Financial Literacy 101

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To be effective in today’s world, Canadians must be financially literate. Currently, most individuals learn personal finance at the dinner table, during commercial breaks, or indirectly through conversations with loved ones. Schools can only do so much to prepare its students from entering the real world, yet many young Canadians find themselves repeating the same mistakes as their parents.

Where to start?

It is crucial to learn the true meaning of wealth. Wealth provides individuals with flexibility to pursue their goals in life, gives individuals the power to pursue opportunities with minimal obstacles, and allows people to make new plans when they have achieved their goals.

The dictionary defines Wealth as:




  1. An abundance of valuable possessions or money.
  2. The state of being rich; material prosperity.

Unfortunately, the definition is too vague; what may be considered lots to one individual may be nothing to the next person. To simplify the definition, to be more universal, we have defined wealth as the following:

  1. Ability to afford your everyday life effortlessly.
  2. To be able to do anything as you please, within reason, without the use of consumer credit.

As long as you are able to do the things you love to do, especially afford your lifestyle effortlessly, you can determine whether or not you are wealthy. However, there are ways to solidify your wealth position; as being wealthy is not a matter of the amount of money in your bank. Rather it is the ability to generate enough cash (from things you own) to pay your expenses (amounts you owe and/or items purchased needed for everyday use) without incurring debt.

Canadians are sold on the idea of being wealthy from the very moment they finish high school. It is packaged in a very different manner, it is called retirement. Everyone is familiar with retirement, most people have heard their parents, peers, and/or co-workers discuss it in great detail.

Retirement is defined as the following:




  1. The action or fact of leaving one’s job and ceasing to work.
  2. The period of one’s life after leaving one’s job and ceasing to work.

In order to successfully retire, an individual would require to have enough savings/ investments (things they own) to pay off their monthly expenses (amounts they owe and purchases required for everyday use) until the end of their life. Generating an income from employment may no longer be an option, because the individual has decided to retire (by choice or even by force).

There are pensions available from the Government, but it is a poor decision to rely solely on CPP (Canadian Pensions Plan) and OAS (Old Age Security).

Prior to retirement, most individuals have their Financial Planner’s help build a retirement plan for them. Within that plan they review the following:

  1. Monthly budget (i.e. living expenses)
  2. Lifestyle choice (i.e. adventurous, conservative, etc.)
  3. Major purchases throughout retirement (i.e. new automobile, change of residence, etc.)
  4. Estate Planning (i.e. downgrading size of home, tax planning for survivors, final wishes, etc.)
  5. Length of time of retirement (# of years from the age of retirement to the anticipated age of mortality)

A retirement plan could be viewed as a template to map out one’s ability to determine what would be required to become wealthy today. Being wealthy does not mean you have to stop working. Wealth provides an individual with the option to pursue work that is more rewarding and/or provide the individual with time to achieve their goals in life.

The following steps should be considered to become wealthy (click on the images to view the pages):

1) Eliminate all consumer debt:

It is difficult to become wealthy with consumer debt. On average debt charges more than most savings & investments earn; therefore, it is important to eliminate all forms of consumer credit (any debt not attached to an asset such as: house/apartment, car, investments, etc.)

2) Create a monthly budget for your current situation:

Incorporating debt payments, if any, the budget template will help create a monthly budget that should prevent the use of consumer credit. Knowing your parameters will provide a clearer path to reaching your goals.

3) Discover the path to your Perfect Destination (ideal lifestyle) by creating a plan:

Once you are able to create a concrete budget that fits your income, you should now be able to plan the next steps to reach your perfect destination. It may not be possible with your current situation to attain your ideal lifestyle; therefore, we have provided a planning tool that could help you reach your goals sooner.

4) Safeguard your plan from financial fraud:

Millions of Canadians will be approached with “lucrative opportunities”. Some scams may be obvious while others are harder to decipher. Protect yourself from being scammed, learn about the various forms of fraud that have made victims out of thousands of Canadians.

5) Review proven steps to become independently wealthy:

The path to financial independence is the same for every individual. The length of time and distance along the path varies. Wealth provides freedom of time, that is considered to many, as the most valuable commodity. Always remember, you don’t have to be a millionaire to be wealthy.