Financial literacy: We can’t do it without you
April 15, 2014
Ottawa, Ont.
Thank you for the kind introduction. I’m delighted to speak with you this evening about the importance of teaching children about money early on. As a mother of two teenage boys, it’s a matter that is close to my heart.
“Talk with Our Kids about Money Day” encourages us to start a conversation that we should have with children as soon as they can count, and continue to have on a regular basis as they grow up.
At twelve, I started babysitting to help with expenses like clothes. So my parents helped me open my first savings account. They taught me about the importance of saving for the future; for me, that meant university.
When I started working after university, my parents loaned me the money to buy my first car. Through that experience I learned the basics about credit and paying down debt. Albeit, at a very low interest rate.
I wasn’t taught about money at school. Luckily for me, my parents were my financial heroes! Thanks to their lessons about savings and debt, I was able to pay for my own education and learned how to use credit responsibly.
As parents, we want the best for our kids. As do teachers for their students. I believe that we can give them a big head start in life by teaching them early on money management skills that will last for a lifetime.
We can teach them to avoid pitfalls in financial decision-making before they make costly mistakes. And we can help them gradually take responsibility for their own financial well-being.
It’s not getting any easier. The number and complexity of financial products and services available to consumers continues to grow.
New ways to pay for purchases, like mobile wallets or payWave, create greater convenience. But also mean people need to better understand the benefits and risks of the new method of payment.
Cash and credit are becoming more accessible and fewer barriers stand in the way of spending. Think of online shopping and mobile apps. The stores never close and temptations are literally at our fingertips.
This is the reality in which we’re raising our kids. So grasping financial principles early in life is crucial to preparing them to budget, save, invest and plan financially for their future.
Financial literacy has become as important as basic literacy and numeracy.
Financial literacy is defined as having the knowledge, skills and confidence to make responsible financial decisions in your own best interests.
But the Canadian Financial Capability Survey, which was fielded in 2009 and again last year, found that four out of five young Canadians are not confident in their financial knowledge.
Young people don’t automatically pick up financial literacy skills. They need to be taught at home and in the classroom and in the workplace. It’s a community effort.
Through several initiatives in recent years, the Government of Canada has demonstrated its commitment to supporting the financial literacy of Canadians of all ages.
A year ago today, I was named Canada’s first Financial Literacy Leader. My mandate is to collaborate and coordinate with stakeholders to strengthen the financial literacy of Canadians, and develop and implement a national strategy for financial literacy.
To help guide our work, the Minister of State for Finance, Kevin Sorenson and I appointed a National Steering Committee.
Gary Rabbior, who organized today’s event, is part of that 15-member steering committee of experts whose leadership and advice has been invaluable. I know they will continue to champion financial literacy as we roll out the national strategy later this year.
To develop this strategy, the Government held nation-wide consultations. In these, we looked at the financial literacy strengths and needs of three broad groups of Canadians:
- seniors
- priority groups — Aboriginal peoples, Canadians with low incomes, newcomers to Canada and people with disabilities
- and young and adult Canadians.
I’d like to focus on what we heard about the needs of young and adult Canadians.
Many emphasized the importance of lifelong learning and urged that financial education be integrated into school curricula as early as possible, which is happening here in Ontario.
This would have the added benefit of reaching parents who may be helping with homework.
Parents, you may be interested to hear that children can influence your behaviour. Just think back to recycling and anti-smoking campaigns.
On changing behaviours, we heard about the need to help Canadians set and live within their budgets. Simple lessons can help, like:
- pay bills on time
- track expenses
- save up for purchases
- and when using credit, a plan in place to pay it back.
But budgeting and saving for a purchase can be difficult at any age. Consumerism and instant gratification are symptoms of our culture. What my generation refers to as “keeping up with the Joneses,” my kids call “Fear of Missing Out,” or “FOMO” for short. Both are real budget busters and part of a bigger challenge.
Managing expectations is essential. To change attitudes toward credit and debt, we need to change the way people think about money.
One of the messages that stood out from the consultations is that one size does not fit all. We must tailor financial literacy programs to meet the needs of specific audiences at specific points in their lives.
These are what I call “teachable moments,” when people are ready to absorb specific financial knowledge and develop financial capability.
This might mean a program tailored to young people getting their first jobs or applying for post-secondary school.
Others might focus on single parents saving for their children’s education, or target young families looking to buy their first homes.
The “Talk with Our Kids about Money Day” “Home Program” is a great resource for parents, guardians and other caregivers. It provides tools, ideas and activities centred on money that children and youth can use at different ages and stages.
During the consultations, we also heard about the need to encourage partnerships between the public, private and non-profit sectors to ensure that everyone is working toward the same financial literacy goals.
Ultimately, improving the financial literacy of young Canadians is a shared responsibility between the public, private and non-profit sectors, as well as parents, teachers, schools and individuals alike.
This confirms what FCAC has learned through our experience: we cannot do it alone. Collaboration is critical to success.
Collaboration is at the heart of my mandate as Financial Literacy Leader.
FCAC’s largest collaborative project is the Canadian Financial Literacy Database. I’d like to show you a video FCAC produced to promote the database.
Housed on FCAC’s website, this one-stop shop lists more than 860 resources from over 75 organizations. Anyone can use it to find the financial products and services they need. The database is also a networking tool, enabling like-minded organizations to build partnerships.
The database includes a self-assessment quiz that allows people to measure their money-management skills, and then links them to resources in the database they need most.
Please check out the database on FCAC’s website, ItPaysToKnow.gc.ca, and find resources that you can use with your children or your students, with your spouse or by yourself.
In that spirit, I’ll leave you today with an invitation to get involved.
“Talk With Our Kids About Money Day” is a great conversation starter. Check out activities parents can do with their kids to help teach them about money. Like pricing out groceries while you’re shopping together or encouraging them to save for their goals like buying the latest electronic device.
Take advantage of “teachable moments” to direct children and youth to the right information.
FCAC’s website has a wealth of information to help build knowledge, skills, and confidence about money.
Parents and teachers are also caregivers, role models and important influences in children’s lives.
Your role is indispensable in teaching children the money management skills they need to make financial decisions and to take responsibility for their financial well-being.
Financial literacy is our shared responsibility. I look forward to working together to boost the financial literacy of young Canadians.
