Introduction

The Canadian Bankers Association (CBA) is pleased to participate in this final consultation, Toward a National Strategy for Financial Literacy, which focuses on young Canadians and adults.

The CBA and its member banks have been active in providing financial information and education to both young Canadians and adults for many years. Canada’s banks have collaborated through the CBA in a successful program for youth entitled Your Money Students. In addition, all banks have created specialized tools and resources both online and in branch to help adults improve money management knowledge and skills.

The banking industry is working closely with Canada’s Financial Literacy Leader toward the overall objective of strengthening the financial literacy of Canadians and CBA President Terry Campbell is a member of the National Steering Committee on Financial Literacy.

Financial Literacy Goals for Young Canadians and Adults

While much work is underway, there is still a need for enhanced financial literacy knowledge, skills and confidence among adults and young Canadians. In a study commissioned by the British Columbia Securities Commission (BCSC) in 2011, The National Report Card on Youth, we find that young Canadians not only have financial literacy challenges but they also have unrealistic expectations about the future. The study found that the majority of young people expect that within 10 years, their earnings will be three times higher than the national average and they will own a home. Young Canadians need the tools to manage expectations and plan for the future.

Many adults struggle with basic money management skills such as budgeting. For example, the Canadian Financial Capability Survey (CFSC) conducted in 2009 found that only 51 per cent of adult Canadians have a budget. Those Canadians who do not have a budget are more likely to be young Canadians.

The consultation document suggests four overarching goals for this final phase of the strategy. They are:

  • Strengthen and improve money management knowledge, skills and behaviours.
  • Engage Canadians in setting financial goals, saving and planning for their financial future.
  • Encourage lifelong learning so that Canadians can make sound financial decisions as their life circumstances evolve.
  • Promote the practices that contribute to financial wellbeing and that protect against risk.

Question 1: Are the proposed goals the right ones? If you suggest modifying them, please identify and explain the changes you would propose for young Canadians or adult Canadians.

The CBA agrees with the proposed overarching goals as set out in the consultation document. Whether they are young Canadians or adults, all Canadians can benefit from lifelong learning that will strengthen their money management and planning skills. CBA and its member banks agree that financial literacy is a skill set that is built over time and that the type of skills an individual will need will vary throughout one’s life. A young adult may find that their financial literacy needs are focused on understanding student loans or saving for a small purchase such as a new phone while an adult may need to focus on planning for retirement. Canadian banks will continue to be active in engaging Canadians in the ongoing process of building financial literacy skills throughout their lives.

Financial Literacy for Young Canadians

Provide young Canadians with the information they need to manage their money at key points throughout their lives

Question 1: Are you aware of programs or services that are effective in helping children and youth learn to manage their money that could be shared with others?

The CBA initiated the Your Money Students program more than 15 years ago. Over the years it has reached more than 225,000 students through 7500 seminars. The program has engaged over 600 volunteers from Canada’s banks. The program is offered to high schools across the country in both official languages and focuses on several key financial topics including: budgeting, understanding credit and debt; how to save; banking tips and protecting yourself from frauds and scams. With a banker volunteer delivering the program, students benefit from an engaging seminar format and the ability to discuss key issues.

Many banks have developed or supported the development of tools and resources to help children build financial literacy skills. For example, RBC has developed an engaging iPad app for young children entitled, “Leo the Lion”. The app is aimed at children three to six years old and teaches money basics.

Banks are strong supporters of Junior Achievement’s (JA) financial literacy programs. JA has worked in Canada’s high schools for years providing entrepreneurship and financial literacy training. HSBC Bank Canada has just recently announced its support of $1M over three years to expand JA’s financial literacy programs. TD Bank Group has also announced an additional $1M in support for JA’s business education and digital learning programs. Volunteers from CIBC are active in classrooms across the country supporting JA’s programs.

Question 2: How can we encourage parents to be more involved in teaching their children about money?

Parents need to be supported through access to high quality financial literacy resources in order to be more involved in teaching children about money. Many adults do not feel confident in their own abilities to manage money and would find it difficult to take on a teaching role with their children. With the Financial Consumer Agency of Canada’s (FCAC) new database of financial resources, parents can access quality resources online or in print. Online resources such as Clearfacts.ca, established by the National Bank of Canada, is one example of an online resource that parents can use to help them teach their children.

