Financial resilience helps us enjoy greater stability, autonomy and wellbeing. The good news is that even in a challenging economy, enhancing your financial literacy can help you become more resilient and grow your wealth.
The path to financial wellbeing in today's economy is a long and winding road. After an eventful couple of years, many Canadians have watched their pay cheques dwindle, their costs of living soar and their investments fluctuate wildly.
And the bumps may not smooth out any time soon. In June 2022, the annual rate of inflation for the Consumer Price Index (CPI) reached 8.1%, the highest it's been in 40 years. Meanwhile, many economists are predicting a recession for Canada in the first half of 2023, with interest rates predicted to rise as high as 4.25% by the end of the year.
With more challenges on the horizon, financial literacy has never been a more important skill. And there's no better time to get started than November, which is Financial Literacy Month in Canada. This year’s timely theme, "Managing Your Money in a Changing World," is focused on helping Canadians make smart financial decisions in a fast-moving financial marketplace.
Financial literacy is made up of many different skills, including knowing how to budget, save, borrow, and invest. Being able to purchase a home involves all of these skill areas, and home ownership can play a big role in a person's overall financial health.
A recent report found that 61% of Canadians consider real estate to be the best long-term investment, and the data supports this perspective. Canadian house prices have risen almost continuously for 18 years, and while the national MLS® housing price is predicted to decline by an average of 6.2% in 2023, prices will already start to bounce back in the second half of the year: in 2024, they are predicted to rise by 2.1%.
Owning a home can also help to reduce your monthly expenses. Census data shows homeowners spend less of their household income on shelter than renters do: 26.3% of homeowners spend more than 30% of household income on shelter compared to 39.4% of renters.
While home ownership can offer a path to financial stability, it's not always an easy goal to achieve in Metro Vancouver, where real estate is among the most expensive in the world. As of October, 2022, the composite benchmark price for all residential properties in Metro Vancouver was well over a million dollars, and as the population continues to grow, the affordability gap could widen further. It's a problem that affects young people aged 18-34 most, with one-third saying unaffordable home ownership is their top financial issue.
As a developer, icona seeks to create communities that offer the benefits of home ownership options to people at every life stage and income bracket. We do this by working closely with neighbourhood residents and other development stakeholders to ensure icona communities are designed and zoned to give as many people as possible an opportunity to invest in a home.
For example, as part of our corporate responsibility, we explore opportunities such as housing at both market and non-market rates to ensure that people in different life stages and income brackets have more affordable options for home ownership. We are also exploring affordable home ownership programs that support home purchases for people who deliver essential services to the community.
We also work with city planners to effect zoning changes that allow for sustainable housing choices, which helps to relieve some of the pressure on the housing market and keep prices more affordable.
At a time of rising costs and an unpredictable economy, achieving wealth and financial stability isn't easy. The good news is that there are lots of free or low-cost resources available to help you and your family become more financially savvy. Here are some helpful digital tools that can help you make the most of your money.
In a fast-moving housing market, it pays to be an informed buyer or seller. You can find out the assessed value of any property in B.C., plus the amount it sold for during the past three years, on the BC Assessment website. You can also try HouseSigma for in-depth information about for-sale and previously sold properties in B.C., including details about which properties are best for rental investment, which have seen the greatest one-year price growth, which have delivered the highest returns, and more.
For many Canadians, a mortgage is the single greatest source of debt. According to Statistics Canada, the median amount of mortgage debt for Canadian families almost doubled between 1999 and 2016, so it pays to know what you're getting into. The Government of Canada provides valuable information to help you understand your rights as a mortgage holder, including the information on mortgage applications, renewals and prepayments that you have a right to receive.
Your credit score is an important part of your financial health because it determines how much you can borrow and how competitive the interest rate will be on the loan. Yet only 26% of Canadians have checked their score within the past month. You can request a free credit report any time from Equifax or Transunion to make sure your profile is accurate and up to date.
We all yearn to live the fullest life. We want to be able to travel but still save up to buy a home, enjoy going out but still put away enough to send our kids to university and be ready for retirement. And being able to do all those things means finding that sweet spot between being fiscally responsible and spending our hard-earned money on things that bring us joy.
Being financially knowledgeable and savvy is the key to being able to find that balance and what it should be. That balance may look very different for the recent grad getting their first career job, or the couple growing their family, or a person looking to retire. But knowing your balance and how to achieve it can be greatly advanced through a sound understanding of finances and how to manage them. As such, we all have a responsibility to ourselves and our life’s happiness to be as financially literate as possible.
While we can't control the big-picture trends that affect the economy, we can all gain more control over our personal finances by improving our financial literacy. This November, take advantage of the many resources available to strengthen your financial future.