In a world where talk of “financial literacy” fills the pages of weekly consumer affairs blogs, columns and broadcasts, it seems strange that the most active consumers of media would have the least knowledge of the subject.
But according to a recent poll commissioned by the Canadian Institute of Chartered Accountants, this is exactly the situation Canadians are now facing.
The poll asked more than 1,000 respondents across the country to give their assessment of their level of financial literacy.
The results were disappointing for any who recognize the importance of having money management skills.
The poll found 84 per cent of young Canadians feel they don’t have the knowledge to manage their personal finances by the time they enter the workforce. The poll also found that another 22 per cent of 18 to 29-year-olds have no savings or investments.
Financial illiteracy among youth presents problems for the whole of Canadian society. As previous generations retire, the next generation will be called on to provide tax revenues to support the healthcare needs of an aging population.
As recent global events have shown, the cost of skyrocketing household debt is too often instability, insolvency and want. This is especially likely among a population that claims to lack basic financial knowledge.
Given the need for additional financial literacy skills among young Canadians, governments, agencies and individuals would do well to invest in organizations that provide training and support for those wishing to learn the basics of personal financial management.
While the study found 98 per cent of Canadians believe much of the responsibility for teaching money management skills to children lies with parents, the reality is that many parents are as confused as the children.
This is particularly true of low and lower-middle income households who also tend to lack the resources to easily employ the services of professional financial advisers or bankers.
Fortunately, a number of organizations in Ottawa have set out to make it easier for individuals, including the university-aged next generation of taxpayers, to develop sound financial literacy skills and escape indebtedness.
These organizations offer training and counseling services to low and middle-income individuals who need help organizing their finances.
Entraide Budgétaire Ottawa is the largest and oldest organization of this kind in the city. The not-for-profit organization provides free budget-counseling, debt management and tax services to as many as 1,200 low and middle-income individuals a year.
The organization also conducts financial literacy workshops that are open to the public– several of which are scheduled to take place at the main branch of the Ottawa Public Library in the spring.
Organizations like Entraide Budgétaire provide practical skills and provide a direct benefit to the city. With an annual operating budget of $400,000 in 2010, it put more than $500,000 back into the pockets of city residents through their income tax return clinics.
Entraide Budgétaire is a registered charity whose funding comes from a complex network of federal, provincial and municipal grants, contributions from the United Way and private donors. Government grants are often made after applications which must be resubmitted each year.
According to executive director Hélène Ménard, intermittent instead of recurrent funding makes it difficult to keep enough staff to meet demand.
As such, Entraide Budgétaire has only four permanent budget counselors and one contract position available to serve the entire city.
Ménard says that recurrent funding from local and provincial governments, agencies and private interests would allow them to better serve the needs of communities around Ottawa.
Given the value of the service this would be money well spent.