Steps to start the new year on the right foot – Finance Edition

by Hannah Johnson | Jan 17, 2024 | Financial Literacy

Steps to start the new year on the right foot – Finance Edition

Wednesday, January 17, 2024

The new year stands before us like a chapter in a book waiting to be written. And when it comes to our finances, starting the year off with knowledge and a plan can create a narrative of success and stability. It’s not just about setting goals; it’s about forging a path that weaves financial wisdom with actionable strategies. Here are some steps we recommend you take now, to start your 2024 finances on the right foot.

Tidying Up Transactions

Before you dive into the depths of budgeting and planning, take a moment to declutter your transaction history. Look back at your past expenditures and identify any habits that might have held you back. Were there impulse buys that gnawed away at your savings? Any subscriptions that turned out to be more frivolous than fruitful? A little fiscal housekeeping can offer invaluable insights and set a clear course for the months to come.

A Debt-Reduction Blueprint

Debt can often feel like an anchor, slowing down our financial progress. Craft a blueprint to pay down debt, focusing on high-interest rates first. Consider methods like the snowball or avalanche strategies but remember—there’s no one-size-fits-all solution. The trick is to find a method that resonates with your lifestyle and stick to it like glue. See our blog about advice on getting out of debt.

Savings and Investments: Building Your Financial Future

Saving may seem like a marathon, but with the right mindset, each step can propel you forward. Begin by establishing an emergency fund—it’s the buffer between you and life’s surprises. Next, survey the investment landscape. Whether it’s stocks, bonds, or retirement plans, find avenues that align with your risk tolerance and timeline. Remember, the wisest investors aren’t those who strike gold on a lucky venture, but those who consistently contribute, come rain or shine.

Automated Financial Growth – Setting up automatic transfers removes the temptation to skimp on your savings goals and ensures that your future wealth grows without needing constant attention.

Staying the Course: Regular Check-ins and Adjustments

Life has a knack for throwing curveballs, which is why regular financial check-ups are vital. Every few months, review your budget, savings, and investments. Are you hitting your marks? Do adjustments need to be made? These check-ins are the pit stops that keep your financial engine running smoothly throughout the race of the year.

Crafting a sound financial plan, alongside a budget, at the start of the year lays the groundwork for twelve months of progress. Remember, it’s not about leaps and bounds; often, the most enduring changes happen one step at a time. Dedication, discipline, and a dash of daring—that’s the recipe for a financially fruitful 2024. Stay the course, and soon enough, you’ll be penning a success story that spans far beyond this calendar year.

For general financial inquiries and how you can plan out your financial goals, talk with someone at your YNCU branch!

Don’t forget to follow us on Facebook, Instagram, X, formerly known as Twitter, , or LinkedIn for more honest money talk tips!

2023 in Review: Finance Edition

by Hannah Johnson | Dec 12, 2023 | Financial Literacy

2023 in Review: Finance Edition

Tuesday, December 12, 2023

As we approach the end of 2023, let’s discuss what happened this year in the Canadian world of finance, what happened with our personal money management, and how we can improve our financial situation in 2024. It’s important to reflect on the year in all aspects of our lives, and how we can better plan for the future. In this blog, we will dive into the key highlights of the financial landscape in Canada for 2023 and provide some tips to help you plan your finances more effectively for 2024.

An Overview of the Financial Landscape in Canada in 2023

In 2023, Canada’s economy faced both challenges and opportunities. The global pandemic continued to impact various sectors, but there were also signs of recovery and growth. Here are some key highlights:

Investing in Technology: The finance industry embraced technology, with a surge in digital banking services, mobile payment platforms, and online investment options. Fintech startups flourished, providing innovative solutions for Canadians to manage their finances conveniently.

Real Estate Market Boom: The real estate market witnessed a significant surge in demand, leading to soaring housing prices in many parts of Canada. Low mortgage rates and increased immigration played a role in driving the market, but concerns about affordability and potential risks also emerged.

Inflation & Rising Interest Rates: In an era characterized by changing financial landscapes, the year 2023 proved to be no exception. It brought about increased interest rates and inflation in Canada, influencing everyone from young adults just starting their career to seasoned retirees which really limited people’s ability to save and invest.

