FINANCIAL LITERACY BASICS

FOR ADULTS

Métis Nation of Ontario

Financial Literacy Program

 TABLE OF CONTENTS

INTRODUCTION.................................................................................................................................... 3
What is Financial Literacy? ..................................................................................................................... 3
BUDGETING............................................................................................................................................ 4
What is a budget? ................................................................................................................................... 4
Components of a Budget ......................................................................................................................... 4
Creating a Successful Budget................................................................................................................. 5
My Budget ................................................................................................................................................ 7
Staying on Budget ................................................................................................................................... 9
MANAGING EXPENSES ................................................................................................................... 10
Negotiating Existing Bills ..................................................................................................................... 10
Saving on Housing Expenses .................................................................................................................. 11
Saving on Food Expenses ....................................................................................................................... 12
Cutting Travel Costs ............................................................................................................................ 13
Saving on Entertainment Expenses ...................................................................................................... 13
The Power of “Shopping Around” ......................................................................................................... 14
Needs vs. Wants ..................................................................................................................................... 14
CREDIT AND DEBT ............................................................................................................................ 15
What is Credit? ...................................................................................................................................... 15
Types of Credit ...................................................................................................................................... 15
Choosing the “Right” Credit ................................................................................................................. 16
Principal and Interest ........................................................................................................................... 16
Credit Scores and Responsible Credit Use ............................................................................................ 17
Managing Debt ...................................................................................................................................... 17
SAVING AND INVESTING .............................................................................................................. 19
Steps to Successful Saving ................................................................................................................... 19
Barriers to Saving ................................................................................................................................. 20
Investing Basics ................................................................................................................................... 21
Getting Financial Advice........................................................................................................................ 23
Setting Financial Goals .......................................................................................................................... 24
S.M.A.R.T. Goals..................................................................................................................................... 24

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PROTECT YOURSELF ...................................................................................................................... 26
The World of Scammers ......................................................................................................................... 26
Protecting Yourself Against Fraud....................................................................................................... 29
MNO PROGRAMS AND SERVICES ............................................................................................. 30

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 INTRODUCTION

WELCOME to Financial Literacy Basics, the financial literacy manual created by the Métis
Nation of Ontario to help Métis Citizens better develop their understanding of financial basics
and promote independence in their financial futures.

This manual will cover basic financial literacy topics such as budgeting, managing expenses,
credit and debt, saving and investing, setting financial goals, protecting your financial future,
and programs and resources available to Métis Nation of Ontario (MNO) citizens. By the end
of this manual, you’ll have a better understanding of:

• The importance of developing your financial literacy

• How to create a budget
• How to successfully manage your expenses
• What credit is and how to use it responsibly
• Saving and investing strategies
• How to set S.M.A.R.T financial goals
• How to protect your financial future

What is Financial Literacy?

Financial literacy is having the knowledge, skills and

confidence to make responsible financial decisions independently.

Having a strong understanding of your personal finances empowers you to navigate the ever-
changing financial world we live in. It allows you to make informed decisions about what
financial solutions are available and which options are best-suited to your needs. Developing
your financial literacy positions you to plan ahead and use your hard-earned dollars in the best
way possible to meet your goals.
The MNO Financial Literacy Program will work with citizens in a one-on-one manner to address
financial literacy questions and help to improve your overall financial situation. The goal is to:
1. Increase awareness of basic financial literacy topics
2. Provide support to MNO citizens seeking assistance developing their financial well-
being
3. Ensure the MNO citizenship understands and has access to programs, supports, and
services that promote overall financial well-being.

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 BUDGETING

What is a budget?

BUDGET: a spending plan of how your income will be spent over a set period of time

BUDGETING: the process of creating this spending plan

A personal budget can be created for daily, weekly, monthly, or annual timelines.
In most cases, it’s beneficial to have budgets for each of those time periods so you can track
unexpected expenses and plan your future budgets accordingly.

Components of a Budget
INCOME: This is the most basic element of a budget. Income represents how much money
you make, and can come from a variety of sources. There are two income terms to know: gross
income and net income.
- Gross income is the amount of money you receive before deductions.
- Net income is the amount of money you receive after deductions.
***Net Income is the amount to be used in your budget***

FIXED EXPENSES: These are the expenses that don’t change readily and you have little
control over, such as your rent, mortgage, or insurance payments.

EMERGENCY FUND: This part of your budget is for the unexpected. Plan for a portion of
your income to be put into an “emergency fund” to cover unexpected costs, like a broken-down
car or a replacement refrigerator.

SAVINGS: Every successful budget includes part of your income being put towards savings
that remain untouched and grow over time. Note: savings are different and separate from your
emergency fund.

FLEXIBLE EXPENSES: These expenses change each month and you are mostly in control over
how much you spend on them. They often represent the things that you want, but don’t
necessarily need, such as take-out meals or entertainment costs.

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 Creating a Successful Budget

“A budget is telling your money where to go

instead of wondering where it went”
– John Maxwell

In this section, we’ll learn how to create a budget based on monthly net income and expenses.
Work your way through Steps 1 to 5, and use the My Budget template provided on PAGES 7
and 8 to create your own personal budget. You can print off copies to make changes if needed.

STEP 1: DETERMINE INCOME

To create a successful budget, you first have to know how much income you have to allocate.
Remember, net income is the income after deductions (such as pension, benefits, or
employment insurance).

To determine your monthly net income, identify how much and how often you get paid.
Consider income you receive from all sources to determine your total monthly net income.

