Financial Literacy: Starting at an Early Age
Canada has hit an economic surge the past few years, and among those who are benefiting from this are ages 28 to 34. According to a study by the Federal Finance Department, those who belong in this age bracket, particularly those who were born in the first half of the 1980s, are actually the wealthiest such generation in the country’s history. This shows that today’s young Canadian generation is growing their finances at a much faster pace than those in previous generations.
Furthermore, Canada placed in the Top 3 in the Program for International Student Assessment (PISA), a triennial worldwide survey run by the Organization for Economic Co-operation and Development (OECD) that measures financial literacy among 15-year-olds. Participants included those in British Columbia, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador. The survey revealed that 46 per cent of Canadian 15-year-olds were able to perform tasks associated with advanced levels of financial literacy (Level 4 or Level 5).
So what exactly is financial literacy?
For most people, being financially literate is avoiding debt, but that is only a part of the equation. To be financially literate is to be aware, knowledgeable, and skilled to come to sensible financial decisions that ultimately lead to one’s financial wellbeing.
Looking at the benefits
Some people dismiss the importance of teaching finances to kids because they don’t come across money in the way that adults do. However, the moment kids are provided with school allowance—even with something as small as $5 a week—is the moment financial literacy becomes a necessity. Exposing them early on will help them grow into financially wise adults. With the knowledge they will gain at an early age, they will be able to manage their finances well and be well-aware enough to avoid the pitfalls of too much debt once they start paying for their own utility bills, credit card bills, food, transportation, rent, mortgage, insurance, and other expenses.
Room for improvement
While Canadian youth is not lagging behind those in other countries when it comes to financial savviness, there is still much room for improvement, and numerous organizations around the country recognize this. Hamilton-based Teresa Cascioli, revered philanthropist and Lakeport Brewery business legend, shared in a recent interview with the Hamilton Spectator that financial literacy among the youth should be a priority just as much as reading and doing math.
This perspective drove Cascioli to launch a publishing company that released a series of children’s books that focuses mainly on financial literacy. Elementary school-age kids read these books and learn about loans, budget, and savings, which will prove to be valuable as they grow older.
Various educational institutions throughout Canada has also embraced the fact that the youth can truly use some help in gaining an insight into finances at an early age. In Ontario, for example, financial literacy subject has been integrated into the existing Grade 4 curriculum.
Meanwhile, in Saskatchewan, the Ministry of Education has approved 10 school divisions to teach a personal finance class for Grade 12 students. Here they can learn about saving and investing, budgeting, income tax, insurance, and even the stark differences between leasing and buying vehicles.
Start saving early
It’s not only the educational institutions who are willing to lend a helping hand to improve Canadian youth’s financial literacy. A number of Canadian credit unions have worked together to launch Humanomics Youth Savings Account, which provides incentives for pre-teens who start saving early. Others are determined to help out with financial literacy efforts like Coast Capital who has launched Junior Achievement’s Dollars with Sense.
While there are more efforts these days to create a financial literacy mindset among today’s youth compared to before, there are still a lot to be done.