Most of us learn a lot in school—math, economics, science, history—but when it comes to managing money, there’s a surprising gap in our education. Why is it that something as essential as financial knowledge is often left out of school curriculums? Maybe school directors probably think our mathematics knowledge should cover money calculations and management. But the truth is, even Professors of Mathematics can find themselves stuck in managing their finances.

Despite the fact that we get little to no knowledge about finances, we can always learn. There’s no age where you can’t learn about money management. This blog aims to uncover some vital money lessons that you probably didn’t learn in school. Whether you’re just starting to handle your own finances or looking to patch some gaps in your knowledge, the points we will discuss here are foundational to building a secure financial future.

1. How Money Grows

Compound interest is the process where the interest you earn on a sum of money gets added to the principal, and then that new total earns interest as well, leading to your money growing at an increasing rate over time. For example, if you invest $1,000 at an interest rate of 5% per year, not only does your initial investment earn interest, but the interest earns interest too! This can boost your savings or investments, especially if you start early. 

2. Credit Scores

Managing Credit Wisely

Credit scores are crucial in determining your financial health, yet they are seldom emphasized in school education. A credit score affects your ability to borrow money and the interest rates you’ll pay. It’s calculated based on your history of paying bills, the amount of debt you carry, and other financial behaviors. By managing your credit wisely—paying bills on time, keeping credit card balances low, and avoiding unnecessary debt—you can maintain a high credit score. This not only helps in securing loans with favorable terms but also impacts other aspects of your life, like renting an apartment or getting a job. Educating yourself on how credit scores work and how to improve them can save you money and open doors to new financial opportunities.

Understanding Credit Report Details

Your credit report contains the history of your debt payments, the status of each credit account, and instances of applications for new credit. Regularly checking your credit report allows you to verify that all information is accurate and up-to-date. Discrepancies can be disputed, preventing them from negatively affecting your score. Awareness and correction of these details ensure that your credit profile remains healthy, reflecting your actual creditworthiness to potential lenders and employers.

Building Credit from Scratch

For many young adults and newcomers to Canada, building credit is a challenge because they start with no credit history. Starting with secured credit cards, becoming an authorized user on a family member’s card, or using credit-builder loans are some of the ways to start building credit. Each of these options involves demonstrating responsible credit behavior over time, which gradually builds up your credit score.

3. The Reality of Student Loans

Repayment

In Canada, going through student loan repayment starts with understanding your loan terms—like the interest rates and repayment period. Upon graduation, there’s typically a grace period before payments start, which can be a time to plan your financial strategy. It’s important to explore repayment assistance programs, such as the Repayment Assistance Plan (RAP), which can help if you’re facing financial difficulties. By making regular payments, you can avoid accruing additional interest and reduce your principal faster. Also, consider making extra payments whenever possible, as this can reduce the total interest paid over the life of the loan and shorten the repayment period.

Loan Forgiveness Programs

In certain cases, student loans may be partially forgiven, especially for those working in public service or specific professions in need. Canada offers programs that forgive a portion of student loans for eligible individuals, such as doctors and nurses who practice in remote or underserved areas. Knowing about these programs can be beneficial. Researching and applying for any applicable loan forgiveness programs could potentially save thousands in debt and ease the burden of repayment. 

4.Budgeting Isn’t Just for Adults

Creating a personal budget involves tracking your income and expenses to understand where your money goes each month. Start by listing all sources of income, then document all expenses, categorizing them into essentials (like rent and groceries) and non-essentials. This overview allows you to identify areas where you can cut costs and redirect funds towards debt repayment or savings. Regular budget reviews help adjust your spending habits and keep your financial goals on track. Embracing budgeting early can foster lifelong financial responsibility and stability, making it easier to handle larger financial commitments in the future.

5. Investing Isn’t Just for the Rich

Many people believe that investing is only for those with substantial wealth, but this misconception is not addressed enough in schools. Investing can start with small amounts and it is not limited to large amounts of money. For beginners, understanding the basics of investing involves learning about different types of investments such as stocks, bonds, and mutual funds. Starting with low-risk options like savings bonds or mutual funds can be a good way to get accustomed to what investment is all about. Also, using tax-advantaged accounts like a TFSA (Tax-Free Savings Account) or an RRSP (Registered Retirement Savings Plan) can enhance the growth of your investments in Canada. By demystifying investing and making it accessible, everyone can learn to grow their money, contributing to long-term financial security and wealth.

Conclusion

We all know how complex personal finance can be sometimes. It’s something you have to keep learning and understanding as time goes on. Debt management is another topic you need to have deep knowledge about. If you have overwhelming debts and are confused about what to do. There’s help available. You can speak with one of our debt experts at EmpireOne Credit to get tailored advice that will help you get rid of debt. Your debt can be reduced by up to 80%, and interest will stop immediately. Call us at (416) 900-2324 to schedule a free consultation. Being debt-free feels good!