CLC: Financial Literacy

Laura McAvoy
2-1

1.) Budgeting
● Budget to zero (income - all expenses = 0)
● Adjust the budget with each month as things change (Christmas, birthdays, vacation etc.)
● Have a savings fund to put money into throughout the year
● Put the most important categories first
→ giving and sharing
→ 4 walls (shelter, utilities, food, basic clothing, transportation)
● Make a schedule (pick specific dates to pay bills)
● Put a small amount of money aside for unexpected expenses
→ prevents from taking money away from other things
● Don’t compare yourself to others
● Use cash for expenses you may go over on
→ once the cash runs out stop spending

The two tips that resonate with me the most are using cash and putting the most important
categories first. I think using cash for spending is a good tip because when you use a debit card it
almost feels like you don’t have a limit to what you should spend. Whereas with cash once it’s gone
it’s gone so you can no longer spend money on that expense. I know I often buy coffee or tea and I
use my debit card. But if I set out a certain amount of cash a month to use for coffee it would limit
my spending on that one thing. I think prioritizing is important because there are some things that
you need to spend money on and other things you don’t. By planning ahead of time and knowing
what you need to pay for first, you can pay for those and then if there is enough left you can pay for
other things.

2.) Saving
The TFSA program to set aside money tax-free for those who have a valid social insurance
number and are 18 years or older. The first step to opening TFSA is contacting your financial
institution, credit union or insurance company, providing them with your social insurance number
and birthdate. Deposit, annuity contract and an arrangement of trust are the three types of TFSA.
TFSA Programs are great options because it allows you to set aside money tax-free for a lifetime
that can be used for emergency funds or short term financial goals. Savings from this account can be
withdrawn at any time and are tax-free.

3.) Simple and Compound Interest

a.) Simple Interest = (principle)*(rate)*(# of periods)
Simple Interest = ($2000)*(0.03)*(5)
Simple Interest = $300

nt
b.) A = P ( 1+r
n )
 A = 1200( 1 +120.05 ) 12(3)
A = 1393.7667
Around $1393 after 3 years when this term deposit matures.
4.) Credit Cards

Pros Cons

- Great way to build credit - High cost of burrowing

- Every time you build a credit card - Higher than a traditional loan
account, the lender reports that activity - Interest rates higher than purchases
to a credit reporting agent

- More secure than cash - Easy to dig yourself a hole

- If you lose the card, the credit card - New credit card may give you access to
company can keep it on hold for no more funds than before making it easy
further purchases to overspend

- Reward points - Applying for too many credit cards may

- Many credit card companies reward
points such as cash back or airline miles
for using regularly
damage credit
- Several factors impact credit score,
including payment history, current
amount owed, lengths of history, new
credit and types of credit used

5.) Identity Theft and Fraud

Identity theft is when someone used any type of your personal identification information
(ie: names, birthdates, driver’s license, social insurance number, credit card numbers) ​in order to
commit fraud and other crimes.
10 Tips to Prevent Identity Theft:
1.) Don’t carry unnecessary credit and charge cards
2.) Cancel cards you no longer use
3.) Don’t always carry social insurance number cards ​(it’s only legally required by an employer)
4.) Memorize you PIN and never write it down ​(make PIN difficult to guess)
5.) Submit changes of address to Canada Post and notify any agency when sending billing
information
6.) Consider getting online statements
7.) Invest in a shredder which will dispose of old financial and personal documents ​(ensures it
is completely unusable afterwards)
8.) Create photocopies front and back of your identification and keep it in a safe place
9.) Get on the National Do Not Call List to reduce calls from telemarketers
10.) Install firewall software protection to prevent unauthorized access to private
information on your computer