Financial Literacy Newsletter – October 2021

Building financial resilience in an increasingly digital world

A few words from FCAC

The Financial Consumer Agency of Canada (FCAC) is proud to be a leader in financial literacy. FCAC recently released Make Change that Counts: National Financial Literacy Strategy. This renewed National Strategy sets out a bold vision: A Canada where everyone can build financial resilience in an increasingly digital world. Helping every Canadian better cope with predictable or unpredictable financial shocks, and to recover from and overcome negative financial events is timely given the current global Covid-19 pandemic.

In this newsletter, we will provide you with helpful advice on how to build your financial resilience using five key building blocks identified within the National Strategy. You will also discover tips from ABC Life Literacy Canada on how to acquire the necessary digital literacy skills to manage your money effectively and safely.

FCAC, and other federal partners and organizations, also offer a wide range of tools and information in this area. These resources will help you better navigate the increasingly complex and digital financial marketplace. For instance, many Canadians wonder if their money deposited with a Canadian financial institution is protected in the event that the bank fails. An article from the Canada Deposit Insurance Corporation will answer this important question. Or perhaps you are considering banking online – what are the benefits and how can you protect yourself?

You will also be introduced to Danika and Valentina: two young women who developed a board game that won first prize in the national My Money, My Future Challenge. Breadwinner is an innovative board game that aims to help young Canadians improve their financial literacy and strengthen their financial resilience.

The crisis caused by the global COVID 19 pandemic has made it clear that financial vulnerability can affect anyone, regardless of income, background or education level. Financial stress can impact your mental health and overall wellbeing. CPA Canada shares some tips on having healthy money conversations with friends and family. Addressing this money taboo and decreasing your financial stress can be a key contributor to increasing your financial resilience.

We hope that the worst of the pandemic is now behind us. However, its negative effects on the personal finances of Canadians may still be felt. We encourage you to continue to build your financial resilience by checking out FCAC’s financial tools and calculators, the helpful content on the COVID-19: Managing financial health in challenging times webpage and the list of resources and events in the Canadian Financial Literacy Database.

Are any of the articles in this newsletter relevant to you? Feel free to share them with your network. Follow us on social media, on Facebook, Twitter, and Instagram. We are also on YouTube and LinkedIn.

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What’s new

• The Office of Consumer Affairs launched its new Consumer Hub resource finder, a portal designed to help consumers make informed decisions in the marketplace. You can find consumer information and complaint processes for the transportation, financial services and telecommunications and broadcasting sectors.
• The Department of Finance published the Financial Consumer Protection Framework Regulations on August 18, 2021. This framework, which comes into effect June 30, 2022, brings together 60 new or enhanced measures to further empower and protect consumers in their dealings with their banks.
• Innovation, Science and Economic Development Canada (ISED) recently announced phase two of its Connecting Families initiative, providing internet access to more low-income families and seniors. Eligible families can get faster internet access for $20 a month.
• Employment and Social Development Canada (ESDC) extended the doubling of Canada Student Grants for two years. The maximum amount available will be up to $6,000 until July 31, 2023
• Did you know that 84% of mortgage consumers are confident that they will be able to make future mortgage payments? This is just one of the findings from the Canada Mortgage and Housing Corporation’s latest Mortgage Consumer Survey.
• The Bank of Canada Museum published a blog post on how the economies in classic and modern video games can teach us about decision making and financial literacy.

Ways to help build financial resilience

By: Financial Consumer Agency of Canada

Financial resilience is the ability to adapt or persevere through both predictable and unpredictable financial choices, difficulties, and shocks in life. Building your financial resilience may sound scary or difficult to some. However, it’s within everyone’s reach. It’s as simple as taking one step at a time and using tools and resources to help you along the way.

The renewed National Financial Literacy Strategy supports better financial outcomes for Canadians through changes in the financial literacy ecosystem—either by removing barriers or catalyzing action—that will help Canadians strengthen their financial literacy and, ultimately, their financial resilience. The National Strategy is about making financial decisions a little less overwhelming for financial consumers in Canada.

The renewed National Strategy identifies 5 key consumer building blocks that have been proven to help consumers develop the skills, capacity, and behaviours that lead to financial resilience. These building blocks are relevant to everyone, regardless of income, personal background or circumstances.

Consumer building blocks

1. Developing skills to navigate the financial marketplace

For many Canadians, navigating the financial landscape remains a challenge due to the growing complexity of financial products and services, the number of choices and players, and the increasing role of financial technology and digital product offerings. Therefore, it is important to:

• do your research to understand the types of financial products and services available to you,
• shop around for the products that best meet your needs, and
• learn how to safeguard your personal and financial information.

