Improving Financial Literacy in Indigenous Communities

By: Samantha Kremer and Katie Mah
University of Waterloo
BSc Science and Business

Copyright © 2021 Samantha Kremer and Katie Mah. All rights reserved.


Indigenous peoples make up a large portion of the Canadian population and helped, if not founded, present-day Canadian culture. Despite their vast contributions, the group has faced massive barriers in pursuing and achieving financial wellbeing. Historical events, such as residential schooling, formed a foundation of distrust between the two nations. These negative attitudes contributed to an increased educational gap, income gap, and an overall segregation between Indigenous peoples and Euro- Canada. This research paper will be discussing the barriers facing Indigenous peoples and their effects on building monetary savings. We also discuss the opportunities saving offers in regard to entrance into the financial marketplace. The financial marketplace refers to the trading of financial assets (Business Jargons 2016). By partaking in this marketplace, individuals have the opportunity to invest savings and earn interest, making a profit on initial investments. This can be extremely beneficial to individuals wanting to build monetary value, specifically for Indigenous people. Creating a solution which makes the financial marketplace more accessible will help in narrowing the financial segregation between the two Canadian societies. In order for this to be accomplished, the inaccessibility of resources and services on reserves as well as the effects of the educational and income gap must be explored in greater depth. By better understanding these topics and their effects on Indigenous financial wellbeing, the benefits received could work to counteract these segregative consequences and help cultivate confidence and prosperity among Indigenous peoples.

Overview of financial behaviour

Indigenous peoples make up 4.9% of Canada’s population, but due to low income and high unemployment rates, they make up 29% of the country’s homeless population (Prosper Canada, 2015). A factor leading to this is the historical colonization of Canada which introduced various forms of assimilation and oppression of the Indigenous peoples. This included abolishing the traditional trading and bartering systems, as well as the implementation of residential schools. This created a barrier for Indigenous people to enter the new “Euro-centralized” financial marketplace (Prosper Canada, 2015).

Other challenges present today include the lack of financial institutions in their communities and the shift to electronic banking. The lack of financial institutions is exemplified in Ontario where access to these services is limited to only five of the province’s 123 First Nation reserves (Prosper Canada, 2015). There is an estimated rate of 15% of individuals without bank accounts in First Nation communities- which was derived from a 4.2% of low net worth aboriginal respondents to the 2009 Canadian Financial Capability Survey. This percentage was double that of non-Indigenous respondents (Prosper, Canada, 2015). This leads to a higher use of payday loan institutions by Indigenous peoples which distribute small, short-term, and unsecured loans to low-income individuals. The borrower tends to provide a post- date cheque for the full amount plus interest within one or a few payday cycles (“Focus: Banks and Alternatives to Payday Loans,” 2021). The problem with these services is their higher interest rates to account for the increased risk in working with low-income individuals (Bowles, 2015). High energy and food costs amplify these financial problems due to the lack of financial support (Prosper Canada, 2015).

Research findings

There are many factors contributing to the financial segregation between Indigenous and non- Indigenous individuals in Canada. However, only two key issues will be explored in depth. These being the various effects of underdeveloped infrastructures in rural aboriginal communities and the factors contributing to the extent of the educational gap between these two Canadian cultures. The focus falls on how these issues are connected to each other, and how they affect Indigenous capabilities to build monetary savings and enter the financial marketplace.

Resources and services on Indigenous reserves

Various financial issues stem from the fact that many First Nation reserves are isolated (physically and culturally) from Westernized Canadian society. A large portion of these issues link back to the distrust and segregation between the two communities. Two key issues result from the lack of tangible resources and public services and infrastructure in Indigenous communities.

Access to resources

Due to physical isolation, basic necessities (e.g., fruit, vegetables, dairy, etc.) cost more and are in limited availability. Not only is fresh produce inaccessible, but housing and energy also have higher prices (Prosper Canada, 2015). In attempts to make nutritious food more affordable in remote northern communities, a program called, “Nutrition North” was created. This was done by the government providing subsidies to retailers at lower prices. Their next steps are to fund community freezers and hydroponic greenhouses in these communities (Pedersen et al., 2019). According to Statistics Canada, government funding has not reduced food insecurity through their funding which implies the fact that this problem is not a small issue with an easy fix and must receive more attention.

