Financial ABC's Preached, Not Practiced

A new survey report on Canadian financial literacy shows Canadians agree on the importance of good financial planning – but often fail to implement their own good ideas.

The Financial Consumer Agency of Canada just released a report on the state of Canadian financial literacy. The report (entitled "Moving Forward with Financial Literacy") discusses how many Canadians understand basic financial principles and how many actually implement that knowledge. It also explores ways to improve financial literacy in Canada.

The report summarizes presentations from a September 2008 conference that took place in Montreal: "Reaching Higher: Canadian Conference on Financial Literacy." The conference attracted participants from around the globe, and was created to highlight the effectiveness of current Canadian financial literacy efforts and to examine international strategies.

One of the findings published in the conference report is that Canadians show strong agreement about how to appropriately manage their personal finances. For example, the report considered the results of two large studies of Canadian financial literacy, each involving more than 5,000 Canadians. The survey results found that:

• 96% of those surveyed believe it is important to save for the future.
• 92% agreed it is important to carry out research before investing.
• 88% believe it is important to have a formal financial plan.

However, the same survey also found that most Canadians do not take their own advice. Despite these survey findings, 25% of the survey respondents said they have no savings for the future, 49% said they do not do any investment research, and 58% said they have no financial plan.

The report’s authors conclude that in order to close the gap between intention and behaviour, Canadians must better understand why they need to be more financially responsible – and the high costs of poor financial literacy. The report notes the need to encourage Canadians to act on their strongly held beliefs about the importance of financial planning and to take personal responsibility for managing their own money.

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