FCAC’s website offers useful tools and resources on a wide range of financial products and services to help you choose the bank account and credit card that best suit your needs or understand your rights and responsibilities when dealing with a federally regulated financial institution.

2. Developing the capacity to build just-in-time financial knowledge and confidence

Having the right information about financial products and services when you need it can help you make informed choices with confidence. For example, if you want to buy a home in Canada, take the time to research a variety of unbiased and fact-based information sources or consult a trusted advisor to learn more about mortgage terms, amortization and prepayment penalties.

3. Manage your expenses

Research shows that managing day-to-day expenses is a key to successful money management. Effective budgeting helps you live within your means and contributes to increased feelings of control and decreased stress. People who understand their financial situation, follow a spending plan, and actively track their money are more likely to keep up with their expenses, reach their financial goals, and build financial resilience.

4. Manage your debts

Whether you’re dealing with credit card debt, car loans, student loans, lines of credit, payday loans or a mortgage, you should have a realistic plan for paying off your debts. The total long-term cost of these debts due to compound interest and fees can be very high.

5. Manage your savings

The pandemic has certainly put a strain on many Canadians’ finances. However, when you can, it is important to save for short- and long-term goals, such as unexpected events, education, leisure and retirement. Savings that can be used for “emergency” expenses directly improve financial resilience.

You’re not in this alone! Financial consumers are only part of the solution to achieve the vision of the National Strategy - a Canada where everyone can build financial resilience. The National Strategy calls upon the stakeholders in the financial literacy ecosystem to reduce barriers and drive change in the financial marketplace to enable consumers to achieve financial resilience.

As one of the ecosystem stakeholders, FCAC is committed to leading by example in tailoring financial literacy content, programs, communications, and experimental interventions to meet the needs of diverse population groups. FCAC will continue to conduct research and analysis to identify and understand diverse needs of Canadians and collaborate with other ecosystem stakeholders to test and develop resources to serve all financial consumers.

Bringing financial education into family game night

By: Financial Consumer Agency of Canada

Danika Hindson and Valentina Mounzer, two Grade 12 students from Canterbury Arts High School in Ottawa, have come up with an innovative way to help young Canadians improve their financial knowledge and skills—in other words, a way to have fun while learning.

Their project, called “Breadwinner”, is a board game that won the first prize in the My Money, My Future: Canadian Financial Education Challenge organized for high school students across Canada by the Canadian Foundation for Economic Education with the support of CIBC.

About Breadwinner

Danika: Breadwinner is a bakery-themed financial board game. It incorporates both simple and complex topics. It is designed for children ages 8 to 12 to learn about personal financial management in a simple and fun way. For example, it deals with topics such as making a budget, investing and managing debt.

The secret behind the concept

Danika: “I work in a bakery. When I heard about this contest, I thought it would be cool and fun to combine my love of sweets and baked goods with the crucial knowledge of financial literacy into a fun game for youth.”

Valentina: “By conducting a survey with a group of 40 peers our age, we decided that the best way to teach people of our generation is through something visual. Our goal is to help kids associate finances with positive and happy feelings, rather than feelings of stress or anxiety.”

What motivated Danika and Valentina to enter the challenge

“Next year, the students in our grade will be turning 18, graduating and entering the real world. Despite the excitement that comes with becoming an adult, there is a collective sense of fear—fear of the unknown, fear of responsibilities, but most of all, fear of unpreparedness,” said Danika and Valentina. They hope to “spare the next generation from the mistake of underestimating the power of financial knowledge.”

Helpful tips from Danika and Valentina

For youth and children: “We will deal with money issues for the rest of our lives, so it’s important to look for ways to develop our financial wellness and avoid the financial turmoil our elders face.”

For parents: “Teach your children about personal financial management at an early age. This will give them the knowledge and skills they need to be financially responsible in their future.” “For example,” said Danika, “at a young age, my father organized my finances using three jars: one was for saving, one for spending and the other one was for donation. By separating their finances in this way, children will have a better idea of how to use their money wisely.”

Danika and Valentina are currently working with CIBC to finalize the prototype of the game for it to be made available to Canadian families and schools who can develop their financial capacity while enjoying family fun.

• Breadwinner game description video – Available in English only
• View all the My Money, My Future Challenge winning games
• Find more money management tools and resources at canada.ca/money
• Stay tuned for the second edition of the My Money, My Future Challenge

The Money Taboo: How can I open up about money with friends?

By: Chartered Professional Accountant of Canada (CPA Canada)

Money is one of the top stressors for Canadians. In CPA Canada’s 2020 Canadian Finance Study, 72% of respondents said they are stressed about money, and one in ten worry about affording the basic necessities. Money can affect all aspects of life, but despite its pervasiveness, money stress tends to be suffered in secret. Money is one of our society’s final taboos.

