The short answer? Financial literacy in Canada is improving, but we can do more
Where we are now—How financially literate are Canadians?
Canada scores well compared to its peers, according to surveys by the Organisation for Economic Co-operation and Development (OECD). And over the past 5 years, Canada has made targeted efforts to improve financial literacy. One example is to start teaching it early in schools. The result? A 2018 OECD survey placed Canadian teenagers as second in the world (tied with Finland).
The majority of Canadians do not feel financially knowledgeable
Only 43% of men described themselves as knowledgeable, 31% of women, and only 61% of Canadians could correctly answer five of seven financial knowledge questions (the same OECD survey).
Research shows many Canadians may not have the tools or understanding to improve their financial well-being
According to the Financial Consumer Agency of Canada (FCAC)’s 2019 Canadian Financial Capability Survey, a growing share of Canadians are under increasing financial stress:
35% can’t keep up with bills and payments. About:
Almost one third (31%) believe they have too much debt
29% owe balances on credit cards
Financial literacy is much lower in vulnerable groups
Financial literacy fluctuates significantly. Findings show low-income earners, Indigenous Peoples, newcomers, and those with low educational levels are particularly vulnerable. And men score more highly than women.
So how can we do more?
Can you guess the #1 priority to reducing barriers in the financial system?
Communicate in ways people understand
The FCAC recently released its national 5-year strategy to improving financial literacy in Canada (2021-2026): Make Change that Counts. Under the strategy, the #1 priority for “Reducing barriers” is “Communicate in ways people understand.”
In the FCAC’s “What we heard” report, which collected information and perspectives to evaluate the previous national strategy, the FCAC said:
"nearly all stakeholders emphasized the need for financial institutions, governments and other stakeholders to use better communication, starting with plainer language.”
Writing is at the heart of everything
Writing, and whether it works or doesn’t work, affects so much more than we realize. Read this article to learn the federal plain language guidelines for the financial industry, our analysis of how well they are being applied, and before-and-after examples to show them in action.
What is financial literacy?
Financial literacy means having the skills and knowledge to make informed decisions about managing your money (and using this knowledge to improve your financial well-being and self-trust).
What does it mean to be financially literate?
When you’re financially literate, you understand:
how much you earn and spend
where to put your money to meet your goals (expenses, savings, debt, risk, insuring)
how to research and evaluate loans, credit cards, and investments
What is the FCAC?
The Financial Consumer Agency of Canada (FCAC)'s job is to make sure financial organizations:
comply with federal regulations
do their part to protect consumers
educate consumers about financial products and their rights and responsibilities
Financial literacy is an essential part of being able to deal with unexpected hardships, like the COVID-19 pandemic
In Canada, since the pandemic began:
35% of households who had debt said it increased
37% of households accessed savings to cope with COVID-19
people who say they are short on money at the end of the month increased from 19% to 28%
Data from FCAC’s COVID-19 Financial Well-Being Survey in April and May 2021