Financial literacy: Understanding money – and managing risk

Financial literacy isn’t just about knowing how to budget or invest. It’s about understanding the bigger picture: how money works, how to protect it, and how to make confident decisions that support your goals.

At its core, financial literacy is having the knowledge, skills, and behaviours to make informed choices about your finances. In today’s world, that’s more important than ever.

The financial landscape is complex. Canadians face rising costs, global uncertainty, and an overwhelming number of financial products – from investments and credit options to insurance and tax strategies. Navigating all of this requires more than basic money know-how. It requires a solid understanding of risk.

That’s where insurance and risk management come in. Because while financial literacy teaches you how to grow your wealth, risk management teaches you how to protect it.

The hidden cost of financial stress

Money remains the number one source of stress for Canadians.

According to the 2025 Financial Stress Index from FP Canada, 40% of Canadians say money is what causes the most stress in their lives, and nearly half (48%) lose sleep over financial worries.¹ These concerns often stem from everyday realities: paying bills (37%), saving for retirement (34%), preparing for big purchases (31%), and managing debt (30%).¹

And the effects ripple beyond the wallet. FP Canada found that 55% of respondents say financial stress has a negative emotional impact on their lives, 38% link it to anxiety or depression, and 18% say it affects productivity at work.¹

Behind those numbers is a simple truth: financial uncertainty creates anxiety. But one of the best ways to ease that uncertainty is to be proactive – not just about how you manage your money, but about how you protect it.

Financial literacy includes risk literacy

When most people think of financial literacy, they think of budgets, savings, and investing. But truly comprehensive financial literacy includes an understanding of risk management: the steps you can take to shield your income, assets, and family from the unexpected.

Life doesn’t always go according to plan. Illness, injury, or loss can quickly undo years of progress. Insurance acts as a safeguard, helping ensure those setbacks don’t become financial crises.

That’s why understanding insurance – life, disability, critical illness, or business protection – is a key part of building financial literacy. It helps you answer questions like:

• How would my family manage if my income stopped tomorrow?
• Could my business continue if a key person became ill?
• Do my existing policies still match my needs?
   

Knowing how to protect yourself from risk doesn’t just add stability to your plan. It builds long-term financial confidence.

The role of a financial advisor

Financial literacy grows stronger when you have someone to guide you. A qualified advisor can help you not only understand your finances, but also put strategies in place that work for your goals and comfort level.

A good advisor doesn’t just talk about investments. They look at the whole picture, including budgeting, credit, insurance, and future planning.

Here’s how they can support you:

Personalized planning

An advisor looks at your unique situation, including your goals, dependents, and long-term plans, to create a strategy that balances growth with protection.

Building confidence through education

Financial jargon can be intimidating. Advisors help you make sense of it all, turning complex topics like compound interest, tax deferral, and insurance premiums into clear, actionable steps.

Managing risk with purpose

Insurance isn’t about fear; it’s about foresight. A financial advisor helps you understand how different insurance products fit into your life and how they can help you weather life’s uncertainties while protecting your progress.

Improving your financial well-being

Money stress doesn’t just affect your bank balance. It affects your mental health. FP Canada found that Canadians who work with a financial professional are more likely to feel hopeful about their financial future (60%, compared to 48% for those without an advisor).

Putting it all together: The foundation of a confident future

Being financially literate means more than understanding numbers. It means knowing how each decision, from how you save to how you safeguard your future, connects.

It means recognizing that:

• A well-structured budget keeps you on track today.
• Smart investing builds your wealth for tomorrow.
• And thoughtful insurance planning protects it all along the way.
   

We believe financial literacy and risk literacy go hand in hand. Our role is to help you understand where insurance fits into your broader financial plan – not as a product, but as a partnership that evolves as your life does.

If you’re ready to strengthen your financial literacy and gain confidence in the strategies that protect what matters most, we’re here to help.