash is gone the spending stops cash is also good to use when buying and selling in classified ads for cash discounts tipping cash-only emergencies and when using cash studies show that you’ll likely spend less for

the cons cash is harder the track for Budgeting there’s a chance of losing it and you might get robbed and you won’t be able to make certain purchases like online purchases pre-authorized purchases pay bills and somewhere where only mastercard and visa is accepted what

about keeping your money in a checking account and using a debit card pros no need to carry cash if it gets lost or stolen you can just cancel the card you can send and receive e-transfers you have Budgeting tools mobile check deposit ability to withdraw cash at any atm

Overdraft protection and set up payroll direct deposit cons with the big banks you’ll be paying a monthly fee unless you maintain a certain balance you can get a weight plus with a checking account there’s many other fees you need to worry about but with that being said

there’s many banks out there that offer no fee checking accounts like tangerine simply and modus bank another con is that using a debit card won’t help you build Credit if you want to build Credit you’ll need a Credit card with a

Credit card you get the ability to borrow money doing this properly is one of the best ways to build your Credit but with getting a Credit card you’ll need to understand a few things what’s your annual interest rate what’s your

grace period Interest Rates for late payments and cash advances and foreign exchange fees pros of using a Credit card is you get benefits that range from purchase protection and extended warranty to airport lounge access and free roadside assistance also most

Credit cards will offer you cash back or reward points and another pro of a Credit card is that you’re protected under a zero liability protection program cons of a Credit card include interest and other fees interest on a

Credit card is usually around twenty percent this is why it’s important to pay off your Credit card before you get charged interest one of the biggest cons of a Credit card is getting yourself into Credit card

Debt when you don’t track your spending this could be easily done without you even realizing it you should only use Credit cards for two reasons to build your Credit or take advantage of rewards and benefits if you’re trying to build

Credit make a few purchases every month and pay off the balance right away if you tend to overspend and you can’t pay off your full balance every month maybe Credit cards aren’t for you another spending option is a reloadable prepaid mastercard or visa

these will be cards like coho stack mogo and a pc money account these kinds of accounts have no monthly fees and are limited on the fees they do charge they offer you Budgeting and money management tools to help you spend less and a card like coho will even offer you cash back like

a Credit card and coming soon to coho will be coho save where instead of paying interest with a Credit card you could earn an interest on your balance also since these cards are mastercard and visa you get their benefits the con with these cards is that they

won’t help you build Credit but if you’re not trying to get yourself into Credit card Debt this might be a good thing but the thing is your Credit is another important part of financial literacy having a good

Credit report and Credit score will allow you to get better Credit cards and Loans with better terms and Interest Rates so why is this important well there’s two types of Debt out there good

Debt and bad Debt bad Debt is your car Loans Credit cards or any kind of Debt that doesn’t pay you back what you put in good Debt on the other hand is something that will pay

off like a student Loan a business Loan or a mortgage that can be a tool that can ruin your life financially or if used properly it could be a tool to help you build your wealth this investment strategy is called leverage another aspect of financial literacy is

protecting yourself financially this includes types of Insurance car Insurance home Insurance life Insurance and business Insurance having Insurance protects you financially from hardship and

Debt also you’ll want to make sure that your Assets are protected like any cash accounts should be protected under cdic and any investment accounts should be protected under cipf so how can you learn about financial literacy you can start off with getting as

much free knowledge as possible youtube CashNews.cos blogs podcasts and other free resources like budget planners financial calculators comparison tools and free workshops and programs you can also take it another step up and buy books courses programs and even use mentors and experts and the best

way to learn about financial literacy is to take action and practice it you could read everything you need to know about investing in the Stock Market but if you don’t actually invest you’re not applying that knowledge and making mistakes is another good way to learn

something this is why i would suggest you start learning as soon as possible if you have very little to invest but keep going at it for years you’ll make mistakes learn and gain experience but if you wait till you have more to invest you’ll still make those same mistakes and it will

cost you a lot more now i know financial literacy isn’t the most exciting topic but financial literacy is probably the most important topic money is something we all need the more money we have the more freedom we have and the more money we waste the more time is wasted and money is the

world’s most valuable tool because money gives your time back so educate yourself on financial literacy so you can reach your financial goals and live the lifestyle you always wanted now i can’t teach you everything you need to know about financial literacy in one CashNews.co but

hopefully you’ll understand which topics are important if you want to keep improving your financial literacy make sure you subscribe and check out some of my previous CashNews.cos or click one of the CashNews.cos on the right thanks for watching until next time keep making money moves