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Financial Literacy

Financial literacy is vital to maintaining financial health and awareness.

Some aspects of financial literacy are common, while others are more unfamiliar.

To help you with money management, we’ve taken the time to summarize five key components to understanding your finances.


Make a budget to help you determine where your money is being spent. This increases your financial literacy by drawing awareness to your spending habits and helps you feel more in control.

Major life events like: getting married, having a baby or buying a home force you to create a budget.

But day-to-day costs of living and lifestyle also require a budget—this type of budget is where many people struggle.

Small purchases like coffee, eating out or even buying the latest gadgets can chip away at your finances without you knowing.

Setting a budget helps you increase your financial literacy and keeps you accountable when you want to make these types of purchases, helping you live within your means.

Learn more on how to create a budget in our blog Debt Anxiety and Recovery.

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Debt Management

One of the key components of financial literacy is managing your debt.

A budget helps determine how much you should spend and what you should spend it on.

Debt management helps determine whether you are borrowing money for good debt or bad debt.

So, what’s the difference between good and bad debt?

According to the Government of Canada website, “good debt is an investment in something that creates value or produces more wealth in the long run.”

For example, paying off student loans or a home renovation loan (which could increase the value of your property) is viewed as good debt.

“Bad debt is borrowing to buy something that goes down in value or that you can’t repay on time and in full, thus incurring interest charges and more debt,” says the Government of Canada website.

If you borrow money for a vacation, or treat yourself to an expensive dinner that you are not able to fully repay within that month’s billing cycle, you are acquiring bad debt.

Credit Score

A credit score and how to keep it in good standing is essential to your financial literacy.

Scores between 660-724 are regarded as good and the minimum range you should keep your rating within.

Ensuring your credit score is maintained in this range, or higher, will help you borrow money or apply for credit.

It will determine how much you qualify for and is one of the factors in helping lenders decide whether they consider you a high-risk or low-risk applicant. 

For more information, check out What is a Credit Score?


Financial literacy also means paying all your bills on time and putting money away in your savings.

When you use credit for your purchases that you can’t pay back quickly, you are damaging your financial health.

First, pay your living expenses and immediately after that put money away in your savings.

In today’s terms, you can look at it as paying yourself. Doing this will allow you to make purchases without paying interest on them. 

Savings can also give you a financial cushion if you are ever faced with a job loss or other life emergency. Having money to fall back on will provide you with financial and mental security.

Fraud Protection

Protecting yourself from fraud is another component of financial literacy.

Changing the passwords to your account frequently will help prevent hackers from accessing your funds and information. Adding two-factor authentication to all your accounts as an added layer of protection/verification is also highly recommended.

While changing your password may seem standard, checking your accounts on a public wifi might not be the first thing that comes to mind when it comes to fraud protection.

If you check your bank accounts on a public wifi you are leaving yourself vulnerable to a potential data breach.

Free wifi is great for surfing the web, but be mindful of when you need to access accounts with your confidential information attached to them.

Another good best practice for fraud protection is pulling your credit report once a year.

You can request your report from any Canadian credit reporting bureau as many times as you want without it affecting your score, but you can only get one for free every 12-months. Otherwise, you have to pay to have your report sent to you.

Alternatively, you can also set up a consultation with EP Climb Credit and our credit coaches can go through your credit report with you.

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