How can Canadians start a healthy money conversation with friends

One way Canadians can build confidence and reduce feelings of financial struggle is by being proactive and creating a safe space to talk about money with friends. The purpose of these conversations is to learn from each other’s knowledge and experience to help us make better financial decisions.

Talking about money with friends is a popular piece of financial advice, but most people seldom do this because we do not want to seem like we are meddling in someone else’s life.

Here are a few ideas to help you identify and engage in healthy money conversations with supportive friends.

Find your friends who are savvy with money

If you are trying to better your financial habits, you will want to learn from friends that are financially savvy themselves. Financially savvy people have many different qualities and habits, but these are some key traits to look for:

1. They live within their means. For instance, do you have friends who complain about being broke, yet are first in line to buy expensive concert tickets or eat at the trendiest restaurants? If so, they may be spending more than they make and may not be the most financially savvy friends to talk to about money.
2. They spend their time and money trying to better themselves. For example, are they taking courses and enhancing their education? If so, this might indicate that they are actively trying to enhance their careers and might have interesting views about improving wealth.
3. They do not focus too much on displaying high status with flashy items. Studies have shown that some of the wealthiest people live modest lives and are not interested in spending money on material items that do not increase wealth.
4. They come from modest backgrounds and are self-sufficient.
5. They are always seeking out new opportunities. Are your friends looking for side hustles and new business opportunities? If so, this could indicate that they are trying to create multiple streams of income to better their futures.

Use their conversations to start sharing about your own experience with money

We regularly speak in cryptic languages when it comes to money. A friend considering moving closer to their parents to access “free daycare” may be more a comment on the high cost of childcare than a desire to uproot their lives. This might be a good opportunity for you to start the discussion and share your experiences, such as the struggles of affording childcare. The conversation may present other opportunities to talk about money and to learn from each other’s challenges and mistakes.

Ask questions

Finally, be prepared to ask and answer open-ended questions about values related to money. For example, a question you could ask is “if you won the lottery today, what would you do?” This opens the door to so many deep follow-up questions such as feelings about money; upbringing; lifelong dreams and goals; thoughts on the high cost of living; debates about whether owning a home is better than renting, etc.

CPA Canada’s 2021 Mastering Money Virtual Conference and other resources

If you are interested to learn more about personal or small business finances, register for CPA Canada’s free 2021 Mastering Money Virtual Conference. CPA Canada also offers free resources and tools for independent learning about money.

A key to financial resilience lies in digital literacy

By: ABC Life Literacy Canada

This past year has taken a toll on Canadians in many ways – mentally, physically, emotionally and financially. And while financial stress may often be a worry for many, it’s likely worsened during the pandemic. As COVID-19 government benefits come to an end in September, it’s important that Canadians become financially resilient to bounce back successfully.

One way to be financially resilient is to have the know-how to manage your money effectively – especially online. According to the Canadian Bankers Association, banking in Canada is transforming at a record pace, bringing innovation and new potential to empower people’s lives in a digital world. However, for those who don’t have the digital literacy skills to keep up with innovative online banking trends, there is a risk of being left behind.

For example, the number of bank branches has significantly declined in the past several years, mostly in part due to internet banking and other mobile options, according to Statista. This makes it even more important for those who aren’t currently using online banking, to equip themselves with the necessary digital literacy skills to be able to continue to manage their money without the support of a bank branch.

While the majority of Canadians do use online banking, there are still many that don’t. According to Statistics Canada, roughly 30% of the senior population do not use the Internet, and of those who do, many don’t have strong enough digital literacy skills to use tools that may help them navigate the world of online banking.

There’s also the issue of safety. About 10% of Canadian seniors are victims of crime every year, according to the Department of Justice, with fraud being the number one crime against older Canadians. With more seniors going online each year, it’s important that they understand the threat of fraud so that they can better identify scams when they see one and ultimately protect themselves.

ABC Internet Matters, created by ABC Life Literacy Canada, is a program that aims to help Canadian seniors and adults not only get online, but also stay safe online. The program consists of a free workbook and downloadable resources to help new internet users learn how to use the internet. With ABC Internet Matters, adult and senior Canadians will develop a basic understanding of what the internet is, how to access it, and how to stay safe online.

In addition to ABC Internet Matters, ABC Life Literacy Canada also offers Youth Teaching Adults to anyone wanting to improve their overall digital literacy skills. The program offers free downloadable lesson plans on a variety of tools such as how to identify fake news, how to create a Gmail account and how to use apps such as Spotify, Facebook and YouTube.