Parents also need to better understand the benefits of teaching their children about money. One program that is focused on awareness is Talk to Your Kids About Money created by the Canadian Foundation for Economic Education (CFEE) and supported by BMO Financial Group.

Question 3: Can you give examples of the types of materials, tools, information, programs and services you would like to see to help young Canadians manage their money?

Many excellent resources already exist in a variety of formats including online, print or in person seminars. We need to leverage what already exists and ensure people know where they can access existing tools and resources.

CBA would like to increase the number of schools and teachers that use Your Money Students and other classroom tools. We will continue to promote the program across the country. But the classroom is just one way to reach young people. Several banks have developed apps that help track spending or deliver engaging “just in time” financial literacy information.

Engage young Canadians in setting financial goals, saving and planning for their financial future

Question 1: Do you know of any initiatives that can serve as best practices to help young Canadians learn how to plan for their short and long term financial goals?

Financial literacy research points to the need for relevant information that is delivered at teachable moments. One such example is the Scotiabank Hockey Season Calculator that helps children and their parents plan for the expenses related to their hockey season. It is a very focused resource that leverages a specific need to teach financial planning skills.

Question 2: How can we reach and get young Canadians interested in saving and planning ahead?

Classroom programs offered by JA or the CBA’s Your Money Students program help to make young people aware of the need to save and plan ahead. Another organization that is operated by young people for young people is Enactus. Enactus is a student led program that can spark interest in entrepreneurship and money management. Scotiabank, TD Bank Group, HSBC Bank Canada and RBC support it.

But ongoing support beyond the classroom is also required. Online resources such as the FCAC website or the websites of individual banks are excellent sources of financial literacy information. All banks have tools and calculators to help with saving and planning ahead. Information and education delivered ‘just in time” through apps or online interactive games and tools can continue to provide young people with the information they need.

Promote the practices that contribute to financial well-being and that protect against risk

Question 1: What are the types of fraud to which children and youth are most at risk and what are the best ways to avoid them?

Children and youth can be at risk for many different types of fraud. It is crucial that they understand their responsibility to protect their PIN and their online passwords. Many young people engage in online shopping, conduct much of their business online and share information readily through social media. It is important that they practice good password security, have anti-virus software and firewalls, be cautious of the personal information they post and share online, and know how to recognize dangerous websites. Protecting yourself from fraud is one component in the Your Money Students program. Other resources are offered online through the CBA’s and its member bank websites.

Question 2: Are there effective programs that help children and youth learn more about their rights and responsibilities as financial consumers that can be used by others?

Most financial literacy youth programs offer information to help protect youth and children as financial consumers. There are broad campaigns such as Protect Your PIN that have helped to raise general awareness of the responsibilities of consumers. The CBA has information on its website about the financial rights and responsibilities of all Canadians including youth.

Financial Literacy for Adults

Strengthen money management skills and behaviours among adult Canadians

Question 1: Are you aware of approaches that have been shown to be effective in helping adults set budgets and live within them?

Most banks have budget worksheets or calculators available on their websites for adults to use to help generate individual or family budgets. More in depth information is available through seminars offered by credit counselling agencies and supported by Canada’s banks. For example, Credit Counselling Canada is an umbrella organization for non-profit credit counselling agencies across the country. Money Mentors is one credit counselling organization that offers Financial Fitness classes in Alberta.

TD Bank Group recently announced that it would offer its customers access to a mobile app that helps them to track spending and set spending limits. This type of resource can be an effective way to deliver “just in time” tips on staying within your budget.

Question 2: How can we reach adults to improve understanding of responsible use of credit and the consequences of over-indebtedness before they get into financial difficulty?

Preventing financial difficulty is one goal of Credit Education Week offered by Credit Canada Debt Solutions and supported by Capital One as well as TD Bank Group, RBC and BMO Financial Group. The week includes seminars and discussions on select financial literacy topics.

Engage more adults in setting financial goals, saving and planning for their financial future

Question 1: What are effective ways to encourage Canadians to set financial goals and save to achieve them?

More than 96 per cent of Canadians have an account with a financial institution in Canada. Canada’s banks serve their customers with a variety of products and services. These include advice and support from certified financial planners in many bank branches across the country who help their customers to set goals 6 and to save for the future. With one-on-one advice and support Canadians can set financial goals and begin to implement their saving goals.