Green Investments: Environmental sustainability gained traction, and the finance sector responded by promoting green investments. Sustainable funds and socially responsible investing became popular among Canadians looking to align their financial goals with their values.

Understanding Your Finances in 2023

Now that we have looked at the broader financial landscape in 2023, let’s shift our focus to your personal finances. It’s essential to understand how your financial situation was impacted by these developments. Here are some steps to help you figure out what happened with your finances in 2023:

1. Review Your Income and Expenses: Start by analyzing your income sources and tracking your expenses throughout the year. Consider any changes in your employment, investments, or other sources of income. This will give you a clear picture of how much you earned and spent in 2023.

2. Assess Investment Performance: If you invested in stocks, bonds, or mutual funds, review the performance of your portfolio. Did you achieve your financial goals? Identify any winners or losers and evaluate the overall return on investment.

3. Evaluate Debt and Savings: Examine your debt obligations, such as mortgages, loans, or credit card balances. Did you make progress in reducing your debts? Additionally, assess your savings and emergency funds. Were you able to set aside enough for unexpected expenses?

Better Planning for Your Finances in 2024

Armed with an understanding of your financial situation in 2023, it’s time to plan for the upcoming year. Here are some tips to help you better plan your finances for 2024:

Set Clear Financial Goals

Define your short-term and long-term financial goals. Whether it’s saving for a down payment, paying off debt, or planning for retirement, having specific goals can guide your financial decisions and motivate you to stay on track.

Create a Realistic Budget

Based on your income and expenses from 2023, create a budget that aligns with your financial goals. Include categories for savings, investments, and discretionary spending. Be mindful of any adjustments needed due to changing circumstances or lessons learned from the previous year.

Diversify Your Investments

Consider diversifying your investment portfolio to mitigate risks. Explore different asset classes such as stocks, bonds, real estate, or even alternative investments. Seek professional advice if needed to ensure your investments align with your risk tolerance and financial goals.

Strategies to Keep Up with Increasing Expenses

• Suspend or Reduce Savings Goals Temporarily: Consider suspending your savings goals temporarily. Chill, it’s okay! You’re not giving up on your dream home, trip to Tahiti, or your child’s college fund. It’s just a temporary pause to rebalance and regain control over your finances.
• Prioritize Expenses: Foster the habit of budgeting. Make note of your ‘essential’ and ‘nice-to-have’ expenses. During trying times, it would be wise to focus more on needs rather than wants.
• Seek Professional Advice: Don’t shoulder this burden alone. A financial advisor can provide valuable insights and personalized strategies suited to your income, lifestyle, and goals.

The finance world in Canada witnessed significant developments in 2023, impacting both the economy and individual finances. By reflecting on what happened with your finances in the past year and implementing better planning strategies for 2024, you can navigate the ever-changing financial landscape more effectively. Remember to set clear goals, create a realistic budget, and diversify your investments to achieve financial success. YNCU is here to help! Click here to book an appointment with one of our advisors, who can assist you with finding the right YNCU product for you to achieve your 2024 finance goals.

For all your general financial inquiries and how you can plan out your financial goals, talk with someone at your YNCU branch!

THE FINANCIAL LITERACY GAP WITH INDIGENOUS COMMUNITIES

by Divora Mehari | Sep 25, 2023 | Financial Literacy

Understanding the Financial Literacy Gap with Indigenous Communities

Monday September 25, 2023

Financial literacy (understanding concepts such as budgeting, saving, investing, and understanding credit) is an essential skill that empowers individuals to make informed and responsible financial decisions. Unfortunately, not every Canadian has equal access to financial literacy resources and support, particularly among minority and BIPOC (Black, Indigenous, and People of Color) communities. This gap in knowledge can have long-term implications on their financial well-being and overall quality of life. Let’s discuss the financial literacy gap and its impact on these communities, as well as ways to address this issue.

Minority and BIPOC communities in Canada often face unique challenges when it comes to financial literacy. For many individuals in these groups, access to quality financial education is hard to come by, which hinders their ability to navigate financial systems effectively, limiting their opportunities for economic advancement and financial well-being. Moreover, cultural and language barriers can further contribute to the disparity in financial literacy levels.

To bridge this gap, it is crucial to develop tailored financial literacy programs that cater to the specific needs and challenges faced by minority and BIPOC communities. These programs should be culturally sensitive and designed with input from community members themselves. By providing accessible resources and educational initiatives, we can empower individuals within these communities to build a solid foundation of financial knowledge.

