by Divora Mehari | Feb 4, 2022 | Financial Literacy
SHARING RESOURCES EXPLORING RACIAL INEQUALITY & MONEY
Friday, February 4, 2022
Centuries of institutional and systemic racism have led to a significant disparity between the wealth of white individuals and those who identify as visible minorities.
Wealth is about more than a paycheck — it refers to the sum of financial assets and physical possessions owned by an individual or family. Less wealth means more challenges with homeownership, investment opportunities, student loans or the ability to pass accumulated wealth down to future generations.
To better understand racial inequality as it relates to money, we will explore the following questions: What is the racial gap? What are the historical impacts of racism? And what are ways to overcome these challenges?
What is the racial wealth gap?
The racial wealth gap is the difference in wealth between white and non-white households. This gap has been growing wider for decades, especially during the COVID-19 pandemic. Other contributing factors include:
- Limited educational opportunities
- Inheritance
- Discrimination in housing and employment
A report from The Conference Board of Canada states that, for every dollar earned by a white worker, visible minorities earn on average 87.4 cents. This difference in wages, among other disadvantages, can impact opportunities such as one’s ability to save or invest. If left unaddressed, this could result in continued imbalances between certain populations, leading to severely imbalanced wealth distribution.
Elements of family-wealth generation
Generational wealth, or family wealth, is a term used to describe the accumulation of assets from one generation to another. It can include income, savings, investments, and property. Building generational wealth allows families to provide their children with more options in life.
For example, if your family is able to help pay for your tuition, this takes away the stress of paying down a student loan debt and provides you the opportunity to save for your first home or retirement. Generational wealth has the potential to significantly impact one’s financial future. This is why it’s so important to address the wealth gap so all families, no matter their race, can provide financial stability for generations to come.
History of racial inequality
The history of racial inequality in Canada is long and complex. It has been influenced by many factors, including the country’s colonial history, laws, policies, economic decisions and social movements. Racialized communities are still dealing with the repercussions and will continue to until change is made.
Recent census data from Statistics Canada reveals “black Canadians make significantly less money than non-racialized Canadians regardless of how long their families have lived in Canada”. Racism is ingrained in our history. It will take time and effort to begin to unravel these deeply rooted systems.
Addressing the racial wealth gap
The racial wealth gap is a persistent problem in Canada. The Canadian government has taken steps to combat the issue, but there are still many aspects of the problem that need to be addressed. The first step is to create policies and laws that ensure equality and equal opportunities for all Canadians.
The second step is to ensure economic decisions are made with equality in mind. This includes ensuring people of all races have the same access to jobs, housing, education, and other benefits.
We will never undo centuries of discrimination, but there are steps we can take to create change. The wealth gap is the product of systemic policy choices, and it’s going to take intentional policy interventions to make any significant progress in closing the gap.
Although we’ve come a long way, there’s still so far to go before we start to see true change. There are a wide variety of sources that provide further insight into the racial wealth gap and the disparity in Canada. We encourage you to further your research to learn more and continue to have these important conversations.
Ready to get started? Here’s a list of great resources regarding income inequality in Canada:
The Racial Wealth Gap is a Problem
Canada’s Colour Coded Income Inequality
Colour of Poverty — Colour of Change
Income Inequality
By the Numbers: Race, Gender and the Canadian Labour Market
How the Economic Landscape is Tilted Against Black Canadians
by Divora Mehari | Jan 21, 2022 | Financial Literacy
HOW TO ACHIEVE YOUR FINANCIAL NEW YEAR’S RESOLUTION
Friday, January 21, 2022
Getting in shape, eating healthier, and breaking bad habits. They’re all popular new year’s resolutions. But this year, thanks to the ongoing COVID-19 pandemic, improving our financial health is climbing closer to the top of the list.
The pandemic is taking a toll on our bank accounts. But there are ways to get back on track. Let this year be the year to rethink your spending habits, improve your budgeting and start saving!
Here are some tips to help you achieve your financial resolutions:
1. Start small with SMART goals
Improving your financial situation can be an overwhelming endeavor, so we recommend aiming for small improvements while setting SMART goals: specific, measurable, attainable, realistic and time sensitive. When you set goals that satisfy these conditions, you are more likely to achieve them.
