Are we doing a good job of helping Canadians be financially literate?
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).
Canadians may not have the 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
1 in 6 (17%) say their monthly spending exceeds their income
1 in 4 (27%) say they borrow to buy food or pay for daily expenses
Almost a 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 way to reduce barriers in the financial system? Communicate so 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.