When it comes to boosting your financial knowledge, the list of topics is endless — but before hitting the expert-level on the latest investment trends, make sure you’ve mastered the financial pillars.
Here’s a look at the skills you should sharpen in order to have the best grasp of your finances—and where you can go to fine tune them:
Cashflow Knowhow: Hands down, the number one financial skill everyone should have a handle on, says Shannon Lee Simmons, certified financial planner and founder of the New School of Finance, is household cashflow – having a clear understanding of what is coming in and going out of your accounts every month.
“I do think that you need to fundamentally understand how much money you actually make and where that’s going every month so that you can make empowered financial decisions,” she says.
Indeed, says Mark Traunero, president of Montreal-based The Financial Independence Club — which offers free, in-person financial literacy courses on everything from RRSPs to taxes — basic budgeting is one of the most overlooked financial literacy skills, but is at the core of many other issues, such as retirement planning, insurance needs, or how to get out of debt.
“How much of your income do you need for retirement? Well, that’s fairly simple to figure out if you do a basic budget,” he says.
I.T. (Investing, tax, etc.): You don’t need to be an expert, says Simmons, but it is crucial to have a some knowledge to help you feel confident in your decisions when choosing a particular financial product, or to understand why you owe taxes this year.
“If you’re talking about investing, confirm ‘what are the fees I’m paying and why am I paying for that?’; ‘what services am I getting?’; and, for insurance policies, ‘what kind and amount of insurance do I actually need and what’s a reasonable fee to pay for it’”.
As Traunero says, financial education isn’t meant to replace working with a financial adviser but should equip individuals with the right questions.
Limit Order: Rather than trying to become a ‘global expert’ in all matters financial, Traunero suggests focusing your learning on areas that apply directly to your situation.
“If you’re going to learn about high-net-worth investing and you’ve got $10 in your bank account, you need to learn about basic budgeting first. You need to learn about creating some debt management strategies and creating an emergency fund. Those should be your priorities,” says Traunero.
Extra Credit—Where to Source Financial Education
Books, blogs and podcasts are a great free or inexpensive way to learn the fundamentals of anything from budgeting to taxes or investing, on your own time.
Options include online DIY courses, such as the New School of Finance’s course on “budgeting for couples” or the Canadian Securities Institute’s Canadian Securities Course for Investors — or perhaps an in-person meeting with a third-party who will give you advice you can implement.
Ultimately, interactivity and action are key for participants to gain any benefit from what they’re learning, says Traunero. In-person classes or workshops can be especially useful in this regard, as attendees are engaged with the presenters and handouts can encourage them to take immediate action on tasks like checking their credit report.
In some cases, these courses are available free of charge, such as via Traunero’s Financial Independence Club or Ryerson University’s financial basics workshop offered through its continuing education school, for example.
“If people don’t take action on that education they’re not really benefiting. They feel smarter but they’re not acting smarter,” says Traunero.
