Geoff Johnson: Financial literacy is more essential than ever

The average debt, including credit card debt, for people aged 18 to 25 in Canada is $8,345

Even though the British Columbia curriculum includes some financial literacy units in math and career education, as well as applied design and technology, young Canadians still seem to need to develop more relevant skills. in “real world” financial literacy.

Here’s why.

“Credit card spending is at historic highs,” Rebecca Oakes, vice president of advanced analytics at Equifax Canada, said in a news release. “Strong consumer demand for credit cards means a competitive market for lenders. Consequently, the credit limits offered on the new cards are much higher than what we have seen in previous periods. »

More troubling is the fact that the average debt, including credit card debt, of people aged 18 to 25 in Canada was $8,345 as of July 7, according to a recent report by Equifax on national trends in the Consumer credit.

The biggest problem, says Oakes, is that if 18- to 25-year-olds are already that deep in debt, they have to sort it out before they turn 30.

Why? Because there are other debts that young adults will almost inevitably have to take on in their 30s and beyond – a mortgage, for example.

According to the Office of the Superintendent of Bankruptcy Canada, a breakdown of 2021 insolvency filings by age group is a financial wake-up call for Canadians aged 18-35, 25% of whom have already had to file for a bankruptcy or a consumer proposal (an alternative to bankruptcy) with the Office of the Superintendent of Bankruptcy.

In 2018, the Canadian Foundation for Economic Education surveyed 6,000 Canadians aged 12 to 17 to find out if personal finances are a topic of real interest. The common answer was, “If high schools offered a drama class, why couldn’t they do the same for managing personal finances?”

Gary Rabbior, president of the Canadian Foundation for Economic Education, has been an advocate for financial literacy for 40 years. He says he now detects ‘a significant shift in the momentum that is building’ as provinces are ‘increasingly looking to do more [in the area of ­financial literacy]. They seek to be bolder in the kinds of things they do. They seek to be more collaborative.

In 2019, Ontario’s new Minister of Education, Stephen Lecce, announced that Ontario secondary schools would include financial literacy education as part of the revised and mandatory 10th grade career studies course. year.

Other provinces have also made changes either to add financial literacy courses or to integrate the subject into other curricula.

“Alberta has a lot of that in its Career and Life Management program, as well as a number of other areas,” says Rabbior.

In early May, Alberta announced that it would invest $5 million in basic financial education programs for students in grades 3 to 12 over the next three years. The Canadian Foundation for Economic Education is one of three organizations with which the province partners.

“Newfoundland and Labrador has just created a new curriculum for Grade 10 students that includes a strong financial literacy component. In fact, they use our money and youth book as a core resource for this program,” says Rabbior.

One of the most comprehensive measures of global financial literacy to date, the Standard & Poor’s Ratings Services Global Financial Literacy Survey (S&P Global FinLit Survey), found that two-thirds of adults worldwide n don’t have financial literacy.

S&P’s global survey consisted of interviews with more than 150,000 adults in more than 140 countries.

Each adult was tested on their knowledge of four topics: risk diversification, inflation, numeracy and compounding interest.

According to S&P’s analysis, respondents were considered financially literate if they were able to accurately explain at least three of the four concepts.

Denmark, Norway and Sweden were in the top spots, with scores of 71%, meaning that 71% of their populations are financially literate. The good news is that Canada got 68%, tied with Israel.

The survey may be a good example of how school-based financial education programs can create more financially literate populations. In Denmark, financial education is compulsory between grades 7 and 9. In Sweden, financial education is part of the school curriculum from the first year.

The proverbial “result” is that financial literacy education, from kindergarten to seniors, will continue to be essential to improving the standard of living of Canadians and reducing the problems associated with financial inequality.

Being unfamiliar with financial literacy topics such as the economy, interest rates, savings, loans, investments, and long-term financial planning will be a significant barrier to economic opportunity and mobility of today’s children as they enter the responsibilities of adulthood.

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Geoff Johnson is a former Superintendent of Schools.

Geraldine L. Melton