For payments you receive weekly, bi-weekly, quarterly, or annually, use the chart below to
convert various payment frequencies into monthly amounts. Monthly income can be used
exactly as received. Enter your net monthly income into the My Budget sheet on PAGE 7.

FREQUENCY CALCULATION TO CONVERT TO MONTHLY AMOUNT

Weekly Payment amount x 52  12 = monthly amount
Bi-Weekly Payment amount x 26  12 = monthly amount
Quarterly Payment amount x 4  12 = monthly amount
Semi-Annually Payment amount x 2  12 = monthly amount
Annually Payment amount  12 = monthly amount

STEP 2: TOTAL FIXED EXPENSES

Once you have determined your monthly net income, the next step is to identify your fixed
expenses. Fixed expenses are the things you need to pay for. They change infrequently, you
have little control over them, and they are your priority expenses.
Fill out your FIXED EXPENSES on the My Budget sheet on PAGE 7. Fixed expense ideas are
included on this sheet for your reference.

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STEP 3: SAVINGS CONTRIBUTIONS
Determining and prioritizing how much you want to save towards your financial goals is the key
to meeting those goals. In this step, determine:

1. What it is you’re saving for

2. How much it will cost
3. How long you have to save for it
You can have more than one savings goal. In fact, it’s a good idea to have both short- and long-
term savings goals. For example, you could be saving up for a down payment on a home (short-
term) but also saving for retirement (long-term). Fill out the top green portion of the SAVINGS
AND EMERGENCY FUND section on the My Budget sheet on PAGE 7 to record your monthly
savings contributions required.

STEP 4: EMERGENCY FUND

Building and maintaining an EMERGENCY FUND is a necessity to feeling financially secure. Your
emergency fund differs from savings in that it’s used only when unexpected costs are incurred
or you experience changes in your income. Most experts suggest having 3-months’ salary in
your emergency fund. If you don’t have an emergency fund yet, determine how much you need
and include this in your budget.
Fill out the bottom yellow portion of the SAVINGS AND EMERGENCY FUND section on the
My Budget sheet on PAGE 7 to record your monthly emergency fund contributions required.

STEP 5: FLEXIBLE EXPENSES

Now it’s time to consider your FLEXIBLE EXPENSES. Reminder: these are the expenses that
change month to month. They often represent the things that you want, but don’t necessarily
need. We must budget for some of these wants to ensure that we have a quality of life that will
keep us happy and motivated. Some of these expenses, like grocery and clothing costs, can be
things we need, while other times are considered things we want.
Fill out your FLEXIBLE EXPENSES on the My Budget sheet on PAGE 8. Flexible expense ideas are
included on this sheet for your reference. This list isn’t completely inclusive, so make sure to
think of other expenses you have and include them in your personal budget.

STEP 6: CALCULATE AND ADJUST

Transfer your total income and expenses to the final chart on the My Budget sheet on PAGE 8.
Subtract each expense from your monthly net income to determine if you have a monthly
SURPLUS (positive number) or a DEFICIT (negative number). A surplus means you have
additional money to allocate to where you may need it, whereas a deficit means you must
adjust your budget to make it work for you.

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 My Budget
Income

NET MONTHLY INCOME: $

OTHER MONTHLY INCOME: (i.e. income from Canada Child Benefit, investment income, gifts) $

TOTAL NET INCOME (A) = $

(add all monthly income amounts)

Fixed Expenses
Rent or Mortgage $
Property Tax $
HOUSING
Strata/Condominium Fees $
Other: $
Heating $
UTILITIES Electricity $
(use average monthly amounts) Water $
Other: $
Vehicle Payment $
LOANS Student Loan $
Other: $
Auto $
Home/Property $
INSURANCE
Life/Disability $
Other: $
Childcare $
FAMILY RESPONSIBILITIES Child/Spousal Support $
Other: $
TV/Cable/Satellite $
TELECOMMUNICATIONS Phone (mobile and/or landline) $
Note: some telecommunications may be
negotiable, and a source of budget flexibility
Internet $
Other: $
TOTAL FIXED EXPENSES (B) = $
(add all monthly fixed expense amounts)

Savings and Emergency Fund

SAVINGS GOAL TOTAL SAVINGS NEEDED  TIME FRAME = CONTRIBUTION REQ’D
Example: Retirement $100,000  240 months = $416/mo.
$
$
EMERGENCY FUND $
(suggested 3-mo. salary)

TOTAL SAVINGS CONTRIBUTIONS (C) = $

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Flexible Expenses
Groceries $
FOOD Takeout Food/Beverages $
Other: $
Items (toiletries, laundry, etc.) $
Services (haircuts, nail care, etc.) $
PERSONAL CARE
Clothing/Footwear $
Other: $
Cleaning $
HOUSEHOLD EXPENSES Maintenance (indoor and outdoor) $
Other: $
Transit $
Fuel $
TRANSPORTATION
Vehicle Maintenance $
Other: $
Sports/Lessons $
Clubs/Memberships $
Entertainment (concerts, movies, etc.) $
RECREATION Vacation/Travel $
Gifts and/or Charitable Donations $
Other: $
Other: $
Tuition $
Books $
EDUCATION
Professional Development $
Other: $
TOTAL FLEXIBLE EXPENSES (D) = $
(add all monthly flexible expense amounts)

Calculate and Adjust

TOTAL NET INCOME (A) $

TOTAL FIXED EXPENSES (B) - $

TOTAL SAVINGS/EMERGENCY FUND CONTRIBUTIONS (C) - $

TOTAL FLEXIBLE EXPENSES (D) - $

MONTHLY SURPLUS (+) OR DEFICIT (-) = $

If you have a deficit in your budget, you need to either increase your income or decrease your
expenses. Look at what expenses you have and consider if there are ways you can reduce them.
We explore tips for negotiating existing bills and cutting expenses a little later in this manual.

