Editorial: Canada’s financial illiteracy factor

Economic ignorance begins in the home.

In Canada, more residents are clueing in to that reality. The multibillion-dollar question is: how is the country planning to deal with it?

Widespread innumeracy is at the core of a wider issue of poor money management, not only in Canadian homes, but also in the country’s government and public service bureaucracies.

Canada, burdened with a $671 billion debt and planning to add annual deficits ranging from $12 billion to $20 billion over the next five fiscal years, could use a countrywide program to instil financial literacy fundamentals in its residents.

And that program needs to start in elementary schools.

Without that commitment during formative learning years, the country’s public and private debt will worsen.

The head of MNP LLP., a corporate and consumer insolvency company, noted recently that developing good money-management skills early in life is fundamental to understanding how money, investments and budgeting work.

Without those basic financial literacy skills, said Grant Bazian, “individuals are more easily lured into debt: using credit cards, extending lines of credit and taking out high-interest predatory loans, without fully understanding the costs of paying back those debts.”

According to MNP numbers, 85% of Canadians agree that Canada has a financial literacy deficit. And only 16% of respondents to an MNP survey are confident that they have strong financial literacy skills.

That is a disturbing admission.

It confirms that a majority of the public has a poor understanding of its finances and the dangers of becoming mired in debt. It also leaves that majority similarly ignorant of its governments’ finances and the burdens of accumulating public debt.

In what is increasingly becoming a cashless society where the mobility of wealth has been accelerated far beyond what it was even five years ago, the need for financial literacy and money-management fundamentals is more critical than ever.

They should be core curriculum in Canada’s public schools now.