Established by the Financial Consumer Agency of Canada (FCAC), Financial Literacy Month aims to strengthen the knowledge and skills of Canadians to increase their financial resilience.
Marc Tassé, forensic accountant, professor at the Telfer School of Management and associate professor at the University of Ottawa Law School, spoke to the gazette to clarify this concept.
What is financial literacy?
According to Marc Tassé, financial literacy is a set of skills and abilities that everyone should know in order to make informed and thoughtful decisions when managing their personal finances.
For example, financial literacy includes knowing how to set a realistic budget, limit spending, save money, plan for retirement, and understand the different options available when making a financial decision.
Marc Tassé explains that a distinction must be made between the knowledge of specialists in finance and accounting and that of everyday life. “We don’t want to turn you into financial experts, we just want to make you aware and aware of finances,” he comments.
Managing finances, a source of anxiety
Financial literacy is important for everyone. People who are financially savvy are able to manage their finances more confidently, make rational decisions that allow them to deal with the unexpected, and thereby improve their quality of life.
Additionally, as the market for financial products and services becomes more complex, it is important that Canadians gain the knowledge, skills and confidence needed to make informed decisions about the financial products and services that are best for them are suitable,” according to the Financial Consumer Agency of Canada.
If financial literacy is good for financial well-being, it’s also good for mental well-being, the professor points out.
Results from a 2019 Canadian Financial Ability Survey show that nearly three-quarters of Canadians (73.2%) had outstanding debt or had taken out a payday loan in the 12 months prior to the survey. Again, it says: “When it comes to managing monthly finances, approximately 1 in 6 Canadians (17%) say their spending exceeds their income and a quarter (27%) say they borrow, to buy groceries or pay current expenses. According to this survey, financial management causes anxiety.
Indeed, according to Marc Tassé, such management can cause a lot of financial stress. Having a financial plan and being aware of the cost of your needs can reduce financial anxiety.
Free resources for managing finances
According to the professor, people’s financial literacy is less than it should be.
If you don’t know where to start, Marc Tassé recommends turning to government resources. The Financial Consumer Agency of Canada created a self-assessment questionnaire that allows Canadians to understand and compare their financial skills and knowledge. Using the results of this questionnaire, you can filter the resources in the Canadian Financial Literacy Database so that only the resources and tools that meet your needs are offered.
Financial Literacy Month is a great time to validate what you know and explore what you don’t know about managing your personal finances.