The State of Financial Literacy in Canada: How Much Do We Know?

(Disponible en français : État de la littératie financière au Canada : que savons-nous exactement?)

Financial literacy includes the knowledge, skills and confidence people need to make informed choices about money. It enables Canadians to monitor and improve their personal finances. By exercising good financial practices, such as setting aside money for retirement, Canadians also contribute to the country’s economic stability. This HillNote discusses the state of financial literacy in Canada as well as federal efforts to improve it.

The State of Canadians’ Financial Literacy

Canadians score well on measures of financial literacy compared to their peers elsewhere. For example, the 2015 Organisation for Economic Co-operation and Development (OECD) Survey on Measuring Financial Literacy and Financial Inclusion measured respondents’ financial knowledge, attitudes and behaviours. It ranked Canadians’ overall financial literacy third out of 29 countries. However, the same survey found that only 61% of Canadians — roughly the OECD average – could correctly answer five of seven financial knowledge questions.

Domestic results from the federal government’s Canadian Financial Capability Survey (CFCS) also suggest that Canadians’ financial knowledge may be incomplete. CFCS respondents answered 14 objective-knowledge questions, earning an average score of 60.6%. The results show financial knowledge gaps between different groups within Canada.

Differences between men and women varied based on factors such as age, income and education levels. According to Statistics Canada, on average, men scored significantly higher on the CFCS than women, and the score gap between men and women was wider among older than younger respondents. This may reflect social trends that have left some older women poorly prepared to manage their finances.

The same data shows that respondents who spoke English as a first language scored higher than French-first language respondents, and people who had taken a course on the economy or financial matters scored higher than those who had not. The score gap between these groups widened based on gender.

Table 1 compares these groups’ objective knowledge scores on the CFCS.

Table 1: Objective Financial Knowledge Scores, Canadian Financial Capability Survey (2014, %)

Population Total Course No Course
Total 60.6 68.3 59.4
     Female 57.7 66.8 57.0
     Male 62.8 69.7 61.7
English Speaker 62.9 71.2 62.2
     Female 61.0 69.3 60.3
     Male 64.8 73.1 63.9
French Speaker 56.4 66.5 55.9
     Female 54.0 68.2 53.0
     Male 58.7 64.6 58.3

Note: Figures differ from Statistics Canada analyses due to targeted exclusions. Where discrepancies exist, refer to Statistics Canada data.
Source: Table prepared by the author using data obtained Statistics Canada, “Canadian Financial Capability Survey, 2014,” Public Use Microdata File, accessed 1 March 2019. This does not constitute an endorsement by Statistics Canada of this product.

It is unclear why some groups performed better on average than others. However, it appears that certain groups have faced barriers in improving their financial knowledge. These results highlight the need to tailor financial literacy efforts for different populations.

Federal Efforts to Improve Financial Literacy

Canada’s Constitution gives responsibility for formal education to the provinces and territories. However, the federal government has historically helped fund schools in provinces and territories, and funds First Nations students. The federal government also helps coordinate provincial and territorial financial literacy education efforts. For example, roughly one third of recommendations in the federal Task Force on Financial Literacy’s 2010 report were addressed to provincial and territorial governments.

In addition, the federal, provincial and territorial governments jointly regulate the financial service sector. Thus, since 2001, the federal government has run its financial literacy programs mainly through its financial supervision and consumer protection body, the Financial Consumer Agency of Canada (FCAC). Other federal bodies, such as the Bank of Canada and the Canada Deposit Insurance Corporation, also offer financial information to Canadians.

As part of Canada’s National Strategy for Financial Literacy (the National Strategy), the federal government earmarks funding for the FCAC “to undertake initiatives, conduct research and develop consumer-friendly programs and tools.” In April 2014, the Government of Canada appointed its first and only Financial Literacy Leader, who led national financial literacy efforts under the FCAC until April 2019. The Financial Literacy Leader, along with two iterations of the National Steering Committee on Financial Literacy, implemented the National Strategy by coordinating stakeholders and by developing tools and programs.

In addition, the FCAC has a National Financial Literacy Research Sub-Committee to advise on governmental efforts. It also has two working groups focusing on workplaces and Indigenous peoples. Furthermore, the FCAC chairs the Interdepartmental Committee on Financial Literacy, which coordinates federal departments’ and agencies’ efforts.

As part of its outreach plan, the FCAC runs workshops, holds a national conference and hosts a financial literacy database with free resources, among other initiatives. Much of its outreach addresses the unique needs of diverse Canadians. The FCAC database is searchable by topic and target audience, including seniors, Indigenous peoples, youth, newcomers and low-income Canadians. The FCAC also shares best practices with other financial literacy networks. Many of these activities take place in November, which Parliament designated Financial Literacy Month in 2012.

Recent Changes to Federal Financial Literacy Initiatives

Budget Implementation Act, 2018, No. 2 (Bill C-86) abolished the position of Financial Literacy Leader, effective 10 April 2019. Instead, it made financial literacy a part of the FCAC Commissioner’s role. Bill C-86 also clarifies where financial literacy fits in the FCAC’s mandate – it is now linked more clearly to the FCAC’s public service and consumer protection roles.

Dr. Jennifer Robson, an Associate Professor at Carleton University and former member of the National Research Committee on Financial Literacy, suggests that, if the end goal is to strengthen consumer protection, it is logical to promote financial literacy through Canada’s market enforcement body (i.e. the FCAC). These changes also formally recognize financial education as part of a broader consumer protection strategy.

Author: Ryan van den Berg, Library of Parliament

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