Even though the B.C. curriculum incorporates some financial literacy units in mathematics and career education, as well as in applied design and technology, young Canadians apparently still need to develop more relevant “real world” financial literacy skills.
Here’s why.
“Credit card spending is reaching historically high levels,” Rebecca Oakes, vice-president of advanced analytics at Equifax Canada, said in a news release. “High consumer demand for credit cards means a competitive marketplace for lenders. As a result, the credit limits being offered on new cards are much higher than we’ve seen in previous periods.”
More troubling is the fact that the average debt, including credit card debt, for people between the ages of 18 to 25 in Canada is $8,345 as of July 7, according to a recent Equifax National Consumer Credit Trends Report.
The larger problem, says Oakes, is that if 18- to 25-year-olds are already in debt to this extent, they need to clear that up before they turn 30.
Why? Because there are other debts that young adults almost inevitably will have to take up in their 30s and beyond — a mortgage, for example.
A breakdown of 2021 insolvency filings by age group, according to the Office of the Superintendent of Bankruptcy Canada, is a financial wake-up call for 18-to-35-year-old Canadians, 25 per cent of whom have already needed to file for a bankruptcy or consumer proposal (an alternative to bankruptcy) with the Office of the Superintendent of Bankruptcy.
In 2018, the Canadian Foundation for Economic Education polled 6,000 Canadians aged 12 to 17 to determine whether personal finance is a topic of real interest. The common response was: “If high schools offered a drama class, why can’t they do the same on handling personal finances?”
Gary Rabbior, president of the Canadian Foundation for Economic Education, has been advocating for financial literacy for the past 40 years. He says he is now detecting “significant change in the momentum developing” since the provinces are “increasingly looking to do more [in the area of financial literacy]. They’re looking to be more bold in the kinds of things they do. They’re looking to be more collaborative.”
In 2019, Ontario’s then new education minister, Stephen Lecce, announced that high schools across Ontario would include financial-literacy education as part of the revised and mandatory Grade 10 career studies course.
Other provinces have also been making changes to either add financial literacy courses, or incorporate the subject in other programs.
“Alberta has a lot of it within their career and life management program, as well as a number of other subject areas,” Rabbior explains.
In early May, Alberta announced that it’s investing $5 million in basic financial literacy education programs for students in grades 3 to 12 over the next three years. Canadian Foundation for Economic Education is one of the three organizations that the province is partnering with.
“Newfoundland and Labrador has just created a new Grade 10 program that has a significant financial literacy component — in fact, they use our Money and Youth book as the core resource for that program,” Rabbior says.
One of the most extensive measurements 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 are not financially literate.
The S&P global survey consisted of interviews with more than 150,000 adults in over 140 countries.
Each adult was tested on their knowledge of four topics: risk diversification, inflation, numeracy, and interest compounding.
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 held the top spots, with scores of 71% — meaning 71% of their populations are financially literate. The good news is that Canada scored 68%, tying with Israel.
The survey may be a good example of how school-based financial curriculums can create more financially literate populations. In Denmark, financial education is mandatory between Grade 7 and Grade 9. In Sweden, financial education is part of the school curriculum from the first grade.
The proverbial “bottom line” is that financial literacy education, from kindergarteners to senior citizens, will continue to be essential to improve Canadians’ standard of living and to reduce problems associated with financial inequality.
Not being well-versed in financial literacy topics such as economics, interest rates, savings, loans, investments, and long-term financial planning will be a significant hindrance to economic opportunity and mobility for today’s kids as they move into the responsibilities of adulthood.
gfjohnson4@shaw.ca
Geoff Johnson is a former superintendent of schools.