Access to public services and infrastructure

Rural communities, including reserves, lack public services and have poor infrastructure. Many infrastructure issues include mold, inadequate heating, contaminated water, bug infestations, overcrowding, etc. (Sawchuck, 2020). This low quality of life along with the lack of fresh produce leads to many health concerns which are not treated properly due to the absence of a health care system.

Common illnesses in isolated reserves include obesity, Type II Diabetes, and tuberculosis. Resulting in a

4.5 times higher rate of premature mortality compared to non-indigenous people (“The State of the World’s Indigenous People,” 2009). These struggles force Indigenous people to focus on improving their physical wellbeing, rather than their financial wellness.

Access to financial services

Financial services are inaccessible making it difficult for Indigenous people to establish a good credit score or create a financial retirement plan. Others who do have access to financial services feel unwelcome in mainstream institutions (Prosper Canada, 2015). This results in many Aboriginal people using payday loan institutions instead of obtaining loans from mainstream financial institutions. This is also because of the limited hours mainstream banks are open (Bowles, 2015). Online banking is not a substitute for limited hours as some do not own a computer and access to a library computer is limited, again, by the hours it is open (Bowles, 2015). Another reason why some Indigenous people do not get

loans from mainstream financial institutions is from fear of getting rejected as many have poor credit histories. Indigenous people also do not feel welcomed in banks and feel looked down upon for having low income (Bowles, 2015). These issues are faced by people with bank accounts and who have the means of travelling to it; never mind those who cannot physically reach the mainstream banks.

The income gap

The lack of resources and fear of mainstream financial institutions is augmented by several factors, the main issue being the income gap (“The State of the World’s Indigenous People,” 2009). The income gap is caused by many barriers suppressing Indigenous people from acquiring job opportunities. These impediments include the education gap, cultural differences, discrimination, transportation, and more (“8 Basic Barriers to Indigenous Employment,” 2019). Cultural differences lead to many Indigenous students being bullied in schools and discriminated against in the workplace. Due to their geographical isolation, the amount of job opportunities is further limited as Indigenous peoples cannot always transport themselves to the workplace (Department of Economics and Social Affairs - Indigenous people, n.d.).

Having fewer job opportunities causes First Nations people to have an average income score of approximately 22.1 lower than non-Indigenous people, shown in Figure 1 (Indigenous Services Canada, 2020). Since Indigenous people are unlikely to go to mainstream financial institutions, they have no means of furthering their education on financial wellness and have limited access to the financial marketplace. Overall, having low income and higher prices cause Indigenous communities to fall prey to poverty. This prevents them from achieving higher levels of financial wellness as they must prioritize their overall wellbeing and improving their quality of life.

The education gap

Considering the situation many Indigenous peoples face in their home-lives, it makes sense that education and high-status job positions may be low on their priority list. Maslow’s Hierarchy of Needs is a theory that we can use to describe this phenomenon. It states that each level must be adequately filled before one can use the next as a motivating factor (Robbins, et al. 2018). Indigenous peoples living in poverty-stricken reserves with little infrastructure or services are more likely

to place their physiological and safety needs before social, esteem, and self-actualization needs. If these lower-level needs were more often met, motivating factors would then move to the next level within the hierarchy. Education and higher-paying jobs fall within the self-actualization category which describes the need to grow, achieve one’s potential, and to harness the drive to become what one is capable of (Robbins, et al. 2018). We can now discuss a portion of factors contributing to the prominence of the educational gap between Indigenous and non-Indigenous students. By understanding the detriments resulting from the educational gap we can link this to Indigenous financial literacy and their diminished incentive to navigate Canada’s financial marketplace.

The bias of a Eurocentric curriculum

9.8% of Indigenous students between the ages of 25 to 64 years old have attained a college degree, which is exceptionally low when compared to the 26.5% of non-Indigenous students who have (Charbonneau, 2017). While a pure academic focus within a school's curriculum may induce a higher influx of high school dropouts (Bertrand, et al. 2019), the combination of this with the emphasis on Eurocentric curriculum creates challenges for Indigenous students (Charbonneau, 2017). Figure 2 in the Appendix reflects the results of this challenge. Aboriginal peoples’ culture has been implemented somewhat into Canada’s educational systems through the mention of residential schools, treaties, and numerous historical conflicts. Despite these efforts, Canadian history remains misunderstood by many young people, leading to a further marginalization and distortion of Indigenous culture. (Vallée, 2018). This misrepresentation of Indigenous culture serves as a deterrent from pursuing academic careers, intensifying the rift of the educational gap as well as the trust between the two nations.

