Financial literacy is medicine for an ailing economy
As we near the end of November, officially designated as Financial Literacy Month by the Financial Consumer Agency of Canada (FCAC), the only prediction we can safely make is that economic times are hard and getting harder.
Inflation has re-entered Canadians’ lives in a way not seen in decades, with the cost of our everyday essentials like fuel, rent, food, and utilities pushing higher. In response, the Bank of Canada has quickly hiked interest rates, making mortgages, car loans and borrowing of all kinds more expensive. Now, many economists believe that at least a mild recession is inevitable in the coming year.
Against all these forces, what are Canadian families and individuals to do? How can they best protect themselves from the effects of rising prices, slowing growth and worldwide economic turmoil?
The answer starts with the very message that Financial Literacy Month exists to promote: protect yourself with the shielding benefit of good, sound financial know-how. It only stands to reason that, as times get tougher, those who understand their finances best will fare best - by being able to manage money better and establish a solid household plan.
To better understand attitudes, PC Financial® recently had the Angus Reid Forum undertake a nation-wide survey of Canadians and their outlook on financial matters.
The good news is that 77% of Canadians surveyed feel confident in their financial literacy skills. Moreover, two-thirds of Canadians (66%) express optimism about their own personal financial future.
However, the survey also found a large gap exists. Fewer than half of Canadians (44%) feel equipped with the tools and advice to help them find ways to save during the economic challenges ahead.
This data point is the shining spotlight that should guide our focus for this year’s Financial Literacy Month.
People may insist they feel confident in their own financial literacy but the fact that a majority of Canadians don’t feel they have access to the support needed tells us where the work needs to be done.
What can those of us in the financial services industry do to help? Three things come to mind.
First, give people access to financial products and tools that help them save money. That means credit cards and accounts with no or very low monthly fees. PC Financial®, for example, offers a no monthly fee everyday spending account called the PC Money™ Account and a PC® Mastercard® credit card with no annual fee. Both reward you with points you can redeem¹ for everyday essentials. More of these kinds of products is what Canadians will be looking for in the future.
Second, provide people with advice, not just products. Not everything needs to be a sales job. As the survey tells us, Canadians are looking for support, tools and insights on how to manage their money. We offer online tools like the goal setting feature in the PC Financial® App and the PC Financial® Blog, intended to help people find insights like understanding your credit score or tips for reducing the impact of inflation on your finances. As economic conditions grow more challenging, it will be even more important to ensure these tools are tailored to what people need and are looking for.
Finally, we need to do more as a sector – banks, credit unions, financial advisors and asset managers – alongside government agencies like FCAC to find new ways, new strategies and new channels to get the information people need into their hands. By working together, we can accomplish much more than on our own. It’s just a matter of taking the time and making the effort.
Not all Canadians feel vulnerable today, but for the majority of us who would like better access to tools that might help, the time to act is now. Financial literacy isn’t a cure-all. No such thing exists. But it remains our best bet against poor decisions and in favour of sound finances.
General information not about PC Financial® products is provided for your reference and interest only. The above content is intended only to provide a summary and general overview on matters of interest and is not a substitute for and should not be construed as the advice of an experienced professional. PC Financial® does not guarantee the currency, accuracy, applicability or completeness of this content.
¹Minimum redemption is 10,000 PC Optimum™ points (worth $10 in rewards) and in increments of 10,000 points thereafter at participating stores where President’s Choice® products are sold. Some redemption restrictions apply; visit pcoptimum.ca for details, participating stores and full loyalty terms and conditions.