November. Financial literacy month in Canada. The time when we are officially reminded of information and strategies we can use to improve our financial health.
Financial literacy refers to the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources. It’s a term that was introduced fairly recently, when governments began to focus on the need for consumer education in this area.
A recent newsletter from the Financial Consumer Agency of Canada reports that Canada is near the top of the charts for financial literacy in a global survey published in spring 2017 by the Organisation for Economic Co-operation and Development (OECD).
Canada tied for second worldwide…in the financial literacy component of the Programme for International Student Assessment, a global survey of 15-year-olds.
This report was followed by… [one] on adult financial literacy… [in which] Canadian adults…tied for second with Norway.
As a Canadian, I was feeling proud… and perhaps even a bit smug. Then I remembered a Statistics Canada report, also from last spring, telling us that the debt-to-income ratio of Canadians was at an all-time high of 167%. This means we owed $1.67 for every $1 of disposable income. The fact that Canadians have a lot more debt than income seems at odds with the assertion that we have high levels of financial literacy. How can this be? Continue reading