Why it’s time for Canada to improve its level of financial literacy

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There is no doubt that Canadians are concerned about the rising cost of living and increasingly insecure about their financial future. Nanos’ most recent opinion poll found that Canadians’ top concerns are inflation, the economy and the cost of housing. Governments and industry must address these issues.

That’s why an engaging and responsive financial education ecosystem is essential for Canadians to navigate their financial future.

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In these difficult times, we are constantly considering how to improve Canadians’ knowledge and awareness of all the options and opportunities available to make their paychecks go further and improve their financial decision-making skills to ensure they have more success and financial security in the long term. Knowledge is power and Canadians must be equipped to navigate these uncertain times.

November is Financial Literacy Month and financial industry leaders in government and the private sector should take stock of Canadians’ financial concerns and consider what more can be done in the short and long term. We are doing well, but there are some important gaps that need to be addressed. And the federal government, through the The Financial Consumer Agency of Canada (FCAC), which oversees the country’s financial education architecture, needs to take greater leadership.

There appears to be a strong correlation between financial education and economic success. Denmark, often near the top of global rankings for financial literacy and other metrics related to income and living standards, has embedded financial literacy in its school system, requiring it to be taught from seventh to ninth grade. Canada could do the same.

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The public and private costs of being illiterate in the current financial climate are staggering to consider and the impacts and risks go far beyond financial, healthcare and economic pressures. It is important that Canada strives to become a global leader in financial education, providing dynamic, up-to-date and detailed information related to housing, financial technologies and product information to all Canadians.

Fortunately, Canada legislatively has a financial education framework. FCAC first helped launch the month-long literacy awareness campaign in 2011. Over the past decade, the agency has helped create dozens of valuable programs and toolkits for Canadians, which are implemented by hundreds of organizations throughout the country.

But the financial services landscape is constantly changing and evolving, and there is more work to be done to fully equip Canadians of all ages and stages of life with the tools they need to make sound financial decisions. New financial services providers, online platforms, technology-driven products and rapid regulatory changes have contributed to the ongoing need to ensure that no Canadian is left behind.

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This makes financial education a complex and multifaceted issue that affects people differently and requires personalized information and services. This is becoming an even more pronounced need in the new interest rate environment, making one-size-fits-all solutions even less effective.

Financial education must be actively delivered in multiple formats to help Canadians do more than simply budget and manage debt. In 2023, financial education should also include education on complex risk environments, artificial intelligence, emerging investment opportunities, regulated and unregulated service providers, and the risks related to each. The best financial education frameworks should also ensure that products and services are easy to understand from the average person’s point of view and more transparent about data usage, services offered and fees.

Similarly, ensuring Canadians have access and visibility to all available options is critical to avoiding options that may cause them more harm, stress or risk in the long term.

While there are more financial education resources available than ever, these resources can be difficult to find and difficult to evaluate. Industry-driven education is an important part of the mix, but government-delivered education will be even more effective and efficient in reaching more Canadians, especially the most vulnerable. We believe there is scope for the FCAC to take greater leadership and the organization should be supported to do so. The FCAC can improve its work with the financial industry by doing more co-design, promotion and delivery of objective and timely financial education information and programs to all Canadians, rather than rather than relying primarily on industry and non-profit distribution.

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Exposure to and access to timely and objective knowledge, tools and supports have never been more important for Canadians. It’s time to step up our efforts as a country to ensure our collective financial future is bright.

Tanya Woods is head of government and regulatory affairs and policy advisor at Questrade

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