Financial education has been part of the school system for some time, yet a broader concern with financial literacy, or financial capability, among the population as a whole is relatively new. The reasons for this are explored here. Those dynamics have led the Organisation for Economic Cooperation and Development (OECD) to undertake a two-part financial literacy project and to the creation of national agencies and strategies in the United Kingdom, the United States, and Australia. The US agency appears to be concentrating its efforts on the coordination of existing materials; the agencies in the United Kingdom and Australia appear to be especially successful in developing new materials.
Those national agencies are making rapid progress. National strategies have been conceptualized and documented. Websites have been created. Baseline surveys have been designed, undertaken, and published. Programs have been proposed and implemented to improve the financial literacy of specific populations such as school-aged children and adolescents, those who are working, the un and under banked, and those with credit problems. Evaluations have been undertaken of some of these programs.
The newness of the field is reflected in variations in the terminology used. The OECD’s landmark study does not use the term financial capability, and even though the report has “financial literacy” in its title, it does not define the term.
Although the field of financial literacy is new, principles have been suggested and many programs have been created. The OECD’s study resulted in principles and good practices such as promoting unbiased, fair and coordinated financial education; separating financial education from commercial advertising; starting financial education in primary school; ensuring that financial education is an integral part of the good governance of financial institutions; focusing on important life-planning aspects, such as basic savings, debt, insurance, or pensions; and promoting specific websites and warning systems on high-risk issues (such as fraud).
These principles and the experiences in other countries provide lessons that Canada can use. The lessons learned go beyond the concern raised in some of the literature about financial literacy for the marginalized and disadvantaged to reflect a realization that financial literacy concerns all income levels.
Canada could establish a single national website and find ways to develop quality generic advice that could be used on that site and elsewhere; use a life cycle model; understand that an integrated approach involving multiple government programs would have greater success in convincing Canadians to take an interest in their own financial literacy; be prepared to undertake pilots before a complete plan has been developed; and develop model curricula that could be used in the schools and in workplace learning. In undertaking this work, Canada might borrow from and build on the best experience available in other countries. FCAC’s consumer education mandate makes it the logical agency to undertake this work. It may not be necessary for Canada to do everything on its own: FCAC could initiate the sharing of materials among agencies in Australia, the United Kingdom, and the United States.
Contents
Foreword (CPRN)
Foreword (FCAC)
Executive Summary
Acknowledgements
Introduction
- Financial Consumer Agency of Canada
Core Documents
Overview
The Importance of Financial Literacy
- Demographics Are Changing
Financial Markets Continue to Change
Employment and Pension Systems Are Changing
Consumers Are More Involved in Financial Markets
The Consequences of Poor Financial Decisions Are Becoming More Serious
Financial Literacy Levels Are Low or Inappropriate to Changed Circumstances
Widespread Financial Literacy Can Contribute to Social Cohesion
Definitions
- Financial Capability
Financial Literacy
Financial Education
Economic Capability
Other Expressions
International Experience
- OECD
Agencies Created
National Strategies Developed
Websites Created
Research, Surveys, and Evaluations
Baseline Surveys
Evaluations
Lessons Learned
- Principles and Elements of Good Practice
National Agencies, Strategies, and Baseline Surveys
Websites
Life Cycle Model
Integrated Approach
Pilots, Consultation, and Coordination
Generic Advice
Start in School
Continue throughout Life
Vulnerable Consumers and Alternative Financial Services
Wealthy Consumers
Public Acceptance of the Importance of Financial Literacy
Savings Incentives
Sharing Materials, Methods, and Research
Canadian Context
A Note on New Zealand
Summary and Conclusions
References
Appendix A. Key Abbreviations
Appendix B. Key Websites
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