Financial literacy: 5 tips for taking control of your money

Financial literacy can be challenging to talk about — especially because it isn't taught in schools, and can make some people uncomfortable, according to personal finance columnist Bruce Sellery.

"It is for many parents a worse topic than sex!" said Sellery, who writes for MoneySense Magazine.

"But like an ability to read, an ability to know the basics of how money works is really important...because in order to function as an independent adult you need a basic level of financial literacy."

Sellery shared his tips for financial literacy with Sheryl MacKay on North by Northwest:

1. Look at your own life first

Sellery said people don't need to get bogged down in learning about topics such as day trading.

"Rather than researching and learning definitions for definitions' sake, look at your life and look at what you need to know," he said.

Sellery suggests looking at one's personal financial literacy as a triangle with different priorities. The first of those is cash flow: "Have the literacy around what your salary is every month, what your expenses are, and know if you're living within your means."

2. Look at debt and savings

Sellery said next priority is looking at debt — how much one has, how that could be lowered — and savings.

"Are you saving enough for what it is that you want? There's a lot of morality about savings that I don't think it super helpful, it's like the morality sometimes that parents have as a way to make themselves feel better about their parenting skills.

"Let's instead focus on moving ourselves one step forward, instead of judging our success or failure on the results of others."

3. Taxes

Sellery said it's important to take advantage of things like tax-free savings accounts and registered retirement savings plans (RRSPs), as well as the other credits and deductions that can result in paying lower taxes.

"You need to make sure you keep the receipt for ballet, and the receipt for hockey, or whatever it is, because those are relevant at tax time.

"If you're not literate enough...it could be costing you hundreds of dollars that you're paying in taxes that you don't have to pay.

4. Discuss money with family

"Host a family meeting, just have a time on a Sunday and say, 'Let's talk about our money. What is it that we want as a family? Is this a year when we're going to take a vacation, is this a year when we're going to do a renovation, is this a year when we're going to eliminate our consumer debt? What is this the year for?

"If you don't have kids, [talk] with a spouse, and if you're solo...talk about it with your best friend."

5. Access learning resources

"Get a book out of the library, buy a book, pull a copy of MoneySense magazine off the shelf and learn something...that's relevant to you."

Sellery said MoneySense Week is a good resource, and also recommends the Financial Consumer Agency of Canada, which has listings for 1,000 events in local communities for financial literacy month.

Another resource is getsmarteraboutmoney.ca.

To hear the full interview listen to the audio labelled: Personal finance expert offers tips for becoming financially literate