It looks like Canada’s consumers are in for a little financial schoolin’. Hidden among the 360 pages of the federal government’s recent budget proposal is a plan to launch a new financial literacy task force this spring. The task force, which will include representatives from the business, education, academic and volunteer sectors, will report to Flaherty with recommendations on how best to equip Canadians to make more responsible financial decisions.
The new effort appears to be a tacit acknowledgement that part of the blame for today’s financial mess falls on regular Canadians who took on more debt than they should have. “We are graduating people who can design and build complex buildings and bridges, but cannot effectively manage their personal finances,” said Flaherty during a Washington speech last May. “A country’s financial success is ultimately the sum of the financial success of all its households.”
The U.S. is also trying to educate its consumers. The proposed National Financial Literacy Act, announced last week, aims to create financial education programs in communities across the country. The bill includes measures to motivate financial institutions and businesses to inform their customers of the benefits and repercussions of their financial decisions.
In Canada, educators say the initiative is long overdue. Our citizens are expected to graduate from high school knowing how to read and write, but most can’t balance a chequebook. “I think there’s a real need to deal with it at the public school and the high school levels,” says Lynn Biscott, financial educator and director of Fernwood Consulting. She adds that many of her clients are intelligent people who simply have never been taught the basics of finance.
Elena Jara, education coordinator for Credit Canada, agrees. She says that the days when you could count on the bank not to lend you too much are gone. “People need to take responsibility for themselves,” she says. “The financial institutions have left all the weight on the shoulders of the consumers.”