Question 2: What prevents some adults from planning for their financial future, and how might these barriers be overcome?

Today’s world is busy and individuals and families are pressed for time and resources. Many people feel there is little left at the end of the month to put away for the future. However, saving for the future can be much easier when automatic savings take place through the workplace. For example, the Government of Canada offers its employees the option of purchasing savings bonds through payroll deductions. The easier it is to save the more likely that people will do so.

Workplace based programs can be an effective way to deliver financial literacy content to individuals. Programs can be tailored to meet the needs of a particular workplace including information on benefit programs and retirement. Ensuring that employers are also engaged in strengthening financial literacy can help to overcome time and resource barriers.

Encourage lifelong learning so that Canadians can make sound financial decisions as their life circumstances evolve

Question 1: We know that there are some “teachable moments”, such as entering the workforce, buying a home or having children, that present good opportunities to help adults ensure their financial knowledge and skills keep pace with changes in their life and financial situation. How can we incorporate financial literacy into these teachable moments?

Research continues to demonstrate the importance of delivering information that is relevant and timely. We may refer to these timely interventions as teachable moments. If we are to build financial literacy skills we will need to develop a fairly broad-based partnership of organizations both within the financial services sector and outside.

This cross-collaboration will allow the delivery of relevant financial information to people who may be entering the workforce or planning for a family. The Financial Literacy Leader has already begun to build crosscollaboration and the CBA and its member banks will be there to support and participate in these crucial partnerships.

Question 2: Can you name some organizations that could be partners in reaching the adult population with financial education initiatives, including some that involve games or other interactive activities?

Organizations that work with individuals and families in workplaces, community centres, churches, health care and sports teams are all possible partners for financial literacy collaboration. An essential component of the financial literacy challenge is raising awareness. Collaboration across sectors can make a difference. Banks have partnered with voluntary sector organizations as diverse as the Canadian Foundation for Economic Education; Junior Achievement; Credit Canada Debt Solutions; Money Mentors; Prosper Canada; Momentum Calgary; and Enactus to name just a few.

Promote the practices that contribute to financial well-being and that protect against risk

Question 1: What specific types of risk to financial wellbeing are important for adult Canadians to understand?

There are many risks to financial wellbeing – some of which are criminal. Fraud and financial abuse are more common than many people realize. It is important for adults to recognize the signs or red flags for fraud or abuse and to know where to go for help. The CBA website contains information on frauds, scams and abuse. Most banks include information for adults on what to watch for and how to get help if required.

Other risks to financial wellbeing can include excessive debt or not saving enough for retirement. It is important to raise awareness of the need to manage debt and to save for the future. Credit counselling agencies help individuals with debt management and to regain control over their financial lives. For over forty years, banks have supported credit counselling in Canada both financially and with volunteer expertise.

Question 2: What current initiatives could be leveraged or enhanced to increase awareness and understanding of these risks?

The CBA and its banks have information on their websites to alert consumers to the risks of fraud and financial abuse. Partnerships between banks and non-profit organizations provide help to individuals who may be struggling with debt.

Together with government and the voluntary sector, Canada’s banks will continue to work toward raising awareness of risks to financial wellbeing.

Measuring progress

Question 1: Are there any distinct means of measuring progress on improving financial literacy for young Canadians or adults that are different from measures for the broader population? If yes, please identify proposed measures and reasons for suggesting them.

Measuring progress for young Canadians has made significant advancement with the 2012 pilot of a financial literacy survey of 15 year olds included in the Programme for International Student Assessment (PISA). Eighteen countries participated in the financial literacy pilot and once implemented the assessment will allow countries to track progress over time. Although Canada was not a participant in the pilot, there may be learnings from the pilot that can be applied in our classrooms.

In Canada, tracking student’s progress over time will be an important addition to financial literacy curriculum.

The CBA and its member banks will continue to work together with the Financial Literacy Leader to find appropriate measurement tools and to help strengthen financial literacy in Canada.

Conclusion

The CBA and Canada’s banks appreciate the opportunity to participate in the National Strategy consultations and provide submissions to the different phases and we trust that our contributions have been useful to the process. We look forward to the release of the National Strategy for Financial Literacy which will help guide our collective efforts for the coming years, enable us to share best practices and ultimately achieve success in strengthening the financial literacy of all Canadians.