Financial Literacy Fact Sheet

Financial literacy is the ability to understand and discuss financial concepts and apply them to your own financial situation. It includes skills like budgeting, paying bills on time, making decisions about financial products, planning for the future and being prepared in the event of a setback or emergency.

 

Having a better understanding of personal finances and the confidence to make financial decisions helps individuals to be stress-free, achieve their goals and save for their future and retirement.

 

  • 55 per cent of Canadians have inadequate numeracy skills, which means they may struggle with understanding written instructions that rely on charts, numbers and conditional statements. Inadequate numeracy skills also correlate with disparities in economic well-being, health outcomes and levels of political engagement (Survey of Adult Skills: Programme for the International Assessment of Adult Competencies, 2013).
  • 4 in 10 Canadians report that money is a daily concern – a third of low-income Canadians report worrying about money almost constantly (Canadians and their Money – Financial Planning Standards Council, 2016).
  • Almost half of Canadians (46 per cent) have a budget – and the majority of those with a budget (93 per cent) always or almost always stay within it (Managing Money and Planning for the Future: Key Findings from the 2014 Canadian Financial Capability Survey – Financial Consumer Agency of Canada, 2015).
  • Canada’s Aboriginal population living off reserve, Canadians with lower levels of educational attainment, low-income earners and newcomers face higher financial stress (Managing Money and Planning for the Future: Key Findings from the 2014 Canadian Financial Capability Survey – Financial Consumer Agency of Canada, 2015).
  • Nearly 6 out of 10 Canadian adults (59.6 per cent) do not have a good idea of how much money they need to save in order to maintain their desired standard of living in retirement (Financial Literacy and Retirement Well-Being in Canada: An Analysis of the 2014 Canadian Financial Capability Survey – Financial Consumer Agency of Canada, 2017).
  • Greater financial knowledge leads to longer-term financial planning in the pre-retirement years. Retirees’ level of financial knowledge is positively related to having an RRSP, and knowing how much money is needed for retirement (Financial Literacy and Retirement Well-Being in Canada: An Analysis of the 2014 Canadian Financial Capability Survey – Financial Consumer Agency of Canada, 2017).
  • People who have higher levels of financial confidence tend to have better outcomes associated with day-to-day money and debt management than those with low levels of confidence (The link between financial confidence and financial outcomes among working-age Canadians – Social Research and Demonstration Corporation, 2016).