Starting off with a short-term goal can also be a good way to start the new year with less pressure. Short-term goals are easier and faster to obtain. They also allow you to see your progress faster, which can lead to higher confidence and a greater chance of remaining committed to a long-term goal.
If you’re in need of a smaller and simpler financial goal this year, we recommend focusing on your monthly spending. Setting a monthly budget allows you to spend less than what you earn. Over time, a budget can help you cut back on discretionary spending or rely less on credit cards, leaving you with more cash at the end of every month.
Learning to live below your means is a small but smart way to save more money sooner and live debt-free. Ready to get started? Download a free copy of YNCU’s financial goals worksheet to start planning your goals today.
2. Pay yourself first
Want to see your savings grow faster this year? One of the best ways to prioritize savings is through automatic transfers.
“Pay yourself first” is a popular phrase in personal finance and retirement planning. It involves automatically deducting a fixed amount of money on a regular basis from your income or other money sources and depositing it directly into a savings account.
For example, if you no longer have to make regular car payments, we recommend diverting that money into a savings account. When something is automatic, we are less likely to treat it as an option and it becomes part of our regular saving and budgeting routine.
This system is an effective way to manage your spending habits and contribute to future expenses such as your retirement fund or emergency savings. Automatic transfers can be set up yourself, through online banking or we can help.
3. Focus on cutting down debt
It can be easy to go into debt, but it takes time and self-discipline to pay it off. Now that you know how to set SMART goals, we encourage you to use this tactic when it comes to paying down debts such as credit cards, lines of credit and student loans. This will make it easier to manage your income, you’ll avoid hefty interest down the line and you’ll have more freedom with your cash.
If you have outstanding balances on multiple credit cards, a realistic goal would be to pay down the card with the highest interest rate. Known as the “debt avalanche” method, this strategy involves making the minimum payment on all debts, then using the extra funds to pay off the debt with the highest interest rate. Another tip to consider is paying more than the minimum balance. This will help you eliminate debt sooner and decrease the amount of interest you owe.
If you’re still unsure where to start, reach out to your local YNCU advisor for guidance.
4. Introduce good financial habits
Be honest. When was the last time you took a good look at your spending habits? Is there a streaming service you never actually watch that you could do without?
Kicking the year off with healthier habits and routines is a smart way to take back control of your finances. One financial habit to commit to this year is “no-spend” days. These are days where you don’t spend any money. It simply means deciding to make a coffee from home that morning or holding off on that online purchase. With the majority of us now working from home, incorporating no-spend days into your weekly schedule is hopefully a little easier.
If you’re worried about your finances, our team is here to help! Book an appointment online to meet with one of our experienced financial advisors who will design a custom plan to meet your needs.
Want to track your spending and hold onto more money? YNCU’s household budget tracker is a great resource to help you take control of your spending. You can also check out our latest blog, “How to Build a Better Budget.”
by Divora Mehari | Jan 7, 2022 | Financial Literacy
HOW TO BUILD A BETTER BUDGET
Friday, January 7, 2022
The start of the year has us all googling ways to improve our money management, determined to start the year out right. Budgeting may seem overwhelming for the uninitiated or restrictive to those who’ve tried before and failed, but there’s no better time to start over and rethink budgeting for your lifestyle.
It’s time to view budgets as a critical method to help you maximize your spending and saving. So yes, even with a budget, you can still buy that daily specialty coffee.
To get the inside scoop on budgeting, we sat down with Joe Matos, Financial Relationship Manager at YNCU, who shares his top tips to building a better budget and setting yourself up for financial success this year.
1. Be realistic with your spending
If you are left with less money than you would like at the end of each month, then it may be time to sit down and reevaluate exactly how much money you spend.
Make sure you are looking at major recurring expenses, as well as small, impulsive purchases, such as coffee runs, going out for lunch or ordering takeout a couple times a week. While these may feel insignificant, they can really add up and may be the root cause of your overspending.
While planning your budget, you’ll also want to use after-tax dollars, to ensure you are taking into account the full value of your common expenses.