ABC Life Literacy Canada is a non-profit organization that aims to strengthen organizations that promote adult learning.

Why bank online and how to stay safe

By: Financial Consumer Agency of Canada

Do you bank using your smart phone or computer in the comfort of your own home? Or are you more likely to visit your local bank or credit union in person?

In this increasingly digital world, more Canadians are using online banking. In fact, according to FCAC’s Survey on Canadians’ Use of Bank Products/Services, 85% of Canadians who responded now manage their personal finances using the internet.^{Footnote 1} 

Whatever your reason for banking online, being e-banking savvy will go a long way.

Why bank online

Online banking allows you to access your accounts and make various financial transactions at any time – even outside regular banking hours. For instance, you can use online banking to pay bills or transfer money to other accounts at your convenience.

Generally, online banking transactions cost less than using in-branch teller services or automated teller machines (ATM). Information on fees and transaction costs can be found in your account agreement.

Online banking lets you check your transactions online as they are processed. You don’t have to wait for a monthly statement. You can confirm they have been processed and have electronic proof of the transaction.

Mobile banking can be conducted using a mobile banking application (app) or by accessing an online banking website from your mobile device. This gives you the freedom to access your accounts even when you are not at home. Be sure the internet access is secure to protect your money and your personal information.

Some financial institutions even offer free, practical features such as mobile alerts to notify you instantly when important activity takes place on your accounts. Certain institutions even allow you to check your credit score free-of-charge directly in their online banking tools. Check with your financial institution to see if they offer these features.

Protect your information while banking online

Most financial institutions have policies in place to protect you in the event of unauthorized transactions. It’s still, however, your responsibility to always keep your banking information to yourself. If you share your personal information with anyone, you may lose the protection offered by your financial institutions and be responsible for unauthorized transactions.

To make sure you’re protected

• Never share your PIN, password, security questions with anyone, not even your partner
• Review your account activity regularly for accuracy
• Contact your financial institution as soon as you see an error or something suspicious
• Don’t use public wi-fi (such as in coffee shops or libraries) for banking transactions
• Use strong passwords that cannot be guessed easily and change them often
• Never respond to suspicious calls, emails or text messages asking for personal financial information
• Don’t allow your device to save your online banking password. Enter it manually for every session

Ready to learn more? Check out these online banking resources and tips

• Visit FCAC’s Online banking web content for more information
• ABC Life Literacy’s resources Money Matters: What is e-banking? and Money Matters: E-transfers teaches adult learners the basics to online banking
• Many financial institutions offer an online banking simulator or demo to help you get started, using common tasks like logging in, paying a bill or making a money transfer. Ask your financial institution if they can help you or visit their website.

Protecting your savings in the event of a bank failure

By: Canada Deposit Insurance Corporation (CDIC)

What is CDIC and why should I care?

Have you ever noticed a purple lock on your mobile banking app, your ATM or even on your bank branch door? Do you know what it means? It means you are dealing with a member of the Canada Deposit Insurance Corporation – or CDIC.

CDIC is the federal Crown corporation that protects your hard-earned savings in the unlikely event of bank failure. It’s free and automatic if you bank with one of their member financial institutions.

Why do I need to know about CDIC?

You may be thinking, “Canadian banks don’t fail, why do we need deposit protection?” Great question. Since CDIC was created in 1967, 43 of its members have failed, affecting some 2 million Canadians. But depositors did not lose a single dollar under CDIC’s protection. While there hasn’t been a failure in a long time, you never know when it could happen again.

Or maybe you’re thinking, “If it’s free and I’m automatically protected, why do I need to know about it?” Another great question! Research shows that just knowing about deposit protection promotes confidence and contributes to financial stability in Canada. In other words, if you know that your money is protected if your bank gets into difficulty, you will be less likely to panic if you start to worry about the economy.

Awareness Gender Gap

Not everybody knows about CDIC. Only about half of Canadian women know about CDIC and deposit protection compared to over 70% of men.

That’s why CDIC is encouraging women to take their financial security into their own hands and learn about CDIC today. It’s important to know that your hard-earned money is protected and will be there if your bank is unable to continue operating.

What do I need to do?

1. Go to CDIC’s website to see if your financial institution is a member
2. Spend a little time on the site to see what’s covered and what’s not
3. Tell your friends, your sisters and your daughters to do the same – let’s close this gender gap

Financial literacy isn’t about having lots of money. It’s about having the tools and information you need to make informed financial decisions. Taking small steps can help everyone feel more confident and contribute to your financial wellness. After all, it’s your money – you need to feel good about it.