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 Staying on Budget
Making a budget is easy; sticking to that budget is where the real challenge lies. Here are a few
things to consider that will help you be successful with your budget:

1. Be realistic when creating your budget. Track every dollar you spend for a month
(whether that’s with paper and pen, by looking at bank records, or by using a spending
track app on your smartphone). The number one reason that budgets fail is because
they are unrealistic.

2. Adjust your budget to meet your current needs. If you know that you will need to
increase your spending in certain areas at certain times of the year, plan for it. Adjust
your budget and reallocate funds from other categories to make up for this need.
Reevaluate your budget every 3-6 months, or as the need arises.

3. Surround yourself with people who respect your budget. Let your family and close
friends know that you are on a budget, and ask them to respect your decisions if you
have to opt out of plans or events.

4. Remember the big picture. There will be times when you spend more and times when
you spend less. There will be times that you have to spend your entire emergency fund
and times when you receive unexpected lump sums of money. Life is ever-changing, so
remember to be flexible with your budget. As long as you’re moving towards your goals
in the big picture, you’re doing well!

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 MANAGING EXPENSES

We’ve learned what fixed and flexible expenses are, but we’re going to go one step further now
and explore how to manage these expenses. From reducing your everyday costs to negotiating
payment terms, this section will explore strategies to help you manage your expenses and
hopefully spend less of your hard-earned dollars where they don’t need to be spent!

Negotiating Existing Bills

Each month, you likely have a relatively set amount of money that goes out towards the usual
bills, like your cell phone, insurance, and utilities. What many people don’t realize is that these
bill amounts are often NEGOTIABLE. Simply contact each provider and ask the following
questions:

1. How can I cut back my monthly bill?

2. Am I currently on any promotions or plans?
3. Do you have a better plan or deal for me?
4. Can I bundle services to save money?

Negotiating takes practice. It may come naturally for some, but for many it’s a challenging task.
Here are a few pointers for those just starting out:

1. Use a friendly, yet assertive voice

2. Ask for more than what you want, then slowly back down
3. Only negotiate with someone who has the power to do so
TIP! Ask the person you’re speaking to if they are able to negotiate your costs. If
not, request to speak with someone who can. Asking to cancel your service,
although you’re not actually cancelling, often leads you to someone who can
negotiate with you
4. Have a back-up plan. If you can’t get your bill amount lowered, maybe you can get
more services for the same price
5. Know when to stop. Decide before you call what the least amount of change you’ll
be satisfied with. You’ll know quickly if you’re too far off of your goal
It’s recommended to make these calls every 6 months to 1 year. There are typically new
promotions that become available, changes in the structure of the company’s billing, or
possibly changes to the way that you use the service provided.

It never hurts to ask!

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 Saving on Housing Expenses
For the most part, your basic housing costs are fixed. Your rent or mortgage, property taxes,
and utility bills don’t change much month to month. They are necessary expenses that you
can’t live comfortably without. With that said, there are ways that you can make sure you have
the lowest payment possible for the service being provided.

MORTGAGE
Your mortgage has a term, which is a period of time that you are committed to the mortgage
agreement you signed. Mortgage terms usually range from 1 to 5 years, with 5-year terms
being the most commonly used. Throughout your term, you pay the interest rate you agreed
upon when you signed your mortgage commitment. Once this is signed, this is the interest rate
and payment amount that you’re locked into for the remainder of the term.
As you approach the end of your term, you can start shopping around and looking for lower
interest rates or mortgage products with cashback. As early as 4-months before your current
term is up, research with various financial institutions or mortgage brokerages to see what
rates and mortgage products are being offered.

RENT
Rent costs are generally fixed, and don’t fluctuate month to month, or even year to year in
some cases. If you want to try and save on rent costs, you could ask your landlord if there are
any options to lower your monthly payment. For example, you could offer to take care of your
lawn and snow maintenance in exchange for a reduction in your rent payment. Alternately, if
your current rent arrangement is all-inclusive, you could suggest paying for your bills yourself
and being mindful of your utility usage.

UTILITY BILLS
There are plenty of opportunities to save when it comes to utility bills. Here’s a few ideas:

1. Switching out fixtures and appliances for high-efficiency and low-energy options not
only saves you money on utility bills, but also helps to reduce the carbon footprint you
leave as a consumer. Weigh the upfront cost of new fixtures or appliances against the
long-term utility savings to see if it’s an option that will work for you.
2. Increase your home’s efficiency by checking for leaks and cracks. Garden hoses, toilets
tanks, and leaky faucets are all spots that can be fixed easily and save you money on
your water bills. Same goes for cracks in doorways or window wells. Reseal these areas
to prevent air drafts and cut back on your monthly heating or cooling costs. Something
as simple as closing curtains can help to keep your home warmer in the winter months.

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 3. Reduce your usage where you can. Adjust your home’s thermostat to be a few degrees
cooler during colder months when you’re not there or overnight. Allow natural light to
be a primary source of lighting through the day, and turn off lights in unused spaces.
Turn off and/or unplug appliances when they’re not in use.

4. Contact your utility providers to see if there are different billing styles (i.e. flat rate vs.
tiered usage) that would save you money based on your home usage.

