Personal finance tips for your twenties - transitioning from student life to financial independence
Nineteen-year-old Logan Robbins knows that learning to make a household budget is part of his journey to independence.
The Prince Edward Island man has been developing job skills through Project Search, a program that helps young adults with intellectual disabilities find employment. He's drafted a resume, dropped it off with prospective employers, and is eager to get to work.
But once he does land that first job, Robbins knows it will be a challenge to live within his means. That's why he's also enrolled in Money Matters, an introductory program that teaches financial literacy to adult learners, newcomers to Canada, Indigenous Peoples and people with diverse abilities.
“What would be most helpful for me would be just understanding how much money I can spend, what the max would be," Robbins said.
Money Matters — which was developed by ABC Life Literacy Canada in 2011 and is delivered annually to thousands of learners through community organizations like Project Search — is just one option available to Canadians looking to increase their understanding of financial matters.
Whether you're a young adult starting out in a first job like Robbins, a prospective homeowner shopping for a first house, or a recent retiree learning to get by on a fixed income, brushing up on your financial knowledge can help to build confidence and freedom, said ABC Life Literacy Canada executive director Alison Howard.
“High inflation is definitely forcing individuals and families to make tough choices these days," Howard said. "So that’s why having a solid understanding of your finances and how to manage them is critically important to ensuring that your needs are met, and to managing your stress level."
"We all face different financial literacy challenges throughout our lives," she added. "The things we need to know when we are 20 are quite different than the things we need to know when we're 65."
Surveys show that many Canadians have gaps in their financial knowledge, whether it's a lack of basic numerical skills or uncertainty around the ins and outs of savings, investments and mortgages.
Howard cites statistics from the Conference Board of Canada which suggest 55 per cent of Canadians have unsuitable numeracy skills, and may struggle with understanding written instructions that rely on charts and numbers.
Other statistics from the Financial Consumer Agency of Canada report that nearly half of Canadians don't have a household budget, while nearly six in ten Canadians don't know how much money they'll need to retire.
While some people may feel embarrassed to admit they don't understand how their mortgage works or the principles of basic investing, they shouldn't, said Howard.
"It’s important for people to know that they’re not alone, that many people face these challenges, and that there are resources to help," she said.
"Finances are very personal, and they're something that we don't teach a lot of directly in school. When we become adults, we're just expected to know all these things."
Managing money can be difficult for anyone, regardless of their financial situation or background. However, for those living on a low income, it is even more challenging to do, said Marlene Chiarotto of Prosper Canada, a non-profit that works with front-line organizations to offer financial literacy workshops, and also delivers free online courses and workshops.
"A lot of social assistance programs aren't being indexed to inflation properly, so the power of that already small amount of money that these individuals are getting on a monthly basis is eroded even more significantly," Chiarotto said.
"Understanding concepts like inflation and what the implication of that may be on your monthly financial situation, understanding the implications of interest, understanding the options that you have for things like your cellphone plan — all of that can make a difference."
From free online resources to in-person classes to self-guided study at your local library, there are many ways to brush up on your knowledge of money and finances, experts say. And the results, according to Howard, can be life-changing.
"It can improve your employability, help you support your children in their learning, improves self-confidence, and helps you take on other challenges," she said.
"We see financial literacy as a bridge to independence and to achieving your goals."
This report by The Canadian Press was first published May 23, 2023.