Lack of Financial Literacy for Indigenous Communities Throughout Canada

There is an estimated rate of 15% of individuals without bank accounts in First Nations communities, which was derived from 4.2% of low net-worth Aboriginal respondents to the 2009 Canadian Financial Capability Survey. This percentage was double that of non-Indigenous respondents (Prosper, Canada, 2015).

Historically, systemic inequalities, marginalization, and limited access to resources have hindered the economic advancement of Indigenous communities. As a result, many individuals lack the necessary financial skills and knowledge to manage their finances effectively.

Indigenous people have barriers, unique to them, that impede financial wellness which is influenced by: societal and institutional structures, policies and practices; personal financial literacy and behaviour; and cultural beliefs and values. Historically, trading, bartering, and communal distributions of wealth were central to the allocation of food, shelter, clothing, and tools. These systems were disrupted by colonization and assimilation policies and practices, including Canada’s residential school system. Depending on their geographic location, some communities may also have limited or no local access at all to safe and affordable financial services.

How We Can Make Financial Literacy More Accessible?

To bridge this gap and ensure that financial literacy becomes more accessible to all Canadians, we need to take proactive measures. By promoting education and awareness, we can empower individuals to make sound financial choices. Tailored financial literacy programs ensure that individuals from these communities receive relevant and culturally sensitive education, giving them the confidence to make informed and responsible financial decisions.

One approach is to integrate financial literacy into school curriculums from an early age. By teaching children the importance of money management, budgeting, and saving, we can equip them with essential skills for their future. Providing financial literacy workshops and resources in schools and community centers can also contribute to raising awareness.

Additionally, utilizing digital platforms and technology can play a crucial role in making financial literacy more accessible. Creating user-friendly apps and online tools that simplify complex financial concepts can help individuals better understand and manage their finances. Offering online courses or webinars can also enable people to learn at their own pace, regardless of their geographical location.

Collaboration with Indigenous communities, financial institutions and other organizations is vital in developing targeted financial literacy. These initiatives should incorporate traditional teachings and values while equipping individuals with the tools they need to succeed in modern financial systems.

Understanding retirement planning is also critical to individuals’ financial wellness later in their lives, particularly if they only have limited financial resources. The financial and legal implications of living on- or off-reserve can be very complicated for First Nations peoples, while many people in general are challenged by the increasing complexity of financial products and services, as well as pension and retirement-related government tax and benefit programs. Financial education can help individuals understand how government benefits, employer-sponsored pensions, employment income, investments, and personal savings all fit into one’s overall retirement income.

Building community capacity to deliver tailored financial information, education, and one-on-one support systems is critical to promoting financial wellness within Indigenous communities. This is the only way to ensure that key aspects of cultures and worldviews (such as non-monetary economies, values, customs, and languages) are incorporated to make financial literacy relevant and engaging for these diverse communities. Indigenous Elders and role models can also help to support efforts to enhance community financial information and decision-making, including for Indigenous youth. Developing contextualized curricula that place Indigenous experiences, cultures and values at the core of financial education is essential to any effort aimed at addressing financial wellness barriers faced by these communities.

We encourage you to share some of these financial literacy tools and resources currently available to support financial literacy education for First Nations, Inuit, and Métis peoples:

• AFOA Canada’s Aboriginal Financial Literacy Needs Assessment and Framework – a comprehensive in-depth overview of Aboriginal financial literacy needs and a guide for addressing these. Visit https://afoa.ca/education/financial-wellness/
• The British Columbia Association of Aboriginal Friendship Centres’ Aboriginal Financial Literacy: Journey to Empowerment is a 250-page facilitator’s guide and curriculum exploring financial literacy topics through an Aboriginal lens. Visit https://bcaafc.com/
• The Healthy Aboriginal Network’s Game Plan – comic book for Aboriginal youth featuring a teenager named Jake who struggled with financial wellbeing until he was taught a lesson or two in financial literacy. Visit https://istorystudio.com/wp-content/uploads/2014/04/Game-Plan.pdf

By addressing the financial literacy gap and making financial education more understandable, engaging, and accessible, we can empower individuals and contribute to a financially literate society. Let’s strive towards equipping all Canadians with the knowledge and tools they need to make informed financial decisions, ensuring a brighter and more secure future for everyone. We can help break the cycle of economic disadvantage and promote financial well-being by empowering minority and BIPOC communities through access to quality financial literacy that relates to their individual situations.

