Financial literacy research: Canada is leading the way
June 19, 2019
By Bruno Lévesque, Director of Education, Research and Policy, Financial Consumer Agency of Canada
Canada is a world leader in financial literacy research.
As Chair of our National Research Committee on Financial Literacy, I’m proud of what we’ve accomplished. Not only are we helping individuals and families here at home, but we’re connecting with colleagues worldwide and having an impact globally.
It’s only recently that financial literacy research has begun to emerge from related disciplines into its own field of study.
We in Canada are at the forefront of this field, and I’m excited to tell you about our latest work.
Research symposium shows collaboration is key
In November, we co-hosted the 2018 National Research Symposium on Financial Literacy with Behavioural Economics in Action at Rotman (BEAR).
We brought together distinguished researchers and practitioners from Canada and around the world. They came from diverse fields and shared their work, as well as insights into how research can inform real-world practices.
Centred on the theme, “Using Research to Improve the Financial Well-being of Canadians,” this gathering reflected the growing recognition that research has the power to make a difference in everyday lives.
We have just published our report on the symposium, which you can find here. It presents the key ideas and takeaways, while shining a light on new research.
For example, it details how financial vulnerability is increasingly an issue for middle class people carrying high debt loads. As a result, we are seeing an increase in financial stress for many Canadians. We also heard how financial stress affects people’s cognitive abilities and makes it difficult for many Canadians to make informed decisions about their money.
The report also highlights research on financial well-being. Interestingly, we found a similarity across a number of countries: People who are active savers also have higher levels of financial resilience, as well as higher levels of overall financial well-being.
Throughout the symposium, we saw researchers pushing the boundaries of what is known in financial literacy—for the better. We also saw a continued strengthening of the relationship between research and financial interventions in the marketplace.
In other words, we’re putting research into practice.
Changing budgeting behaviours
At FCAC, an example of putting research into practice is our work on budgeting. Through the Canadian Financial Capability Survey (CFCS), a national survey that we carry out every 5 years, we’ve learned that many Canadians do not have a budget. But when Canadians do have a budget they tend to stick to it.
In 2016, we led a pilot study in British Columbia and Newfoundland and Labrador. During the pilot, individuals received financial education messages through an app on their mobile devices. Our goal was to empower non-budgeters to make and follow a budget.
It was successful: 14% of non-budgeters began using a budget.
In 2018, we did a follow-up to assess the long-term impact of the pilot. We found the majority of people were still budgeting more than 18 months after the initial pilot and these people markedly outperformed those who did not adopt budgeting behaviours—including keeping up with their financial commitments better, reducing spending, and relying on credit less often than non-budgeters.
We presented preliminary findings from this longitudinal budgeting study at the symposium and have just published a full report on the research, which you can find here.
Taking research to the next level
We are making significant inroads, but there is so much more to accomplish.
This year, we are back in the field collecting more data for the next iteration of the CFCS and I look forward to sharing the results with you.
In the meantime, I encourage all of you who are interested in financial literacy research to join us in this effort—regardless of your discipline. Take your ongoing research to new levels, share your ideas for new studies, and tell us what has worked in Canada and around the world.
Let’s keep the momentum going!
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