Look for ways to improve the health of your finances

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November is Financial Literacy Month so there will be heightened activity in advertising and events encouraging Canadians to be more focused and aware of their financial well-being.

Several years ago the federal government created a Task Force on Financial Literacy. That led to the Financial Literacy Act in 2013. November was chosen as the month to stress financial literacy.

The Minister of State (Finance) said “In today’s global and complex financial world, financial literacy is more important than ever.” The government has been encouraging individuals to be more fiscally responsible for years.

There is good reason for this. Canadians must be financially self-sufficient because there isn’t enough government funding to take care of us. Life is expensive.

It is good government policy to encourage financial literacy. An intelligent financial consumer will make better decisions resulting in less reliance on the government.

The first ever Financial Literacy Leader is Jane Rooney. She said “As consumers of financial products ranging from credit cards and mortgages to a wide array of banking services, Canadians must be equipped to make informed decisions that strengthen their own personal finances and support the economy as a whole.”

We have a recommendation on how you may approach your personal finances where your success will combine financial planning and investing. You have a better chance of achieving your financial goals when these two separate areas work together’

Financial planning requires planning and thinking about what you are trying to achieve while investing is the implementation of that plan.

Financial planning starts with setting goals. These often include paying down debt, assisting children with their post-secondary education and planning for retirement.

It is all about you. Decide what you want and then plan to ensure you achieve your objectives. Make intelligent financial decisions. After you have determined your goals, another group of decisions need to be made.

Should you pay down debt on a regular monthly basis? Should you start a regular monthly savings plan with a specific amount taken from your bank account to be invested? Should those investments be in a Registered Retirement Saving Plan, a Tax Free Savings Account or just a regular investment account?

Planning is important. You should monitor and adjust the process as needed.

Now we switch our focus to implementing the plan by selecting the correct investments. A good plan with bad investments will not likely produce the desired outcome.

A good investment strategy has many characteristics. Begin with asset allocation. How much should be invested in stocks or bonds and how should those investments be diversified within Canada, the United States or the rest of the world.

After those decisions are made it comes down to choosing what specific investments you should purchase. That can be confusing because there are so many different options. Investments are also very well marketed so for many investors there are too many choices.

You cannot control the eventual outcome of an investment but you can control what type of investment you choose and the cost of that investment. The more expensive an investment, the more money is directed away from the investor and to the investment firm and those who sold that investment.

Good financial planning and good investment decisions will significantly improve your chance at achieving your financial objectives. It is worth devoting time and effort towards doing these two things well.

November is Financial Literacy Month. We encourage you to spend time looking for ways to improve your financial well-being.