Saving on Food Expenses

We all have to eat, and of course, that costs money. Food expenses fall into the flexible
category because there are endless ways to reduce your costs. Here are a few strategies to
consider.

1. Reduce the numbers of times you dine out in a month. Eating out is costly, and
limiting how often you choose to order take-out or dine-in at restaurants can save
you significantly over the course of the year. Planning ahead and designating certain
days in the month to eat out gives you something to look forward to and reduces the
chances of making the split decision to grab take-out for dinner on the way home.

2. Make a grocery list and stick to it. Grocery stores tempt their consumers with new
items, sale items, and strategic placement. Make a list of items you need before you
go, and stick to that list once you’re there. It’s okay to have a treat or two on your list,
and to leave some wiggle room for the occasional impulse purchase.

3. Buy in bulk where it makes sense. Items that store well and you have the space in
your house to store them are the perfect items to save money on. Buying in bulk
usually means lower cost per item, and may also help you take advantage of sale
opportunities.

4. Pack emergency snacks and shop on a full stomach. When you’re hungry, it’s much
easier to justify impulse food purchases. Have emergency snacks available where you
might need them, like in your vehicle, at work, or in your daily bag. When you go
grocery shopping, do it after you’ve eaten a full meal to avoid buying more than you
need.

5. Use coupons and price-matching options when available. Many stores have weekly
flyers and sales that you can maximize on. Some stores even offer the convenience of
price-matching sales at competing stores. Use these opportunities to cut costs on
your regular grocery bills.

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 Cutting Travel Costs
Between the maintenance costs of vehicles and daily commutes, travel is expensive before
vacations are even considered. Here’s a few ideas for keeping your travel expenses down:

1. Evaluate your need for one or more vehicles. Some families have a true need for two
or more vehicles, some can manage well with one, and other families can rely solely
on public transportation options. Evaluate your family’s need for vehicles, and
consider cutting back if it’s possible.

2. Commute with colleagues or work from home. Driving to and from work usually
makes up the bulk of monthly travel expenses. Cut your commute costs in half by
commuting with a colleague who lives nearby. If it’s possible, work from home a day
or two each week. Encourage your kids and other family members to rideshare to
sports, clubs, and events, if possible.

3. Vacation on a budget. Whether you stay local or travel across the world, go for a day
or a month, budget a little or lot, vacations are wonderful. When you plan a vacation,
make sure you’ve budgeted savings towards that vacation. Once you have the
savings, create a specific vacation budget and stay within it.

Saving on Entertainment Expenses

1. Entertain at home. Instead of going to restaurants or bars to visit with friends, take
turns hosting at your homes. Instead of watching movies at the cinema, enjoy them at
home with your own popcorn.

2. Cancel or share memberships or subscriptions. Evaluate how often you’re using the
services of your memberships and subscriptions. Consider cancelling them if your
usage is low. If you still enjoy them regularly, see if a family or shared membership is
an option to cut your costs in half or more.

3. Reduce your overall gift budget. Shaving a few dollars off of your current budget per
gift can add up over the course of the year. Evaluate who you currently buy gifts for
and how much you normally spend, then determine if you can cut that back. Add
those amounts to your budget so you can plan ahead with each pay check.

4. Prioritize the entertainment you value most. We all need to spend money on
entertainment at one point or another. Prioritize which sources of entertainment are
necessary for you and plan for those in your budget. Reduce or eliminate your
spending on the opportunities that aren’t as valuable to you.

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 The Power of “Shopping Around”
In all cases, exploring your options before you commit to a purchase is going to save you
money. It’s pretty rare that you find the most cost-effective option in the first place you look.
Whether it’s checking flyers, using coupon applications on your smart phone, or calling various
providers for quotes, taking the time to shop around before you buy will save you money.

Why pay more for something than you have to?

Needs vs. Wants

Through most of this section, we’ve talked about reducing or eliminating costs from your
everyday expenses to save money. You have to decide what things in your life you consider
“needs” and what you consider “wants”. This decision is going to be unique to you and your
situation. There is no right or wrong! Everyone will have a different perspective on this, and it
has to be based on your own values.

Tip for Success!

Make small changes to start. Allow yourself some time
to adjust to each change before making more changes.

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 CREDIT AND DEBT

What is Credit?
Credit is the ability to borrow money or access goods and services with the understanding that
you’ll pay it back later. Having “good credit” means that you’ve proven your ability to pay your
sources of credit (i.e. credit cards, lines of credit, loans) in an agreed upon or timely manner.
There are many different types of credit, each with their own benefits and downfalls.
Determining what’s right for you largely depends on your situation, personality, spending
habits, and ability to get approved.

Types of Credit
PROS CONS
 Convenient to use
Credit Card  Excellent for pre-authorized  High interest rates, with
bill payments potential for large sums
Ideal for every day and
 Possibly includes rewards paid in interest alone
online purchases that
you intend to pay back  Can be paid off at any time  Potential annual fees
quickly  Simple approval process  Easy to overspend
 Reusable source of credit
 Increases debt load for a
 Can fund a wide variety of
Loan (auto, student, expenses
set period of time
personal, business, etc.)  Repayment is less flexible
 Straight-forward repayment  Penalties and/or fees for
Ideal for large purchases structure
that you intend to pay missed or late payments
 Lower interest rates  Not a reusable source of
back on a schedule
 Simple approval process credit
 Interest rates can fluctuate
Line of Credit  Larger credit limit than  No pre-determined
Ideal for large purchases credit cards repayment plan can lead to
that you may carry a  Reusable source of credit more paid in interest over
balance on for a while  Lower interest rates time
 Significant interest paid
 Helps you own a home over life of the loan
Mortgage
 Lower interest rates  Penalties/fees for missed
A loan used to purchase  Pre-determined payment payments
a home where the plan
home is used as  Penalties/fees for paying
 Possibility for cashback or the mortgage in full early
collateral for the loan
other incentives  Complex approval process