Additional financial literacy tools, resources, and events can be found on the Canadian Financial Literacy Database.

Our goal is to ensure every one of our members is equipped with the knowledge and confidence to make responsible financial decisions. Our financial advisors at YNCU are always available to provide educational advice and are happy to assist wherever they can. For all your general financial inquiries and how you can plan out your financial goals, come in and talk with an advisor at your nearest YNCU branch.

Bank of Canada Rate Hikes Explained

by Hannah Johnson | Aug 31, 2023 | Financial Literacy

Bank of Canada Rate Hikes Explained

How Will Rising Rates Impact Your Finances?

Thursday, August 31, 2023

In July of this year, The Bank of Canada increased its target for the overnight rate to 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. This comes only weeks after its early June decision to raise it to 4.75%. Today, we’ll be talking about this recent rate hike and how it might affect your finances. So, let’s dive right in!

The Bank of Canada often raises interest rates to manage the economy and maintain stability. These rate hikes are implemented when the central bank believes that the economy is growing at a fast pace, which could lead to inflation. By raising interest rates, they aim to slow down borrowing and spending, encouraging individuals and businesses to save and invest instead. This helps to prevent prices from rising too quickly and ensures the economy stays on track. This makes borrowing more expensive, reducing consumer spending and cooling down the economy. Through this measure, the central bank can effectively manage inflationary pressures and ensure long-term economic growth. Remember, the Bank of Canada’s actions are always in the best interest of maintaining a healthy and stable economy for all Canadians.

If you have a variable-rate mortgage or any other debt tied to the prime rate, you can expect to see an increase in your payments. Since borrowing costs rise, your lender will adjust your rate accordingly. On the bright side, savers may rejoice! Higher interest rates mean that you’ll earn more on your savings accounts and fixed-term investments. This could be a great opportunity to grow your nest egg or achieve your financial goals faster.

Here are some ways to maintain financial stability despite the impact of rising policy interest rates and inflation on your finances:

• If you find that the price of food and gas has increased in the last year, it could be a good time to re-evaluate your priorities and update your budget.
• If you’re planning to buy your first home, you might have to rethink your budget for the first few years because rising mortgage rates may change how much you can borrow. Click HERE to see the mortgage options YNCU offers.
• If your mortgage rate expires in less than 6 months, an early renewal may be advantageous to secure a lower rate before the next increase, should the rates increase more, without penalty. For a loan coming with a longer term, you will need to take into consideration the penalty fees.
• If you have a variable-rate mortgage, your monthly mortgage payments may increase. Fixed-rate loans will only be affected at the time of your renewal.
• If you have savings at your disposal, this could be an opportunity. When stocks are down, it’s a good time to buy. In addition, some investments, such as guaranteed investment certificates (GICs), see their interest rates rise during a period of rising rates. GICs offer a guaranteed rate of return, so are a safe investment choice, even when the market feels unpredictable. Click HERE to check out YNCU’s current lending and investing rates.
• If you’re concerned about your investments, discuss them with your financial advisor. Above all, don’t make hasty financial decisions. In a long-term strategy, it’s normal for the value of certain investments to fluctuate. Remember that just because rates are rising, or markets are volatile for a period, doesn’t mean your long-term financial plan has to change.
• If you have debts, such as a line of credit, a personal loan, or a credit card balance to repay, prioritize paying off the ones with the highest interest rates first.
• If you want to increase your cash flow or build an emergency fund, you may want to postpone certain projects, like a big trip or renovations.

Of course, it’s always wise to review your personal financial situation with a professional advisor who can provide tailored advice based on your specific needs. They can help you determine whether any adjustments need to be made to your budget or investments. While rate hikes might bring some challenges, they also offer opportunities. By staying informed and taking proactive steps towards managing your finances, you can navigate these changes with confidence.

For all your general financial inquiries and how you can plan out your financial goals, come and talk with an advisor at your YNCU branch!

Don’t forget to follow us on Facebook, Instagram, Twitter or LinkedIn for more honest money talk tips!