Finally, you’ll want to take into account fluctuations. If you have seasonal or monthly bills with balances that change, use an average to guide you as you plan out your ongoing expenses.
Taking into account all of these tips, you should be able to create a realistic outline of what your spending looks like each month and adjust accordingly as life changes.
2. Use your past spending as a starting point
When planning for the year ahead, we always recommend looking back. By reviewing old bank statements or scrolling through your chequing history, you can get a clearer picture of your spending habits and identify areas for improvement.
Looking through your past year of spending not only outlines the categories that account for most of your monthly spending, but it can also help you see what times of the year tend to be the most expensive for you.
If you know you have a few birthdays in one specific month, go out more often in the summer or tend to go overboard with spending around the holidays, then you can start budgeting for these expenses in advance.
3. Create sinking fund accounts
Now that you know what times of the year tend to break your budget, we recommend setting up a few short-term savings accounts (also known as sinking fund accounts) where you can slowly set money aside in preparation for major expenses.
Whether you have a vacation coming up, a wedding party you’ll be a part of or need to put money aside for a down payment, there’s no better time than right now to start planning financially.
To maximize your savings potential, create automatic transfers from your chequing to savings. Even a transfer of $5 a month can make a big difference the earlier you start.
4. Don’t ignore your retirement
When we’re young, we tend to view retirement as an incomprehensible milestone. With so much time left between now and the age at which we can retire, why bother saving?
In actuality, there is no better time to start! We always recommend paying yourself first by investing in your future self.
Find some room in your monthly budget for retirement savings and have a recurring payment go to your Registered Retirement Savings Plan (RRSP). With compound interest that accumulates on each and every dollar you add into your account, your savings will add up quickly over time.
by Divora Mehari | Oct 31, 2021 | Financial Literacy
EMPOWER YOUR FINANCIAL FUTURE WITH A CREDIT UNION
Monday, October 31, 2022
October 20th was Credit Union Day! To honour this day, we wanted to share with you some background on credit unions and how YNCU makes an impact on the lives of our members.
Did you know the first credit union in Canada was nicknamed “the people’s bank”? This is because credit unions have always been centered around a cooperative model, where members are able to make decisions about their money. Credit unions were created with the specific intention to meet societal needs. They are focused on their members’ financial well-being. These financial institutions are very different from traditional banks. They can do things a bank can’t and care about the things they don’t, like keeping your money local.
Here are a few of the reasons credit unions can benefit you over a traditional bank:
- Credit Unions are focused on their members’ financial well-being because they were designed to meet a societal need.
- Credit Unions have some of the best rates and deposit protection in the industry.
- They put your health, the health of your community, and your local economy ahead of some investment banker’s bottom line.
- The focus is on putting your interests first because you are a member.
Every person who does their banking at a credit union is also a member of that credit union. Once a year all the members are invited and entitled to vote on a one-member-one-vote basis to elect the board of directors, who is ultimately responsible for overseeing the credit union. The board does not have an incentive to seek excessive profits to serve a shareholder as any profits are derived from the customers who are also members. Credit unions do need a profit to ensure the organization meets legal requirements related to having a buffer against bad years. However, the credit union’s pursuit of profit is in service to the organization and its membership, not a goal in itself.
Profits have never been a part of credit union values. They have always been focused on their members and the community in which their members live and work. Credit unions look at the whole picture and work to build long-term relationships with members to provide customized growth strategies that actually work to meet your goals.
At YNCU, we work hard to keep the values of what a credit union is meant to be. We are constantly engaging with our members and community. International Credit Union Day celebrates the spirit of the global credit union movement. The day is recognized to reflect upon the credit union movements and history, promote its achievements, recognize hard work and share member experiences.
For all your general financial inquiries and how you can plan out your financial goals, come talk with someone at your YNCU branch!
by Hannah Johnson | Oct 19, 2021 | Financial Literacy
THE TOP FINANCIAL TOOLS OUR ADVISORS ARE THANKFUL FOR THIS YEAR
Monday, October 19, 2021
Managing your money, whether it be saving for a dream vacation, your first home or investing for the future, can seem daunting at first. Luckily, personal finance tools such as apps, spreadsheets and software can take some of the guesswork out of managing your money on a daily basis.