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 Choosing the “Right” Credit
Different situations call for different credit needs. Overall, you want to choose the credit option
that has the lowest interest rate, the lowest fees, the greatest rewards, and/or the most flexible
repayment options. There are many different credit options available to you, and it’s beneficial
to have at least TWO open at all times. Try to have a combination of different types of credit
open, such as a credit card and an auto loan, or a line of a credit and a mortgage.
Credit cards are the most commonly used types of credit. They’re convenient, and designed for
every day use. When applying for a credit card, consider the following points before submitting
any credit applications:

1. What is the interest rate charged on carried balances?

2. What fees are associated with the credit card (i.e. annual fees, transactional fees, etc.)?
3. What rewards or incentives are offered by the credit card issuer?
4. Do the terms and conditions change after a certain period of time?
Compare these answers with your credit needs. If you’re planning on carrying a balance on your
credit card from month to month, perhaps a credit card that has an annual fee but has low
interest rate is more beneficial. If you believe you’ll pay off your credit card in full on a monthly
basis, then maybe a card with greater rewards is best, even though its interest rate is higher.
Compare your options and determine which credit card features makes the most sense for you.

Principal and Interest

Principal is the money that you originally borrowed and agreed to pay back. Interest is the cost
of borrowing that money. The higher the interest rate, the more money you’re spending each
month to carry that debt, and less of each payment actually goes towards paying that debt off.
With credit cards, there is a minimum monthly payment due each month. Paying just the
minimum monthly payment means that you’ll avoid being charged a late fee, but you’ll
continue to get charged interest on the remaining amount owing, causing the amount paid in
interest charges to continue to climb. In many cases, you will not pay off a credit card by just
making the minimum monthly payment.
Interest if often compounded on a monthly basis. This means that each month, the interest
that gets charged is added to the principal amount owed. The next month, interest gets
charged on the total amount from the month previous, meaning you’re now paying interest on
interest. This is why it is important to carry as little debt as possible on your credit cards and
lines of credit from month to month.

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 Credit Scores and Responsible Credit Use
Using your credit responsibly has many benefits, with the most obvious being that you’ll pay
less in interest and/or late fees over time. One of the less obvious reasons is how you use your
credit directly impacts your credit score. Your credit score is used by creditors to determine if
they are willing to award you credit and what rate of interest they will charge.
Credit scores range from 300 to 900, where a higher score is preferred. Each creditor reports
your monthly credit activity to credit bureaus (Equifax and TransUnion in Canada), who
calculate your credit score using a complex equation.
Your credit bureau is created the first time you apply for credit, whether that is a student loan,
a mobile phone plan, or your first credit card. Your credit history stays on your credit bureau
through your lifetime, with a few exceptions to that rule.
Your credit score is calculated primarily based on the factors in the chart below, with each
factor having a varying degree of impact on your overall score, displayed here as a percentage:

Payment Are payments consistently YES: POSITIVE IMPACT

made in full and on time? NO: NEGATIVE IMPACT
35%
History
Amount Are balances kept low or non- YES: POSITIVE IMPACT
existent from month to month? NO: NEGATIVE IMPACT
30%
Owed
Credit How long has the credit been LONG HISTORY: POSITIVE IMPACT
active? SHORT HISTORY: NEGATIVE IMPACT
15%
History
Have many credit checks been FEW: POSITIVE IMPACT
Inquiries done over a short time period? MANY: NEGATIVE IMPACT
10%
Are multiple types of credit YES: POSITIVE IMPACT
Credit Mix being used? NO: NEGATIVE IMPACT
10%

Managing Debt
Carrying some form of debt throughout your lifetime is almost inevitable. Student loans,
mortgages, and auto loans are all examples of debts that you’ll likely carry in some capacity
over your lifetime because saving enough money to make such large purchases is unrealistic for
most. These types of debts are not usually problematic on their own.
Mismanagement of debt occurs when a person is consistently spending more than they are
making. This could be the result of unexpected life events, poor budgeting practices, or
emergency costs. If you’re not able to pay these costs off, the amount owed in interest can
become significant and difficult to maintain. Eventually, this may lead to default. Default is the
inability to repay your loans, either by missing payments or not making payments in full.

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When a person defaults on a debt payment, additional fees are often charged, making it
increasingly more difficult to recover. There are strategies that can help you to end this cycle of
debt, and allow you to manage your debts more effectively. Each strategy has benefits and
downfalls, and it’s vital that you weigh each as it relates to your situation. If you’re considering
exercising any of these strategies, seek independent professional financial advice before you
act.
NEGOTIATING PAYMENTS: Contacting creditors directly and expressing your struggle or
inability to continue making payments can be an excellent starting point. Creditors may be
willing to waive fees, reduce monthly payments by extending the length of time you take to pay
the debt, or forgive past charges to assist you. This has no negative impact on your credit score
and should be attempted before any of the next three options are considered.

CREDIT COUNSELING: A credit counsellor will negotiate your debts and/or repayment terms on
your behalf and provide you with a repayment plan to follow. This will help break the debt cycle
and get you on track with minor negative impact on your credit score.

