Are we financially literate?

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?

Reading on, I noticed that “The self-assessment portion of the survey showed that Canadians had a strong understanding of key financial concepts such as interest paid on loans, risk and return, and the definition of inflation.” Two things struck me…

  1. Self-assessment isn’t necessarily objective. Haven’t we all tried to present ourselves in the best light at one time or another? Perhaps this incongruence between the reports is a case of actions speaking louder than words, as my grandma used to say.
  2. We can understand concepts and be able to explain them without translating our knowledge into practice. There is often a big disconnect between head knowledge and what we actually do. Just think of how many people you’ve heard say, ” I know I shouldn’t eat this brownie, but oh well…

Head knowledge is not enough.

Translating understanding into action requires more than just what we know in our head. It requires us to be connected to our sense of inner knowing about what is our right action based on what’s important to us. Being in touch with our values is a crucial component of decision-making in a consumer culture because there are so many pretty things and shiny new objects to attract our attention and our money. Even more tricky is the fact that we can buy immediately because of our easy access to credit.

Overconsumption is built into the consumer culture.

The story of the culture is based on beliefs that “big is better” and “more is best.” Many people buy into the story with no discernment as to whether that viewpoint is in alignment with their values.

As a result, we see excess everywhere. Thrift stores in North America are full of items that were bought and never used. People put a lot of money into conspicuous consumption, buying flashy status symbols as evidence of their worthiness. The debt load is excruciatingly high as people fund their consumption with credit on which they are paying shocking amounts of interest.

Debt load

Not only does over-consumption put us in debt, the stress it causes is bad for our health. Beyond the mental and emotional stress of carrying a high debt load, there’s the effort it takes to maintain and manage all the stuff.

Befriending ourselves is our best defence.

We will fare best in the consumer culture if we learn to tap into our deep inner knowing. Not what we know in our head, but that felt sense of knowing it in your bones, or having a gut feeling. You may hear someone say, “It just doesn’t sit right with me.” This kind of awareness is an indispensable complement to our mental thoughts and understandings.

This inner knowing is what connects us to the bigger picture of the life we want to live. It’s what keeps us from being distracted by shiny baubles and smooth sales pitches. And this is what will ultimately lead to happy and satisfying lives.

Simplify and Civilize Your Food Shopping

Last week I wrote about dealing with too much information when researching health issues online. Unfortunately, for those of us living in a consumer-oriented culture, the Internet is not the only place where we have to deal with too much to choose from. Think supermarkets. Finding good food and not being distracted by everything else is challenging.

Overconsumption is not an accident… 

Overconsumption is built into the consumer culture, where the story is based on beliefs that “big is better” and “more is best.” Many people buy into that viewpoint with no discernment as to whether it’s in alignment with their values.

Overconsumption, literally, is a major concern with regard to our eating habits. Eating too much and eating the wrong things can cause chronic complex conditions that are debilitating for the person and a major cost to the health care system.

Being aware of our tendencies and habits is useful in helping us manage ourselves, our spending, and our appetite. Self-awareness is a huge asset, and one worth cultivating. to counterbalance  the mindless consumption encouraged by the consumer culture and most  players in it.

Understanding the playing field…

One of our best defences is understanding the forces at play in the consumer culture. When we are informed and aware, It’s easier to navigate the system without being consumed by it.

Checkout at a mega-supermarket

In the world of business as it is widely practised, making a profit is the only point of the game. Everything is geared toward generating that profit. This means inducing consumers to buy—preferably more than they planned to.

That’s the basis of the super-store concept. And it’s why retailers offer “two-for” or “three-for” deals: they want you to buy two or three of an item rather than just one. Most of us do, in an automatic psychological response to the thought of getting a deal.

Supermarkets are arranged to encourage impulse buys. Music is upbeat to put you in a good mood, but slow enough so you’ll have time to see the items you pass. None of this happens by accident. According to Marion Nestle, author of  What to Eat:

…breathtaking amounts of research have gone into designing these places. There are precise reasons why milk is at the back of the store and the center aisles are so long. You are forced to go past thousands of other products on your way to get what you need…. The stores create demand by putting some products where you cannot miss them. These are often “junk” foods full of cheap, shelf-stable ingredients like hydrogenated oils and corn sweeteners, made and promoted by giant food companies that can afford slotting fees [money paid by the manufacturer to “rent” prime shelf space in the store]… and advertising. This is why entire aisles of prime supermarket real estate are devoted to soft drinks, salty snacks, and sweetened breakfast cereals, and why you can always find candy near the cash registers. Any new product that comes into a store must come with guaranteed advertising, coupons, discounts, slotting fees, and other such incentives.

These merchandising strategies expose us to a large proportion of the 30,000 to 40,000 items supermarkets carry. Most of the “food products” in a supermarket would not qualify as food by any reasonable definition. Yet the fact they are referred to as food and are sold in a food store soothes our critical minds and makes us overlook the fact that a powdered drink is nowhere comparable to the fruit it is imitating, except perhaps in colour.

Coping with too much choice…

How does exposure to 30,000 items affect us when we shop? As Barry Schwartz found when he studied the paradox of choice, sometimes our eyes glaze over, we cave in, and buy whatever. Other times we become paralyzed with indecision in the face of overwhelming choice.

Neither caving in nor becoming paralyzed is a constructive response. However, a conscious consumer can beat them at their game. Here are my suggestions for making food shopping a more satisfying experience.

Farmer's Market

My strategies to simplify and civilize food shopping… 

  1. Buy as much local produce as you can at the farmers’ market and go to a small supermarket for the remainder of your grocery list. You don’t need anywhere near 30,000 grocery items, and it’s tiring to sort through the clutter of things that don’t serve you.
  2. Shop the perimeter when you are in a  supermarket. That’s where the basics are, so this strategy allows you to deliberately skip the middle aisles where impulse items and packaged foods are shelved. I learned this early on, when I was shopping for an additive-free diet for my hyperactive child.
  3. Decide on brands you like and stick with them until they no longer work for you. Browsing and “trying new things” is an expensive proposition and usually results in half-used packages cluttering your shelves and your conscience because you can’t bear to waste money by throwing them out. It’s much simpler to purchase judiciously in the first place.
  4. Buy basic ingredients that can be made into many things, instead of purchasing specialty items and packaged mixes. When you have flour, baking powder, milk and eggs, you can make pancakes. No need for a special bag of pancake mix. (Look at the label sometime—there’s not much in a bag of pancake mix besides flour.) If you add butter and sugar to those four basic ingredients, you can also bake cakes, cookies, breads, and scones. With olive oil, vinegar, and a few herbs in your cupboard, you can declutter your fridge because you won’t need to buy a never-ending array of prepared salad dressings. No doubt about it, keeping your cupboard stocked with a few staple ingredients makes shopping and food management so much simpler…and less expensive.

Conscious choice is the deliberate act of deciding between two or more possibilities, choosing with full awareness. The opposite is allowing chance to determine what happens. In the world of food shopping, there are many others who are happy to direct your attention and influence your choices if you are not on the job.

By consciously making food shopping choices that fit with your values and viewpoints, you’ll be navigating the consumer culture on your terms. That’s much more satisfying than allowing those with vested interests to determine what you buy.

Reference chapter: “Spending Consciously” from Conscious Spending. Conscious Life.