Many Canadians are in difficult financial circumstances or making financial decisions that threaten their long-term prosperity, according to a survey conducted for the Canadian Institute of Chartered Accountants.

The survey by Harris Decima also finds the majority of respondents believe financial literacy education must start at an early age. More than eight of every 10 Canadians believe young people are ill-prepared to manage their finances when they enter the workforce and 85% believe that financial management skills should be taught in schools to help solve this problem.

The CICA, which supports the efforts of the federal government’s Task Force on Financial Literacy, conducted the survey to take the pulse of Canadians on the issue.

“Clearly, Canadians want financial literacy education for our youth but rising debt and insufficient retirement savings highlight a need for help at all ages,” says Kevin Dancey, president and CEO, CICA. “The good news is that Canadians see financial literacy as an essential life skill. Helping Canadians develop financial knowledge is critical to Canada’s ongoing prosperity and growth.”

According to the survey, 78% of Canadian parents have attempted to teach their children financial management skills, but 60% believe they have not been very successful; how best to teach their children ranks second among the most sought after financial literacy skills. Tips on minimizing taxes was the first.

While Canadians believe that parents or guardians have the primary responsibility for teaching their children about money and that schools should teach financial management skills, a strong majority also believes that the financial services industry (75%) and governments (68%) also bear responsibility for ensuring that children and teenagers learn basic financial decision making skills.

Thirty-four per cent of people surveyed reported carrying over a monthly balance on their credit cards and, among them, 55% intend to carry forward a balance over the next month.

The survey found that 12% or respondents have borrowed to cover day-to-day living expenses, and half of them still owe against these loans.

Retirement saving rates insufficient

According to the survey, 40% of those 55 or older reported they have not saved enough for their retirement.

Among those planning to retire in the next five years, 32% believe they have not saved enough to retire on.

CICA initiatives

The CICA says it is working on a series of online and offline education initiatives, including community outreach by CAs, to advance financial literacy from childhood to retirement.

“While many Canadians are receptive to acquiring financial literacy skills, a key challenge will be the delivery of information and effective learning tools,” adds Dancey. “A national effort involving the financial sector, educators and government is needed so we look forward to the Task Force’s coming recommendations. Canada’s CA profession is eager to help improve financial literacy for all ages.”

The CICA’s Canadian Finance Study was conducted by Harris Decima via telephone during the summer of 2010 with a national random sample of 1,011 adult Canadians. A survey summary report is available online at www.cica.ca/flsurvey2010.

IE