CONSUMER PROPOSAL: A Licensed Insolvency Trustee (LIT) creates a legal and formally binding
process to form a “proposal” – an offer to either pay creditors a percentage of what is owed to
them, extend the time allowed to pay it back, or both. A consumer proposal has a major
negative long-term impact on your credit score.

BANKRUPTCY: A LIT will file your completed bankruptcy paperwork with the Office of the
Superintendent of Bankruptcy Canada (OSB). Once you have been declared bankrupt, all
payments to creditors stop and any lawsuits against you by creditors are ended. Your assets will
be sold by your LIT and any proceeds will be given to the creditors. You may also be required to
make income surplus payments to creditors if your monthly income post-bankruptcy is more
than required to support your household. A bankruptcy has a major negative long-term impact
on your credit score.

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 SAVING AND INVESTING

Having the ability to save money is a skill that will provide you with financial comfort, both in
the present and in the future. You can save your money in a variety of ways, with the most
common being a bank account designed for saving specifically.
Savings accounts are secure and have a rate of return, where your savings will actually increase
over time, even if you don’t contribute regularly. While you can save physical cash in your
home, it’s far less secure from being stolen or misplaced, and won’t grow this way.

Steps to Successful Saving

There are many different reasons to save, and your reason needs to be specific to you. In
general, however, some benefits of saving money include:

 Provides you with financial comfort. As your savings start to grow, you feel comfortable
that you can afford whatever life throws at you.

 Helps you to reach your life goals. Many of life’s goals have a cost associated with
them, and being able to save for those before you take them on gives you the some of
the support you need to achieve those goals.
 Allows you to live with less debt. Once your debts are paid to a manageable amount
and you’ve started to accumulate savings, you may not have to incur more debt for
future purchases. You can plan ahead and save for your future needs.

There are THREE SIMPLE STEPS to help you start saving:

1) ESTABLISH AND EMERGENCY FUND. In doing so, you’re protecting your soon-to-be
savings from being tapped into if an emergency or unexpected cost should arise. Your
savings are meant to stay untouched until you’re ready to use them for their intended
purpose.

2) PAY YOURSELF FIRST. Each time you get paid, you have to pay your essential bills, like
your rent or electricity bill. Once those essentials are paid, put your pre-determined
savings contribution into your savings account. The remaining money is what you have
to spend on your flexible expenses, like entertainment or clothing.

3) GROW YOUR SAVINGS. Research different types of saving and/or investing accounts.
Each one has different rates of return, and as a result have a different rate of risk
associated with them. Choose which best suits your needs and risk tolerance, and watch
your savings grow!

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 Barriers to Saving
BARRIER HOW TO OVERCOME IT
NO DEFINED BUDGET Create a realistic budget (see 2.0 BUDGETING). For
most, saving has to be an active process, and a
Without a well thought through budget, budget helps to determine how much you can
saving will be difficult unless you have a realistically put towards savings, and how long it
significant surplus of income. will take you to reach your saving goals.

SPENDING TOO MUCH ON Negotiate existing payments (see 3.0 MANAGING

FIXED EXPENSES EXPENSES) to help reduce those fixed expenses. If
When your fixed expenses cost too those reductions don’t provide enough savings,
much, you don’t have enough consider making changes to your current
disposable income to realistically put accommodation or lifestyle to allow saving to
money into savings. happen.

LACK OF A MEASURABLE SAVING GOAL

Avoid the mindset of only saving “what’s left over”
Without having a saving goal, you won’t once your bills are paid. Determine what your
be motivated to save any amount in savings goal is, and actively put the appropriate
particular. You’re less likely to notice amount of money towards that each pay. If you’re
that you’re overspending on flexible not able to meet your goal that month, review
expenses, and more time will pass where the issue was and adjust if needed.
without you growing your savings.

Focus on paying down any high-interest debt as

much as possible, and only putting a small portion
MISMANAGED DEBT towards savings in the beginning. As your debt
load shrinks, shift your focus to savings. For low-
The more debt you carry, the more interest debts, such as your mortgage or student
money you have to spend each month loan, evaluate if it’s more important to you at this
to cover the cost of carrying those time to pay those debts down or build your
debts. It’s important to make payments savings. If saving is more important for you,
towards your debt, leaving less money consider negotiating those payments to lower
available to put towards savings. monthly amounts by stretching out the amount of
time it’ll take the pay them. This will leave you
with more available funds to put towards savings.

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 Investing Basics
Investing is a form of saving, but in a different manner than just a piggy bank or bank account.
Investments are designed to grow your contributions over time. Each type of investment has a
risk associated with it, and it’s up to you how much risk you are comfortable with.
Risk in investments is the degree of uncertainty or potential loss of all or part of your
investment amount. In general, the greater the perceived risk of an investment, the higher the
rate of return on the investment. Rate of return is dependent on how fast the money will grow,
how protected the money is from loss, and how readily available the money is to the investor,
Investments can be designed to be long-term investments that will likely grow slowly but
steadily over years, they can be short-term investments where both the risk and the return of
the investment are high, or they can be somewhere in the middle.
Here are a few of the more common investment routes to consider:
TAX FREE SAVINGS ACCOUNT (TFSA)

 Earn income from investments without paying tax on that income, even when it’s
withdrawn
 Investments can be in cash, mutual funds, GICs, stocks, and/or bonds
 Contributions are not tax-deductible for income tax purposes
 Contributions are limited to an annual pre-determined amount (visit Canada Revenue
Agency (CRA) website for more details)
 Must be 18+ years old and have a Social Insurance Number (SIN)

