How to Strengthen Your Financial Fluency

07/06/2015 12:22 EDT | Updated 07/07/2016 05:59 EDT

Regardless of your age, your job or your personal interests, the topic of money will always be relevant to you. You've likely heard terms "money management" and "financial literacy" countless times before, and with good reason -- having a clear understanding of your finances is non-negotiable if you hope to have a sound plan for your present and your future.

According to Statistics Canada's 2014 Canadian Financial Capability Survey, only 7.1 per cent of Canadian adults considered themselves "very knowledgeable" financially; this breaks down to 5.5 per cent of women and 8.7 per cent of men. While those numbers are distressingly low, they also serve as a reminder that we have lots of room for education and improvement.

If you fall within the remaining 92.9 per cent, there are fortunately many actions you can take to increase your understanding. In my experience, these are the three most important steps to becoming fluent in finance:

1. Empower yourself

Far too often we rely on others to manage our money for us but the instinct is understandable. It's a natural decision when navigating unfamiliar territory. The only way to become familiar, however, is to take this task on ourselves. Thankfully, you can ease into a position of empowerment by snapping your financial picture into sharp focus.

Whether you're in your 20s or your 60s, you should have a clear sense of your savings goals and spending habits. Since one informs the other, you'll need to find a simple and efficient way to obtain a holistic view of your finances. User-friendly DIY software, like Mint, will make sense of your money by helping you to create budgets, pay bills, and see all of your transactions in one place. Once you have a handle on the day-to-day, you should consider taking on additional responsibilities, like your taxes, with an equally reliable resource. Intuitive programs like TurboTax will get you off on the right foot, and in using them you'll soon realize that you're capable of managing your money effectively.

There's no shortage of tools out there to help you get financially fit. Do some investigating and pick the right tool that works for you.

2. Learn the difference between good and bad debt

To truly get a grasp on your finances, take stock of any debt you've accumulated over the years. While you may owe more than you'd like, remember this: not all debt is bad. Depending on the investment, your debt may help you to become more financially independent in the long run.

Good debt, such as a mortgage, a business or student loan, or high-return stocks, will create value over time. The payoff is worth it because you'll get more back than you've put in. An added bonus: some of these debts may even be tax deductible. Bad debt, however, gives nothing back. When you make purchases on a credit card, for example, and don't pay the balance in full, the interest you're charged will continue to accumulate. This means that you're now overpaying for items that are likely losing value, so it's important to limit or cut out this kind of spending.

3. Leverage your resources

Many organizations have programs in place that will help you get started on your financial journey, so don't hesitate to tap into them. In fact, The Government of Canada has just launched its own financial literacy strategy comprised of more than 50 initiatives designed to improve our money-managing habits and skills.

Called "Count me in, Canada", financial institutions, not-for-profit groups and government organizations will come together to help Canadians manage money and debt, plan for the future, and protect against fraud. If you're looking for support, look no further -- gaining access to this kind of information has never been easier.

I can't stress this enough: your financial future is in your hands. Take an interest, handle it with care, and watch your efforts pay off.


Managing your finances in 5 steps