Effect of residential school systems

The misrepresentation of Indigenous culture becomes more predominant considering the struggles faced by the indigenous peoples at the hands of Euro-Canada. The aim of residential school systems was to “transform the children and dispossess them of socio-cultural identities” (De Leeuw, 2009). In the early 20th century, these residential schools occasionally used students to replace operational staff- devaluing emphasis on food quality, health, and teaching materials. In extreme cases, these children

were forced into slave labour for profit-making purposes (Chrisjohn, et al. 2002). While the aim of schooling in general is to promote psychological development (i.e., cultivate student resiliency, cognitive and emotional maturity, and positive self-esteem), the adverse and abusive conditions prevalent in these schools disrupted this developmental process (Barnes, et al. 2006). This “genocide by assimilation” (Chrisjohn, et al. 2002) created a significant scar on indigenous culture, one that has not yet healed.

Residential schools created a deficiency in student’s ability to trust the Canadian educational system. Even today, we see significant levels of anxiety, low self-esteem, and negative attitudes regarding study habits and individual cognitive capability in learning contexts (Charbonneau, 2017). Figures 2 and 3 represent this deficiency and could help explain a factor contributing to the inflated education gaps between the two cultures.

Efforts for reconciliation

Due to the great level of cynicism circling Euro-Canada, these efforts of integration may be seen as another form of assimilation. Considering many families were impacted by historical events, there lies a sense of betrayal in young Indigenous students pursuing post-secondary education. These ambitions are seen by some as a clear psychological disconnect and even as a surrendering of one’s indigenous identity and culture, “In my house, it is not a proud thing to be a university graduate. It means you’re less Indian because you’re educated” (McMahon, 2014). Decreasing the educational gap between Indigenous and non-Indigenous students will eventually lead to the closing of the income gap and will create an incentive to achieve self-actualization. As Indigenous peoples pursue careers and obtain a higher income, this opens numerous doors and encourages the first steps towards tackling the financial marketplace. One of the biggest problems to overcome is the disconnect and doubt that has formed between these two cultures.


Due to the effects discussed in our research findings, we can pinpoint a major problem to be insufficient levels of advanced financial knowledge. While there is no fast, nor easy fix to correcting the financial segregation between Indigenous and non-Indigenous peoples, the focus should be placed on

efforts to raise income levels and increase educational opportunities regarding financial literacy. In a case study conducted by Bowles, 2015, he concluded that Indigenous individuals who participated in his focus groups had basic financial understanding but still needed to advance their knowledge and find ways to apply it to the financial marketplace. Considering these findings, the proposed solution would be to implement financial literacy plus programs.

Proposed financial literacy plus program

Financial literacy plus programs create opportunities for increasing income levels and credit score through incentives (Bowles, 2015). Examples of an incentive would be a matching savings program or an emergency loan facility. Our focus falls on the matching savings program which works to reward individuals for saving and participating in financial education. These rewards are given to help individuals achieve their goals quicker. The goals could include assets such as education, housing, and entrepreneurial activities (Momentum, 2010). The program would allow community ambassadors to educate Indigenous peoples of all ages on financial matters ranging from simple banking and budgeting, student aid opportunities, to mortgaging and investment pathways. These ambassadors can hold community forums and classes, partner with local schools to speak with students about educational opportunities and hold one-on-one meetings with community individuals looking for financial guidance. All these activities can help reward individuals and bring them financially closer to their goals.

