Experts say that there needs to be more discussion around financial literacy
Most teenagers believe that they are competent managing their own money. However, according to Alberta Education statistics, most of the public disagrees with them, and experts say those students are in need of help.
Government agencies have yet to respond to repeated requests for comment on what is being done to improve student’s financial literacy although other organizations are offering such programs.
According to the 2013 Satisfaction with Education in Alberta Survey, 76 per cent of students feel that they are competent in their ability to manage money, credit and personal finances. But only 31 per cent of the public agreed with student’s point of view in the report.
Indeed, Kelly Harper — director of customer learning experience for BMO says the current generation doesn’t understand the difference between needs and wants — and the impact instant gratification can have on their pocketbooks.
“So I might need a new pair of jeans because I have outgrown my old pair of jeans, but do I really have to buy a pair of $100 jeans or can I buy a $30 pair of jeans,” says Harper.
But Gary Rabbior, president of the Canadian Foundation for Economic Education, suggests another explanation for students’ financial illiteracy — a lack of information.
“If you get somebody feeling confident about making financial decisions but they don’t really have the background, it can actually end up being worse for them,” says Rabbior.
Parents agree that more needs to be done to help students gain these financial literacy skills.
A report done by BMO called having the “money talk“, found 96 per cent of parents believe schools should be doing more to educate students on financial matters.
According to this report,”31 per cent [of parents] rank financial literacy as one of the top three most important subjects to teach children in school, comparable to social sciences and humanities (32 per cent).” The significance of financial literacy in schools also severely outranks both physical education and the arts to parents.
Despite multiple emails and phone calls, officials from the Calgary Board of Education and Alberta’s Ministry of Education did not respond to requests for comment about what is being done by the government to further this education.
Photo illustration by Nora Cruickshank
Meanwhile, the Canadian Bankers Association (CBA), the Canadian Foundation for Economic Education (CFEE) and various banks are offering educational financial programs to schools.
Having financially literate customers are important to bankers because their day-to-day interactions with people and students make up the majority of their work.
Kate Payne, media relations’ specialist for the Canadian Bankers Association says, “A financially literate customer is a good customer.”
Programs and in-school-seminars are offered in the hopes that students will start thinking about their money.
In total, the CBA, and CFEE partnered with BMO, have reached over 525,000 students in schools through the Your Money and the Talk With Your Kids About Money programs.
“[Part of the reason that has sparked the movement of financial literacy education], is that financial education is not part of core curriculum,” says Harper. “If you don’t understand how credit cards work, if you don’t understand compound interest, you don’t understand minimum payments, you don’t understand what a credit score is, you can get into trouble the first time you get a credit card.” She warns that those mistakes can remain with a person forever.
But part of the responsibility for ensuring those mistakes don’t get made rests with parents.
The 2013 study done by BMO found parents would rather have a conversation with their kids about the facts of life, than about money matters.
Harper emphasized the importance of adolescents understanding the value of money growing up, and the necessity for families to have open and honest conversations with their children about money.
She suggests the reason parents may shy away from talking to their kids about financial literacy is embarrassment over their own past mistakes or their own lack of knowledge on the topic.
“I think as a society we need to reduce the stigma about the fact that sometimes people make choices that maybe aren’t the best in the long term, but it’s about how they overcome them.”
Harper says the responsibility of building financial capabilities rests with teachers, parents and financial services.