We asked our advisors to share the financial tools they are most thankful for and tend to recommend to their Members.
Whether you are brand new to personal finance or have been managing your money with ease for a while, using the following financial tools can make a world of a difference in your saving, budgeting and planning for the future.
1. Budgeting Apps
When it comes to tracking a budget, some people prefer good old-fashioned pen and paper or spreadsheets to manage their income and spending. For others, being able to set-it-and-forget-it when it comes to allocating funds to different expenses and savings funds is critical for success.
For those who want automation and to leave the calculations to someone else, our advisors recommend downloading a budgeting app. With so many on the market, it’s easy to find the best app to suit your needs and lifestyle. Here’s a few of the most popular budgeting apps:
EveryDollar – This zero-based budgeting app encourages you to enter your income and all transactions, allowing you to track your spending and plan for upcoming purchases with ease.
You Need a Budget (YNAB) – YNAB is based on a zero-based budgeting system, meaning you must allocate every dollar you earn to a specific goal, whether it be saving, investing or creating budgets for certain spending categories.
Goodbudget – Using the “envelope” budgeting method, this app will help you allocate funds to specific categories of spending each month and allows you to track spending with others in your household.
Apps can make it easier to track your income and spending, and oftentimes will send you notifications when you get close to reaching your spending limit.
Budgeting, like any habit, gets easier with time. Budgeting apps can be a helpful tool in getting your spending and saving under control with little effort on your part.
2. Anti-fraud notifications
October is Cybersecurity Awareness Month. While we always recommend you frequently review your bank statements and regularly change your passwords to prevent financial fraud, you can never be too careful.
Our advisors recommend setting up anti-fraud notifications through YNCU, so you can remain confident we have your privacy and safety in mind.
If any large or suspicious spending is detected, you will receive a notification through a text, email or phone call letting you know that there may be a potential fraudulent transaction made on your behalf.
If you tend to make small transactions, you can set your notifications to alert you if a purchase was made over a certain amount. Notifications can even be set if a purchase was made in another country, allowing you to catch financial fraud as soon as it happens.
Anti-fraud software and notifications can be an essential tool to keeping you aware of all activities related to your finances and keep your money safe.
3. Mortgage Calculators
Buying a new home can be a very exciting experience, but also comes with stress and unknowns, especially if you’re a first time home buyer.
When it’s time for you to start looking for a new home, our advisors recommend you first calculate your estimated mortgage to ensure you can afford the monthly payment. This is a critical first step that will guide you in setting a budget for what purchase price you can afford and will dictate how and where you shop for your home.
Interested to see what you can afford? Try out our free mortgage calculator.
4. Amortization Schedule
For those who have already qualified for their mortgage and are an existing home owner, an amortization schedule can be a helpful tool. An amortization schedule is a table that includes the amount of principal and the amount of interest owed in each monthly mortgage payment until the loan is completely paid off.
This is an essential tool, as it allows you to understand what you owe each month and the due date of each payment. For those who are budgeting, this can be a great method of tracking housing expenses and managing how much money to allocate to your mortgage each month.
To create your own amortization schedule, follow this free, helpful resource.
5. Investment Calculators
A common misconception of investing is needing to invest lots of money each month to make a substantial return. Luckily, this couldn’t be farther from the truth.
When it comes to investing, there is no better time to start than now and any little contribution can make a big difference in the future.
For those who are unsure how much they can expect to make in five, ten or even twenty years by investing, our advisors recommend using an investment calculator. This will help prospective investors estimate what their return could be based on their monthly contribution amount, the amount of time they expect to leave their money in the investment market and the average annual return rate.
Your YNCU advisor will also work closely with you to understand your short and long-term goals, risk tolerance levels and budget, to ensure you are making the best investment decision possible.
To see what you can have saved in the future by investing today, try out this free investment calculator.
Becoming savvy with your savings and spending can seem overwhelming. At YNCU, our local advisors work closely with you to learn your current finances and future goals to ensure you’re set up for success.
Looking to speak to someone about your personal finance goals? Find your local branch.
Learn how to become a YNCU member and experience the difference that Your Neighbourhood Credit Union can make.
