Young Canadians need to develop a better sense of the consequences of their financial actions in order to avoid the drag on economic growth that financial illiteracy creates.
That was one of the messages in a summary of public submissions released last week by the national Task Force on Financial Literacy, which will provide a final report by the end of the year to federal finance minister Jim Flaherty.
Some participants noted that financial education should begin in elementary school and continue throughout high school, with appropriate lessons and materials that are relevant to their situation. For example, while teenagers probably are not ready to learn about mortgages and life insurance, they should be taught to understand basic debt products like credit cards, student loans and cell phone contracts.
A lack of basic knowledge can lead to a lot of misunderstanding that can create financial challenges for an individual or household.
One submission noted that low-income Canadians tend to over-estimate the supply of financial assistance available for post-secondary education and can be unaware of the range of social benefits available to them.
The report noted that Canada’s culture of consumption has been a key culprit to the nation’s relatively low household savings rate and relatively high debt level, elements that weaken the country’s financial footing.
That culture has been sustained by the widespread availability of credit, which can create financial challenges for the most vulnerable Canadians, such as seniors, immigrants, those living in remote or rural areas, Aboriginal Canadians without full access to mainstream financial services and those with disabilities.