Financial well-being is a key part of a country’s stability. That’s why, in recent years, focused efforts have been put towards improving Canadian financial literacy. The Financial Consumer Agency of Canada (FCAC) is leading the charge in organizing, measuring, and reporting on over 50 initiatives geared towards greater financial well-being for Canadians. These initiatives use a multi-faceted approach that combines high-level strategy, data-driven research, educational campaigns, and accessible consumer tools.
The backbone of this effort is the National Financial Literacy Strategy 2021–2026, which is directly supported by the FCAC’s outreach and educational programs. A key element of this strategy is the annual recognition of Financial Literacy Month (FLM) every November.
Financial Literacy Month
Since 2011, Financial Literacy Month has aimed to bring awareness around improving Canadian financial literacy. It works by promoting financial literacy through intensive education and outreach in partnership with financial industry stakeholders across the country.
The theme of this year’s campaign is “Talk Money.” The hope is to encourage open conversations about finances throughout Canada and tackle the stigma that often surrounds financial discussions. There’s been proof that by sharing financial insights and resources with each other, we can increase financial knowledge and confidence, ultimately leading to better financial decision-making.
Other initiatives (and findings so far)
Financial Literacy Month isn’t the only initiative. There are over 50 initiatives underway, coordinated by more than 30 organizations. Below are just a few that are key to debt management and Canadian financial literacy.
Debt and credit-specific initiatives
Buy now, pay later
Buy now, pay later programs have expanded far beyond their original use. What used to be a common practice for larger purchases, such as home appliances and furniture, has grown to even include essentials like clothing and groceries. This shift in behaviour prompted the FCAC to explore what’s happening, so they did a survey to find out.
Their results revealed that 8% of respondents had used a BNPL program, 74% of whom used it to cover an expense over $200. What’s concerning is that 20% said they spent at least “a bit more” than they would have if the BNPL service wasn’t available. Even more concerning is that 13% used it for household essentials and groceries. A strong indicator of the financial struggle many Canadians are facing.
The survey also indicated a few gaps in Canadian Financial Literacy. The FCAC report says that, of the group that participated in a BNPL program:
- 44% found it difficult to understand the potential impact on their credit score
- 36% found it difficult to understand how to resolve a potential dispute
- 21% found it difficult to understand the penalties or interest charges for missed or partial payments
Having this knowledge of the gaps, the FCAC plans to do more research into the BNPL market and implement tools to fill them in. Some of these follow-up actions include looking into:
- How the most vulnerable consumers are participating in BNPL programs.
- How to help consumers maximize the benefits and minimize (eliminate) the negatives.
- Implementing better regulations around dispute resolution.
Credit Counselling
This initiative revolves around gathering data on the effectiveness of credit counselling. They are evaluating three key stats:
- First Counselling Appointment Completion
- Annual Review
- Debt Management Program Completion
This particular initiative is ongoing and so doesn’t have any results reported as of yet.
Financial coaching program
This initiative involved offering participants a 6-week financial coaching program along with 2 years of follow-up support. They’ve found that the coaching students who participated in a debt reduction program for up to 2 years paid off a combined $1 million in debt. That equated to an average of over $5,000 per person.
Equifax programs
Many Canadians are at a disadvantage when it comes to accessing credit because rent payments are not reported to credit bureaus. They are making an effort to resolve this and create credit equality by implementing a plan to gather rental payment data.
Canadian financial literacy initiatives
Monthly Financial Well-being Monitor
The FCAC gathers and releases statistics by way of the Financial Well-being Monitor Dashboard. The information is compiled from a regular survey asking 1000 Canadians about how they’re doing financially. The survey asks questions about whether respondents are:
- Struggling to pay bills
- Using a budget regularly
- Taking on debt to cover expenses
- Building a or have an emergency fund
- The victim of fraud or a scam
Exploring the dashboard proves what Canadians are feeling: we are struggling financially. For example, in 2024, 54% of respondents said they are struggling to pay bills. While that is slightly better than 55% in 2023, it’s a far cry from the 38% in 2019 before the pandemic. On a more positive note, in the same time periods, 53% of respondents are using a budget now compared to 50% previously.
This data helps the FCAC and the Government assess how Canadians are doing with money management and formulate strategies to help.
Financial Literacy Evaluation Toolkit
This initiative helps those professionals and organizations that offer financial literacy education a way to assess how effective their offerings are. The findings also help determine what kind of financial help Canadians look for and how often. This information helps stakeholders understand where there are gaps in Canadian financial literacy and realign programs to offer what’s most needed. No findings have been released on any measures for this initiative yet.
Canadian Financial Capability Survey
The Canadian Financial Capability Survey’s goal was to help understand Canadians’ knowledge, abilities and behaviours when making financial decisions. This survey created much of the foundation of what’s been and will be implemented to improve Canadian financial literacy. It covered a wide range of topics, including:
Interesting findings from the survey revealed:
- Only 40% of Canadians know when it’s beneficial to borrow money.
- Most Canadians, 60%, don’t shop and compare credit cards before signing up for one.
- Fewer than 50% of Canadians know how much money to save for retirement.
- 35% of buyers reported experiencing unexpected costs during the homebuying process.
- 70% of Canadians say they are financially preparing for retirement.
Priorities
All of the initiatives are specifically chosen to support at least one of the 6 priorities set out by the FCAC and the Government of Canada. The goal of these priorities is to fill in the gaps of Canadian financial literacy and ensure Canadians are prepared for what’s to come in the financial marketplace. Below is a list and a brief explanation of all the priorities.
Priority 1 – Communicate in ways people understand
This priority is all about encouraging financial stakeholders to use plain and simple language. Using clearer language will help consumers understand what they are signing up for and avoid experiencing negative consequences from confusion and misunderstanding.
Priority 2 – Build and provide for diverse needs
Canada is a big country with a diverse population. This priority aims to help stakeholders expand their financial service offerings so everyone can get access to the services they need.
Priority 3 – Support increased digital access and digital literacy
The financial industry is using tech more than ever before. This priority is all about ensuring Canadians are comfortable with using this technology effectively and safely.
Priority 4 – Enhance access to trustworthy and affordable financial help
Sadly, it’s often the most financially vulnerable who can’t access the financial help they need. Whether they can’t afford to get help or the help they can get isn’t appropriate, they get left behind. The goal of this priority is to get affordable and appropriate help into the hands of those who need it most.
Priority 5 – Use behavioural design to simplify financial decisions
This priority asks financial stakeholders to operate in such a way they it encourages consumers to make good financial decisions. For example, setting up their website or other resources in such a way that Canadians can easily assess the best financial choice for them.
Priority 6 – Strengthen consumer protection measures
It wouldn’t make sense to put in all this effort to improve Canadian financial literacy if the financial marketplace isn’t safe. The objective of this priority is to motivate those in the financial industry to prioritize safe operations.
How to get involved
All these efforts by the FCAC, financial stakeholders, and the National Financial Literacy Strategy 2021–2026 form a comprehensive support system for Canadians seeking to navigate financially challenging times and improve their financial health. This support system is there for us to use. Take advantage of it! Visit the National Financial Literacy Strategy website to learn more about all the initiatives. If you find one you want to take part in, contact the initiative’s Adopter to get started.
