In Canada, most young people are not getting the financial literacy training they need and are ill-equipped to make their way in the modern financial world. We need to teach them how to earn, save, invest, spend, borrow, give, lend and generally manage money effectively.
Learning these basic economic principles will help our youth make better personal financial decisions and help them as citizens to understand and make better choices about critical issues facing the nation.
10 reasons why Canada’s Youth Has Poor Financial Literacy
This can be linked to financial literacy rarely being taught in the home or schools:
- New Canadians may have language barriers to overcome or come from countries where there is little confidence in the financial system.
- Canadians living in rural or remote communities may have limited access to financial information and advice.
- Many parents lack confidence about discussing money if they are struggling financially themselves and may fear saying the wrong thing.
- Parents are spending much more money on children these days than in past generations.
- The internet, cell phones, better TV, high quality entertainment and conveniences, so they aren’t exposed to sensible financial choices, just endless consumerism.
- Nearly all Canadian adults agree that personal finances should be taught in schools but many teachers, understandably, do not feel qualified to teach about personal finances.
- Without proper support in place, young people may be learning wrong messages about money from advertising, popular culture, social media, and their peers.
- They may believe that appearances are more important than financial stability, falling into the “buy now and pay later” trap in order to impress people that they, often, will never meet.
- With a poor inclination to save, many end up with rising debt and debt problems. They often learn the hard way when living out on their own.
- Part-time jobs help young workers to learn the value of money, allowing them to develop discretionary spending habits before having to contribute to household expenses as an adult.
Doing more to raise awareness
Recognizing the need to strengthen financial literacy for Canadians, the federal government began discussing new initiatives in 2005 and in 2007, the Financial Consumer Agency of Canada’s (FCAC) mandate was expanded to include financial literacy and develop financial literacy for youth. A National Task Force on Financial Literacy was also created through the 2009 federal budget and the FCAC now has a $3 million annual budget.
A public awareness campaign for greater financial literacy, including the establishment of each November as Financial Literacy Month in Canada and a National Steering Committee on Financial Literacy being created in 2014 to promote a national strategy and the coordination of financial literacy programs.
Financial literacy information and programs are being offered through private and non-profit organizations such as the Financial Literacy Action Group (FLAG), which is a major coalition made up of several non-profit organizations that teach financial skills.
One of these organizations, Junior Achievement Worldwide, is the largest non-profit organization in the world that is dedicated to educating young people about business, economics, and entrepreneurship. This is achieved through volunteers who visit the classroom, host learning forums, or provide information for new business startups.
Since 2013, the Canadian Foundation for Economic Education has also organized an annual “Talk With Our Kids About Money Day,” which is funded by BMO Financial Group.
On the right track, but still much more to do
While many programs are available, financial literacy efforts are currently somewhat disjointed and the provincial governments have not altered the curriculum to make financial education a requirement. Any literary topics are at the teacher’s discretion, but to help them, the FCAC website established a resource database of financial literacy programs in 2014.
Canada’s efforts in improving financial literacy for all citizens, including young people, are still in its beginning stages through the FCAC – perhaps we should look to the U.K as a model. Since September 2014, U.K. students learn about the functions and uses of money, the importance of personal budgeting, interest, money management and a range of financial products and services, from the ages of 11-14. At ages 14-16, they learn about wages, taxes, credit, debt, financial risk and a range of financial products and services.
Need help with your own financial situation? Call Harris & Partners
At Harris & Partners, Trustee in Bankruptcy for over 50 years, we assist Canadians needing help with credit counselling and debt solutions. We subscribe to the view that if we help our youth today then we’ll avert greater need for consumer proposals and bankruptcy in the future. If you need more information, contact our licensed insolvency trustees at Harris & Partners in Toronto or one of our nine other Ontario offices. Our head office is located in Markham.