by Jessica O’Brien Cameron, Portfolio Manager, Wealth Advisor, CIBC Wood Gundy –
If the last few years of rising inflation and interest rates have taught us anything, it’s that financial literacy is more important than ever. As the cornerstone of personal financial management, financial literacy is the foundation on which individuals make decisions about their money, investments, savings, debt and expenditures. Financial literacy is a vital skill for everyone and it can hold a particular significance for those experiencing major life changes that can trigger a requirement to manage finances independently.
A lack of financial knowledge can lead to debt accumulation, insufficient savings, poor investment choices and the inability to plan for the future. On the other hand, those who are financially literate can make informed decisions about their money, leading to increased financial stability and security. In a time of easy access to credit, diverse investment options and an evolving economic landscape, the need for financial literacy has never been more critical.
Understanding the Basics
At its core, financial literacy involves understanding basic concepts. This includes an understanding of budgeting, saving, investing and debt management. It’s also important to be familiar with products like loans, credit cards and mortgages, and to have knowledge about interest rates, inflation and the significance of compounding.
Learning, Awareness and Support Networks
For many, learning about financial matters may feel overwhelming or unfamiliar, so seeking education and guidance is crucial. Resources that explain financial concepts in a clear, understandable manner can help bridge the gap. Finding advisors and professionals that take the time to help you understand your finances is crucial.
Long-term Security
One of the primary goals of financial literacy is to enhance long-term financial well-being. It’s not just about the short-term management of money; it’s about making decisions that will positively impact an individual’s financial situation for years to come. This involves setting financial goals, understanding risk, and consistently evaluating and adjusting strategies as circumstances change.
Legacy Planning
Understanding financial matters also allows a person to plan for their legacy. This includes decisions about inheritances, charitable contributions and passing on wealth to future generations. Financial literacy aids in creating a roadmap for the distribution of assets and properties in line with personal values and goals.
Financial literacy is a necessity in today’s world. By equipping individuals with the knowledge and skills to manage their money effectively, we pave the way for a more financially secure and empowered society. Encouraging the development and practice of financial literacy is an investment in a brighter future for individuals and communities alike.
Jessica O’Brien Cameron is an Investment Advisor with CIBC Wood Gundy in Sidney, British Columbia. The views of Jessica O’Brien Cameron do not necessarily reflect those of CIBC World Markets Inc. CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries, including CIBC Wood Gundy, a division of CIBC World Markets Inc. The CIBC logo and “CIBC Private Wealth” are trademarks of CIBC, used under license. “Wood Gundy” is a registered trademark of CIBC World Markets Inc. Insurance services are available through CIBC Wood Gundy Financial Services Inc. In Quebec, insurance services are available through CIBC Wood Gundy Financial Services (Quebec) Inc. If you are currently a CIBC Wood Gundy client, please contact your Investment Advisor.