REGISTERED RETIREMENT SAVINGS PLAN (RRSP)

 Contributions and earnings are generally tax-free until they are withdrawn
 Investments can be in cash, mutual funds, GICs, stocks, and/or bonds
 Your contribution limit is calculated annually (visit CRA website for more details)
 You can withdraw certain amounts interest-free for particular purposes, such as a down
payment on a home as a first-time home buyer or for an education plan, but this money
has to be returned in a set period of time

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REGISTERED EDUCATION SAVINGS PLAN (RESP)

 You put money into a RESP for the purpose of a child using it to pay for post-secondary
schooling when the time comes
 Government of Canada pays up to $600 to the plan annually (if eligible)
 The plan pays the contributions, grants, and earned income to the student
 The student pays taxes (if any) on the grants and interest earned, but not the
contributions when withdrawn

REGISTERED DISABILITY SAVINGS PLAN (RDSP)

 You put money into an RDSP for an eligible person with a disability
 Government of Canada pays matching contributions to the plan (if eligible)
 The plan pays the contributions, grants, and earned income to the eligible individual
with a long-term disability
 The recipient pays taxes (if any) on the grants and interest earned, but not the
contributions when withdrawn

PENSION PLAN

 Some employers provide pension plans to their employees.

 The employee contributes a portion of their income to the pension plan, and the
employer may match all, some, or none of the employee’s contribution.
 The pension plan is intended to be withdrawn upon retirement from the employer
 Pension plans are taxable income

STOCK MARKET

 You can invest in the stock market independently, or seek professional help through a
Financial Advisor or investment company
 There are many different risk and reward levels in the stock market that need to be
thoroughly examined prior to investing

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REAL PROPERTY/PRIVATE EQUITY

 Purchasing second homes, rental properties, or cottages are considered investments in

real property
 Ideally, the value of the real property increases over time and you are able to sell the
home for more than you bought it for
 Additional tax in the form of capital gains must be paid on profit made from the sale of
any real property that is not owner-occupied
 Private equity lending is the act of an individual investor loaning their own money as a
mortgage for another individual, secured by real property

TANGIBLE ASSETS

 Purchasing items such as collectibles, antiques, or artwork is considered investing in

tangible assets
 Ideally, as time passes, you will be able to sell these assets for more than you bought
them for

Getting Financial Advice

For simple investments such as savings accounts or GICs, you can consult with your local bank,
credit union, or trust company that offers banking services.

TIP! Compare the rates of return between institutions. Understand what limitations exist to
accessing your money or making additional contributions before choosing where to invest.

For more complex investments, seek professional help from a Financial Advisor. You will likely
be trusting this Financial Advisor with a large portion of your savings, so it’s beneficial to ask
questions before you choose to invest.

Here are a few sample questions to ask your prospective Financial Advisor:
1. What is your background? Experience? What are your proven results?
2. Is your firm registered? What governing bodies regulate it?
3. What services can you provide to me? Provide advice only, sell products, or build a
financial plan?
4. How do you get paid? What fees are associated with your services?
5. How do you work with your clients?

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 Setting Financial Goals
A financial goal is a goal or objective for what you want to do with your money. Examples of
financial goals would be:

• Reduce my debt
• Improve my credit score
• Save money for a vacation

WHY SET A FINANCIAL GOAL?

Setting a clear financial goal gives you both motivation and confidence to achieve it. It helps
you to stay focused on the objective and on track to meeting your goal. A clear goal lets you
track your progress, and share your aspirations with loved ones and financial professionals who
can help you along the way.

S.M.A.R.T. Goals
The acronym S.M.A.R.T is used in many different goal setting practices. When your goals are
S.M.A.R.T goals, you are more likely to be successful. So, what does S.M.A.R.T stand for?

S is for SPECIFIC The goal is clearly defined and focused

M is for MEASURABLE Progress can be easily tracked to measure goal achievement

A is for ATTAINABLE The goal is within your current or near-future abilities

R is for REALISTIC The goal is within reach, given your current or expected situation

T is for TIMELY The goal follows a timeline for achievement

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Now that we know what a goal SHOULD look like, let’s look at an example of a basic goal versus
a S.M.A.R.T goal:

EXAMPLE OF A BASIC GOAL:

I want to reduce my debt and save some money.

EXAMPLE OF A S.M.A.R.T GOAL:

I want to pay off my credit card debt of $2,500 and save $3,000 so I can take a vacation to
visit my family in 12 months. I’ll need to save about $460 each month to reach this goal.

Notice that the S.M.A.R.T goal above is…

1. Specific – it’s defined and focused on what needs to be accomplished and by when
2. Measurable – both the dollar amounts and timeframes are measurable
3. Attainable – based on this person’s income and expenses, this savings goal is possible
4. Realistic – over the set time period, this savings goal is possible
5. Timely – a timeline of 12 months is given to reach this goal
Breaking your goals down into actionable steps makes them SMARTer goals. Have a look:

1. I will cut buying my lunch out to once per week to save $20 per week, or $1,040/year.
2. I will work a few extra shifts each month to save $300 per month, or $3,600/year.
3. I will cut restaurant meals to two per month to save $100/month, or $1,200/year.

Together, these adjustments total $5,840 in savings over a 12-month period, just over the
original goal of $5,500.
CHECK YOUR PROGRESS
Once your goals are set, check in on your progress at regular intervals. It’s important to check in
regularly to make sure that you’re on track to meet your goals. As circumstances change, it
might be necessary to change your approach as well, and that’s okay! Adjust and KEEP
MOVING FORWARD!

