Learning about financial literacy

Someone makes a budget and calculates
Presented by the Financial Consumer Agency of Canada, Financial Literacy Month aims to boost Canadians’ knowledge and skills and increase their financial resilience.

Marc Tassé, investigative forensic accountant, Telfer School of Management professor and uOttawa Faculty of Law lecturer, spoke to the Gazette about financial literacy.

According to Tassé, financial literacy is a set of skills and abilities that your average person should have to make informed, considered decisions when managing their personal finances.

For example, it includes knowing how to make a realistic budget, limiting our spending, saving, planning our retirement and understanding the options available when we have to make a financial decision.

Tassé says that we should make a distinction between expert financial and accounting knowledge and the knowledge we use in day to day life. “We don’t want to make you financial experts, just to make you aware of and pay attention to finances,” he says.

The notion of financial literacy is important for everyone. People with good financial knowledge can manage their money more confidently, make rational decisions that allow them to face unforeseen events and, thus, improve their quality of life.

As well, according to the Financial Consumer Agency of Canada, “As the financial marketplace grows increasingly complex, it is crucial that Canadians have the knowledge, skills, and confidence to make informed decisions about the financial products and services that best meet their needs.”

While financial literacy is good for financial well-being, it’s also good for mental health, says Tassé.

The results of a 2019 Canadian financial capability survey show that nearly three quarters of Canadians (73.2%) had an outstanding debt or had used a payday loan in the previous 12 months. As well, according to the survey, “about 1 in 6 Canadians (17%) (said) their monthly spending exceeds their income, while 1 in 4 (27%) (said) they borrow to buy food or pay for daily expenses.” According to the survey, managing money is a source of anxiety.

Indeed, for Tassé, managing money can produce a lot of stress. Having a financial plan and being aware of the cost of one’s needs can reduce finance-related worry.

According to Tassé, peoples’ knowledge of finance is not what it should be.

If you don’t know where to start, he recommends that you seek out government resources. The Financial Consumer Agency of Canada has published a self-assessment questionnaire that lets Canadians know and compare their financial abilities and skills. With the results of this survey, you can filter the resources in the Canadian Financial Literacy Database so that only those that meet your needs are suggested.

Financial Literacy Month is the perfect time to check out what you know and explore what you don’t know about managing your personal finances.