As Financial Literacy Month comes to a close there’s always a debate: how much do Canadians really know about their money? Quite a bit, if we do say so ourselves – 97 per cent of respondents give themselves a passing grade when it comes to their level of financial literacy, according to a report from BMO. So, it appears we’re on the right track, right?
However, that’s up from only 56 per cent of those surveyed last year – so why the huge increase? Part of it can be chalked up to tough financial times; 2015 has been pretty rough for the Canadian economy, which prompted 64 per cent of Canadians to become more educated about their finances. That’s a good start, but knowing what’s going on with the markets might not be enough to give you a passing grade.
Understanding Financial Concepts
Financial literacy is so much more than just having some financial knowledge. It’s important to develop good financial behaviours and attitudes while adapting to changes in technology.
“As Canadians are faced with difficult financial decisions, almost on a daily basis, the landscape is continually evolving, for example the changes in mobile banking and digital wallet, the learning curve continues to steepen” says Kelly Harper, director of Brand Customer Learning at BMO Financial Group. “It’s important that Canadians are equipped with the knowledge, confidence and resources to make responsible financial decisions at every stage of their life.”
There’s no doubt that the growing access to information has helped educate Canadians, but there are many concepts that we could improve on. The study showed that only 53 per cent of Canadians have a budget in place; budgets help develop good money management skills so it’s important to put one in place if you don’t already have one.
A few other financial concepts you want to make sure you understand include: how interest rates affect your payments, the importance of having an emergency fund, and why you need to make your credit card payments on time and in full every month.
Also read: How to Save a Six-Month Emergency Fund>
Talking to Your Kids About Money
The BMO study also shows that one-quarter (24 per cent) of Canadians do not feel comfortable talking to their kids about money, while another 28% say they don’t feel like they have the resources to educate their children when it comes to money.
According to Robin Taub, a financial literacy consultant and best-selling author, it’s the teachable moments that present an opportunity to build money lessons into your daily life.
“Take young kids with you to the ATM machine and explain that you can only take money out if you make money to put in first – like a piggy bank. You can also talk to older kids about how debit and credit cards work and how they’re different” says Taub. “Make sure any information you share is age appropriate. Your nine year old does not need to understand TFSAs!”
Also read: Mom, Do You Make More Than Dad?>
A Year-Long Commitment
It doesn’t matter if we give ourselves an F or an A when it comes to financial literacy, we should all strive for a better financial well being. Just because financial literacy month is ending, it doesn’t mean we should stop learning more about our money.