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 PROTECT YOURSELF

In our technological world, there are many opportunities for scammers to take advantage of
unsuspecting victims. Even the most careful individuals fall victim to clever scams. Knowing how
to detect and report fraudulent activity, and understanding what information scammers are
trying to get from you will help your financial information stay protected.

The World of Scammers

Fraudulent financial activity is usually done in the form of scams undertaken by scammers. A
scam is deceptive scheme or trick used to cheat someone out of something, most commonly
money. A scammer will communicate in a variety of ways to try and get information from you
that jeopardizes your financial security.

PHONE SCAMS
A scammer will contact you by phone directly, and often use your first and last name. They will
make claims to be from a reputable company. They will often ask you to provide further details
about yourself, such as your address, account number(s), or Social Insurance Number as a way
for them to confirm your identity.
How do I handle a phone scam?

• Don’t give any further information.

• Ask for their name and contact information, in case you need to report this
person as a scammer. Confirm what company they claim to be calling from.
• Find the legitimate contact information for the company they claimed to be
calling from, and contact them directly.
• State that you received a call that you believed might be a scam, and confirm
with the legitimate company if it was them calling you.
• Report the scam if necessary.

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EMAIL SCAMS
A scammer will send an email to your email address. It will appear as though it’s from a
reputable company. There will often be a link to click on to receive a refund or repayment. It
may claim to have charged your account, and provide a link to view the charge information. It
may demand that a payment be made in a short time frame, with a link provided to submit
your payment. Common signs of an email scam may include the following:

 The email has some, but not all of your information listed. For example, it will state
your address, but not have your first and/or last name, and address you in a vague
manner such as “Dear Client”
 Grammatical, spelling, or formatting errors are often present
 There may be a sense of urgency with a defined time limit to respond or act.
 The sender’s email address may not match the company or organization they claim to
be from.
 There may be a button or link to click to access a refund or repayment.

REMEMBER!
Neither the Canadian Government nor financial institutions will send you money via email
money transfer. They will use email to communicate that money has been directly
deposited into your bank account (with no further action required on your part) or that
money is being sent by cheque through the mail.

How do I handle an email scam?

• Do not respond to the email or click on any links.

• If you are unsure about the message, check out your online account or phone
the institution directly without clicking on anything further in the email.
• Report the scam if necessary.

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JOB POSTING SCAMS
Fake job postings often intend to either steal your identity, have you perform illegal work for no
pay, or charge you bogus employment fees with no return. A fake job posting can be recognized
by the following signs:

 Offers considerable pay for little to no effort

 Promises payment in cash only
 Fails to provide a real physical address or contact information
 Phone calls are from foreign phone numbers and/or emails are from unidentified email
addresses
How do I handle a job posting scam?

• Research the company you are considering applying to prior to entering any
information into an application form.
• Trust your instincts. If it seems too good to be true, it probably is!
• Report the scam if necessary.

SOCIAL MEDIA SCAMS

While scrolling through social media feeds, you may come across fake polls/links/apps geared
towards downloading malware on your device, fake messaging or friend requests geared
towards identity theft or obtaining personal information for future scams, or fake crowd
funding requests geared towards stealing money for fake initiatives. Social media platforms
encourage users to share personal information with their contacts, creating a perfect
opportunity for scammers.
How do I protect myself from social media scams?

• Use the security and privacy settings on your social media accounts to control
who can see what information.
• Don’t accept “Friend Requests” or “Follow Requests” from people you don’t
know.
• Report or block suspicious activity.
• Minimize the personal information you share, such as phone numbers,
addresses, work details, children’s school, etc.
• Use a separate email address for social media accounts.
• Do not share your login information with others.
• Avoid participating in games or activities found through social media that require
you to click on additional links or share additional personal details.
• Report the scam if necessary.

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 Protecting Yourself Against Fraud
STEP 1: DETECT FRAUDULENT ACTIVITY
Recognizing what various scams look like and understanding what type of information they
might be trying access is an important part of protecting yourself against fraud. If you’re
unsure, ask a trusted family member or friend for help, and don’t proceed until you’re
confident that it’s safe to do so.

STEP 2: MONITOR YOUR BANK STATEMENTS AND CREDIT SCORE

Many scams try to either steal your money or your identity. If this has happened to you, it will
be reflected on either your bank statements, credit card statements, or credit score. Monitor
these each month and look for unusual charges or unexpected changes.

STEP 3: REPORT FRAUDULENT ACTIVITY

If you believe you have been scammed, follow the 4 steps outlined below.
1. Contact your financial institution immediately. It may be possible to have
charges reversed.
2. Notify Canada’s credit bureaus
▪ Equifax (www.equifax.ca)
▪ Transunion (www.transunion.ca)
3. Contact the Canadian Anti-Fraud Centre (www.antifraudcentre.ca)
4. Contact your local police department to report the fraudulent activity

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 MNO PROGRAMS AND SERVICES

For information about current programs and services provided through the MNO,
please visit the Métis Nation of Ontario website at:

www.metisnation.org

For additional Financial Literacy assistance, please contact the Financial Literacy Coordinator:

Tony Davis
Email: [email protected]
Phone: (705) 527-4962

For more information about programs and services offered through the
Housing and Infrastructure Branch, please contact:

Housing Programs
Email: [email protected]
Phone: (705) 722-5022 ext. 302

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