Should I Save in CAD or USD
Money Africa
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Friday letters are usually dedicated to taking questions from our community. Do you have a question for us? Please feel free to?
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Question
I currently earn in CAD (Canadian Dollars). Does the falling or rising of the dollar have any effect on me? My earnings are usually converted to USD (US Dollars) because my domiciliary account is in USD. It's also easier for me to get USD than CAD here.
Answer
From your question, we can assume that:
To determine whether it’s safe to save in currency A or convert to currency B, one needs to know the value of each. It is advisable to save in the one with a higher value.?
In this case, as of writing, the USD is valued higher than the CAD, when compared to the naira. The official rate is currently 1 USD = N442, while 1 CAD = N331. (Please note that these figures are subject to change). This means that the USD is worth more in naira than the CAD. For as long as this remains, you are therefore better positioned to save in USD.
As regards your naira expenses, it appears your CAD salary is converted to USD and then converted to naira. In this case, some money would be eroded from the double conversion. If there’s an avenue for you to convert your CAD directly to naira, then this is a preferred route to cover your naira expenses.?
In summary, it is advisable for you to seek an avenue to create a bank account that is quoted in CAD. This way, your salary will be paid in its raw form as CAD. You can then convert whatever portion you please individually to USD and naira.
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Question
First, I love your newsletters.?
I currently feel like a "finance illiterate". Whenever I listen to or read money conversations, I get lost. I would like to understand money better. How do I build my financial literacy?
Answer
Thank you for the feedback.?
People often believe the myth that only finance professionals can be financially literate. As long as one can read, write and comprehend, you are capable of being financially literate. As simple as this sounds, being financially literate actually takes effort and a decision to become one.?
You can improve your financial literacy by feeding your mind with books, podcasts and other resources that would improve your understanding of how money works. While doing so, you might come across words that you don’t understand, which will improve your learning process as you check those words out on the internet. You also need to stay in the loop of what’s happening in finance. This could be by subscribing to useful newsletters, making use of news apps, etc. In three months of doing this, there’ll definitely be a noticeable improvement in your finance vocabulary and literacy.
Some useful books to improve your financial literacy are:
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