Are Canadians Financially Literate?

Do you consider yourself financially literate? Have you even been formally taught about personal finances?

Calculating money

As of late, this has been a recurring topic in the media and on personal finance blogs. Many believe our Canadian education system may not be doing enough to make students financially literate. And it’s hard to make good financial decisions when we don’t really understand how money works.

Most provinces have financial literacy content and courses as part of their curriculums. I went looking for Ontario’s Financial Literacy Education documents and found them to be quite comprehensive. From grades 4 through 12, today’s students have the chance to study most, if not all concepts needed to become financially literate. These concepts are integrated into various subjects such as Math and social studies, and are front and centre in many business, accounting and entrepreneurship high school courses.

Could there be more? Most likely. Should we make more financial literacy courses mandatory? Absolutely. But the fundamentals are there.

I think today’s financial literacy problem is related to financial maturity more so than lack of education. At a young age, we learn how to count and what our coins look like. We move onto more complex Mathematics, learning about percentages and interest, eventually learning about rates of return and filing income taxes. But are we really mature enough as children and teenagers to understand how this will eventually apply to us in real life?

Most adults know the right answers when it comes to making good financial decisions. We know spending more than we make is a bad decision. We know we should be paying our bills on time. If we take the time to stop and think, we realize the big screen TV isn’t really a need. We have the tools to make good decisions.

What we often lack is the awareness that there’s a problem in the first place. As a society, the focus is on the here and now, having what we want, when we want it. All it takes is signing on the dotted line and we’ll deal with the consequences later.

Maybe it’s time to relearn some fundamentals. Spend less than you make. Save for retirement. Don’t buy what you can’t afford. Credit cards and lines of credit are not income. Avoid debt. Have a plan.

Once we realize these fundamentals are true and necessary, we can stop burying our heads in the sand and take charge of our financial situation. Yes, bad luck happens. Yes, sometimes things are out of our control. But most of the time, we created the mess we’re in. We chose to max out our credit cards, take out a line of credit and buy that new car. We’re not victims – we’re facing the consequences of our actions.

Once we can own up to our bad financial behaviour, we can start to make good decisions. We can make a plan for a better, richer life now and later. We can take back control of our finances and our lives. Only then will those high school lessons begin to make sense.