You probably spend money almost every day. But that doesn’t mean you’re necessarily an expert on it.

Good thing that November is Financial Literacy Month—the perfect time to take your financial know-how to the next level. Developing your financial literacy, or the key skills and concepts about how money works, can build your confidence about money-related decisions and boost your financial well-being.

You might be thinking that personal finance concepts don’t apply to you—only to wealthy, established “grownups” who have investments and property. That’s simply not true. If you buy groceries, have a credit card, carry student loan debt, earn a paycheque, or deal with money in any shape or form, then being financially literate is relevant to you.

In fact, you’re probably more financially savvy than you realize. Have you opened a bank account? Written a cheque? Looked at your credit score? If you answered “yes” to any of these questions, then congratulations! You already have some basic financial literacy skills under your belt. Personal finance encompasses not only managing your money, but saving, investing, budgeting, banking, insurance, taxes, mortgages, and retirement. No small load. So how do you sort what financial decisions you need to make and when? Here are a few fundamental skills to build now that will help you figure that out.

Build a budget

Budgeting is part of the foundation of financial literacy. Tracking your earnings and expenses using a spreadsheet or a budget calculator can help you feel more in control of your money and help you live within your means.

When setting up a budget, start by determining your fixed expenses. These are the costs that stay the same each month, like rent and car payments and insurance premiums. Then calculate your essential expenses or the things you need that vary in cost from month to month, like utilities, gas, clothing, and groceries.

Then factor in your income from your salary. If you have an inconsistent income from side hustles or commission-based jobs, this part can be tricky. Get help using a budget calculator to crunch the numbers.

If your budget shows that you have more money going out of your accounts than coming in and you’re relying on credit each month to bridge the gap, it’s time to trim your expenses. A budget can also highlight where you’re overspending, whether it’s on rent, clothes, or dining out.

Put aside emergency savings

An emergency fund is an account with money set aside to cover the unexpected and often costly curve balls that life may throw your way. A flooded basement, car repairs, or getting laid off from your job are all possible situations where you might need to dip into emergency savings. Having extra cash on hand for a rainy day can help you avoid putting unexpected expenses on a credit card and assuming too much debt. That’s why building an emergency fund is a crucial part of financial stability.

Experts recommend that you have enough saved up to cover three to six months of your living expenses. While that might sound like a lot, putting a little bit away each month can make a big difference. The easiest way to begin saving is to pay yourself first, setting aside a fixed amount of money from every paycheque for emergencies. You can even set up a direct debit from each payment to make the process easier.

Manage your debt

Many people have some kind of debt, be it student loans, credit card debt, or a mortgage. Understanding how your interest rates are calculated, how your credit score may impact large purchases like buying a car or a home, and which debts to tackle first can help you avoid digging yourself into a deeper hole.

How you manage your debt makes a huge difference in how quickly you pay it back and become debt-free. For starters:

• Pay your balance on time: Also try to pay your balance in full each month and keep it at least 35% below your available credit limit.
• Set up automatic bill pay: That way, you’ll never miss a payment or be hit with a late fee.
• Pay off high-interest debts first: While it may seem easier to pay off smaller balances first, the debt from the higher rate credit cards will cost you the most over the life of repayment.

Take control of your credit

Establishing a solid credit history makes you better poised to take out an auto loan or qualify for the best rates on a mortgage. These practices can help you maintain and boost your score:

• Build your credit: Using your credit cards regularly helps you build good credit, but don’t max them out.
• Check your credit score: You’re entitled to one free credit report annually from each of the two credit bureaus, Equifax Canada and TransUnion Canada. If there is an error on your report, it could be dragging down your score, so start by disputing it with the credit reporting company.
• Don’t spend more than you can afford: Credit is not “free money.” Only charge planned purchases that you can pay off by the end of the month. That way, you’ll never carry a balance and accrue interest, which can put you in debt.

Invest in your future

Saving for tomorrow can help you reach your long-term financial goals. While plans like retirement may seem far off, the point is to save over time. So you’re not supposed to wait. Heed the following strategies for growing your RRSP right now:

• • Contribute early and often: Take advantage of the power of compound interest. The sooner you start saving, the more time your money has to grow tax-free. If possible, deposit a lump sum at the beginning of the year or make smaller, regular deposits each month.
  • Max it out: By making the largest contribution you can before the RRSP deadline in March, you’re getting the biggest tax deduction possible. For 2020, the RRSP deduction limit is 18% of your earned income, up to a maximum of $27,230.
  • Set it and forget it: You won’t miss money that you don’t have access to day-to-day. Setting up automatic deposits into a separate account decreases the temptation to blow your hard-earned cash.

Ongoing benefits of financial literacy

These steps are a great place to start improving your financial health, but the benefits don’t stop there. Developing financial awareness makes you less vulnerable to common money mistakes and financial fraud that can cause you to lose money.

There’s also a personal impact: Financial literacy skills can also help you level up in your career and relationships. Negotiating for a higher salary, filtering out unsound money advice, or talking to your partner about financial issues are all part of personal finance.

The flip side is that a lack of clarity about money can be a great source of stress. Personal finance isn’t necessarily covered in schools, and your parents may not have taught you about saving, spending, or borrowing.

That’s where these financial literacy resources from the Canadian government come in. Start with the financial literacy self-assessment quiz to figure out what skills you already have, and go from there.

If all of this seems a bit overwhelming, just commit to learning one thing a day—or even a week. Bit by bit, these skills can help you feel more in control of your money and boost your bottom line. Who doesn’t want that?