A matching savings program would provide Indigenous people the opportunities to learn about financial literacy, while simultaneously raising their income level and improving credit score. This would decrease the income gap and, with the help of programs like Nutrition North, Indigenous people would be able to afford basic necessities. These programs would also work towards restoring trust between non- Indigenous and Indigenous people. This program will work towards making interactions between Indigenous people and financial institutions more pleasant and cooperative. Increasing access to public services and improving infrastructure on reserves is a difficult problem to approach, but the goal of matching savings programs is to improve financial standings in the long run. This means that the government and Indigenous organizations working together can lead to more collaboration on improving

quality of life for Indigenous communities. Also, when the financial wellness of Indigenous people improves, they can better their health by affording nutritious food. Overall, this program can help rebuild trust between the two societies and be used as a steppingstone to satisfy Indigenous physiological needs, by increasing access to resources and services.

The impact this program could have on Indigenous students would be invaluable to their financial and academic success. By learning how to budget and access other available financial aid services, students develop the financial literacy and resources needed to plan and pursue their academic career- allowing them opportunities to obtain higher incomes in the future. Considering poverty is a highlighted issue among rural Indigenous communities, knowing how to and wanting to manage obtained income and other finances can help individuals achieve greater pecuniary prosperity by better navigating the financial marketplace. This program will work to empower Indigenous students and help close the educational gap between Indigenous and non-Indigenous students- which will contribute to the closing of the income gap.

In the long run, this matching savings program will cultivate familiarity and confidence on pecuniary matters allowing Indigenous peoples to enter and prosper in the financial marketplace.


To implement this effectively, the Canadian government should work closely with urban Indigenous organizations to establish trust between the two societies. Organizations such as Congress of Aboriginal Peoples and Indspire are groups of Indigenous individuals living off reserve that work to ensure economic and social support for other Indigenous individuals and their communities (Indigenous Organizations, n.d.). This collaboration would be beneficial as both are working towards the same goal of improving quality of life for Indigenous peoples, which includes improving their financial wellness.

The first stage would include developing a program plan suitable to present to Indigenous Services Canada and ensure there are enough resources available to allocate towards a pilot program. This would be done by developing a budget based on income per capita in Indigenous communities. When planning and budgeting, a contingency plan must be formed which includes extra funds to cover

unexpected costs. Next, a partnership must be formed with an interested Indigenous organization. This partnership will allow for greater cooperation with those on reserves. The program will increase the probability of success as the government will gain an Indigenous’ perspective when forming the program. Once this partnership has been established, an ambassador must be selected from the government and/or the Indigenous organization to communicate with those on the reserves. This person should be willing and passionate about this opportunity to increase the financial literacy of Indigenous peoples on reserves as this will increase the overall success of the program.

Once the program plan is finalized, the next stage would include gathering data on program interest in rural Indigenous communities. This can be done by sending a government and/or an Indigenous organization representative to different communities to promote this program and hold public forums to gauge the interest and feasibility of the plan. This initial interaction will help foster a strong foundation between the two parties and ensure success in the proposed program. These representatives will be sent to communities in Treaties 11 and 6, as well as those within the Peace and Friendships Treaty. The purpose in choosing these three treaties is to maximize geographical diversity within Canada and gather enough data to support communities across various provinces. Each community has the opportunity to apply through the government to be considered for the pilot program. Once the application deadline has passed, Indigenous Services Canada and selected partners can choose three different communities, one from each treaty. If no communities within these Treaties are interested, then applications for this pilot program would open up to other reserves.

Once the three communities have been chosen, the ambassadors from the partnered Indigenous Organization can communicate with the community and select a local spokesperson. These individuals will work together to inform the community about events and financial opportunities available through the program and otherwise (i.e., advice on mortgaging, student aid, budgeting, etc.).


This program will run over the span of two years. This is to provide enough time to measure effectiveness on Indigenous financial wellbeing. Ways this program can be tested is through direct feedback from the participating communities. Public forums and surveys can be held quarterly for participants to provide feedback and suggestions to the program structure. At the end of the two-year time period, university enrollment for Indigenous students and income per capita can be measured and compared to the initial statistics prior to implementation. This will provide a reference to the average success this program has had for communities in different geographical areas. The information gathered will provide necessary information to gauge the success of the program, what modifications should be made, and where to implement the program next. Another effective way to reflect on the success of this program is to develop individual portfolios on those willing to share their experience. This can help explain and contextualize successes and failures and can better prepare volunteers and other involved parties to better meet the needs of participants.


