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The Challenges Of Financial Literacy

November 12, 2014

Financial literacy is a tricky subject. It has many shades of grey. No wonder it’s become a hot topic in the media with significant political, economic and social consequences.money and laundry quote

So much of financial literacy is common sense yet VERY difficult to practice. Why?

Because we need to get (at least) 3 things right. The subject matter knowledge or expertise, the necessary skills to achieve our financial/life goals and the confidence to change our behaviour and make it happen. I would argue that the 4th and most important thing we need is motivation. Tough to make all these things come together at once!

From my own experience, it’s the last two things that trip people up the most- confidence and motivation. The “soft” skills not the hard ones. Why save for retirement now when it’s 30 years away? Why not buy the house or start the reno today while my family’s still young? A little more debt isn’t going to hurt us? Why bother investing when my salary is so small? Very valid points.

It’s far easier (and more enjoyable) to dig ourselves INTO a financial hole than out of it. Do you watch Gail Vaz-Oxlade’s TV shows (Till Debt Do Us Part and Princess)? All the more reason to pay attention to our money NOW!

The simple act of talking about money can make a big difference. Hence, the title of my blog. Sure, money is a touchy subject but we can talk about it in appropriate ways (without divulging the amount of our debt). Sharing the highs and lows of our own money stories and strategies really helps. So, too, can making the effort to learn more about our behaviour and attitudes towards money. Do I spend money to cheer myself up after a bad day? How much spending is too much? Can I afford today’s lifestyle when I scale back or eliminate paid work in the future?

Here’s another complicating factor…

When it comes to personal finance, sometimes people don’t know what they don’t know.

Pretty hard to ask for help if you don’t know you need it! That’s where education comes in. Professionals can fill the knowledge gap but people must be ready to listen. For example small/simple strategies to save taxes can increase your wealth over time. Reducing your annual investment and debt costs (or tapping into “free” money) can do the same. Often, these changes feel painless once implemented.

Can you relate to any of these comments? Most people, myself included, can. There is always something to learn about or do differently in the world of personal finance. But don’t mistake learning for complexity. You can improve your finances and still keep things simple. Many such strategies, like compound interest, are timeless.

If you think you can take better care of your finances, please start NOW. Read, learn, think or enlist help if you need it. Wouldn’t it be nice to stop worrying about money?

Keep your questions coming!

As mentioned in last week’s post Doing My Part To Inspire Financial Learning, I’m answering all your personal finance questions this month. Please drop me a note and I’ll respond.

Proud founder of this blog Let’s Talk About Money, Patricia Gass, CPA, CA, provides personal finance coaching and education to improve your money skills. Follow her on linkedin, pinterest or twitter.

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One Comment
  1. iThinker permalink

    Reblogged this on INVEST-O-MONEY.

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