We learn about geography, physical education and world history in high school, but when it comes to financial literacy we’re largely on our own. In Ontario there’s no mandatory course in personal finance. Although there’s a strong push towards greater financial literacy, so far there’s been little action.
Buying a home is the single largest financial transaction in the lifetime of most Canadians. Without adequate financial literacy, first-time homebuyers must mostly rely on the advice of their family and friends. November is Financial Literacy Month (FLM) in Canada. It’s the perfect time to highlight the importance of financial literacy in this country.
The facts don’t lie: a significant number of Canadians are living beyond their means, leaving them open to interest rate risk. A survey for Chartered Professional Accountants of Canada (CPA Canada) echoes these facts. 42 percent of Canadians said they are concerned about their personal debt. In fact, 26 percent admitted to purchasing stuff they can’t afford.
Although alarming, this shouldn’t come as a shocker. The household debt-to-income ratio continues to rise in this country. It reached a new high of 164.6 percent in the second quarter of 2015. That means for every dollar Canadians made, they owed $1.65 – yikes!
Interest rates are low now, but who’s to say they’ll be this low forever. What’s even more worrisome is in a recent survey, 49 percent said a significant rise in interest rates would make it tough for them to pay their mortgage and other debt payments.
FLM is relatively new. It was jointly launched back in 2011 by the Financial Consumer Agency of Canada (FCAC) and the Financial Literacy Action Group (FLAG). Its main objective is to shine the spotlight on the importance of financial literacy and encourage Canadians to get into healthier financial habits. The FCAC has a wealth of tools and resources at its disposal to help improve the financial literacy skills of Canadians.
The push for greater financial literacy recently got stronger with the launch of the National Strategy for Financial Literacy in June called “Count Me In.” It was unveiled by Canada’s Financial Literacy Leader, Jane Rooney.
Count Me In illustrates the importance of having all levels of government and both the public and private sector cooperating on financial literacy. It serves a playbook of sorts to build better financial literacy throughout Canada. The goal of this year’s FLM is to help garner support for Canadians to be better at managing their money.
The strategy has three main goals:
- Manage money and debt wisely
- Plan and save for the future
- Prevent and protect against fraud and financial abuse
While FLM is a great time to raise awareness about financial literacy, there are financial literacy programs happening throughout the year. If you’re planning to make a major financial decision like home ownership, or even something simple like making smarter financial choices and planning for your future, it doesn’t hurt to get a second opinion. Feel free to contact our office and let us give you a sobering second opinion to make sure you’re making the best financial decision for your family’s wellbeing.