Indigenous peoples must improve their financial literacy to increase their monetary wellness. This is challenging as they face inaccessibility to basic resources and services, discrimination, as well as a prevalent gap in income and education compared to non-Indigenous Canadians. As a result of these accessibilities, Indigenous peoples direct their focus towards fulfilling their more immediate physiological and safety needs, rather than improving their financial standings for the long run. This acts as both a cause and an effect of the income gap and this issue is heightened by discrimination and the education gap.

While the cycle is difficult to break, it is vital to provide opportunities for Indigenous peoples to achieve higher education by incentivizing academic and financial participation. This will work to reverse the effects of the income gap and create a better homelife and future for the next generation.

The recommended solution benefits Indigenous people as it aims to improve and incentivize financial wellness. It will do this by providing education on advanced financial literacy and opportunities to increase income. Another objective of this solution is to build trust between Indigenous peoples and Westernized society. In decreasing this segregation, those living on reserves may feel more inclined to be involved in the economic marketplace, increasing Indigenous financial literacy, access to the financial marketplace, and overall monetary wellness.

FCAC has established a volunteer working group to address the particular financial literacy needs of Indigenous Peoples. Further details regarding the working group and a link to its member list can be found here: FCAC committees and networks.



Figure 1: Average income scores, First Nations and non-Indigenous communities, 1981 to 2016

Figure 1: Average income scores, First Nations and non-Indigenous communities, 1981 to 2016
Text version of figure 1: Average income scores, First Nations and non-Indigenous communities, 1981 to 2016

This line graph compares the average income scores of First Nations and non-Indigenous communities in Canada between 1981 and 2016.

  • First Nations communities had an average income score of 35.1 points in 1981, 40.7 points in 1991, 43.3 points in 1996, 46.1 points in 2001, 46.1 points in 2006, 49.3 points in 2011 and 53.5 points in 2016
  • Non-Indigenous communities had an average income score of 58 points in 1981, 62.1 points in 1991, 62.1 points in 1996, 65.1 points in 2001, 67.7 points in 2006, 72 points in 2011 and 75.6 point in 2016

This Figure is a reproduction. The original version is available at

Source: Statistics Canada, Censuses of Population, 1981 to 2006, 2016 and National Household Survey, 2011.

Figure 2: Average high school plus scores, First Nations and non-Indigenous communities, 1981 to 2016

Figure 2: Average high school plus scores, First Nations and non-Indigenous communities, 1981 to 2016
Text version of figure 2: Average high school plus scores, First Nations and non-Indigenous communities, 1981 to 2016

This line graph compares the average high school plus scores, a constituent of the education score, of Indigenous and non-Indigenous communities in Canada between 1981 and 2016.

  • First Nations communities had an average high school plus score of 19.9 points in 1981, 33.3 points in 1991, 40.2 points in 1996, 45.2 points in 2001, 48.6 points in 2006, 52.2 points in 2011 and 57.3 points in 2016
  • Non-Indigenous communities had an average high school plus score of 40.1 points in 1981, 49.6 points in 1991, 54.3 points in 1996, 57.7 points in 2001, 69.2 points in 2006, 74.2 points in 2011 and 77.4 points in 2016

This Figure is a reproduction. The original version is available at

Source: Statistics Canada, Censuses of Population, 1981 to 2006, 2016 and National Household Survey, 2011. 

Figure 3: Average university scores, First Nations and non-Indigenous communities, 1981 to 2016

Figure 3: Average university scores, First Nations and non-Indigenous communities, 1981 to 2016
Text version of figure 3: Average university scores, First Nations and non-Indigenous communities, 1981 to 2016

This line graph compares the average university scores, a constituent of the education score, of First Nations and non-Indigenous communities in Canada between 1981 and 2016.

  • First Nations communities had an average university score of 2.4 points in 1981, 2.4 points in 1991, 3.6 points in 1996, 3.9 points in 2001, 4.5 points in 2006, 5 points in 2011 and 5.9 points in 2016
  • Non-Indigenous communities had an average university score of 4.9 points in 1981, 6.2 points in 1991, 7.3 points in 1996, 8.3 points in 2001, 9.5 points in 2006, 11.2 points in 2011 and 12.1 points in 2016

This Figure is a reproduction. The original version is available at 

Source: Statistics Canada, Censuses of Population, 1981 to 2006, 2016 and National Household Survey, 2011. 

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