A lack of skills and education are contributing to surging consumer debt in Canada, says a new survey by MNP Ltd.
Survey results, which were released on Tuesday, said 85 per cent of Canadians agree that financial literacy in Canada is lacking, and this lack of knowledge is contributing to Canada’s consumer debt problem (87 per cent).
The survey also found that 94 per cent of Canadians agree that Canada’s schools need to do a better job at teaching financial literacy skills to children and 85 per cent of respondents wish they personally had the opportunity to learn more about finance and the economy while in school.
“Developing good money-management behaviours like budgeting early on in life is critical to financial well-being in the long term. Without basic financial literacy skills, individuals are more easily lured into debt: using credit cards, extending lines of credit and taking out high interest predatory loans, without fully understanding the costs of paying back those debts,” said Grant Bazian, president at MNP Ltd., who leads a national team of licensed insolvency trustees in over 230 offices across the country.
Other survey results include:
- 16 per cent of Canadians strongly agree that they personally have strong financial literacy skills while 39 per cent admit that they have poor financial literacy skills;
- 35 per cent agree that Canadians have strong financial literacy skills;
- Only a minority are confident that they wouldn’t incur more debt if faced with a change in their relationship status like a divorce (32 per cent), unexpected auto repairs or purchase (33 per cent), having to take three months off work due to illness (31 per cent), a job loss or wage decrease (29 per cent), a death in the family (30 per cent), or paying for someone’s education (27 per cent).
“It is usually a sudden unexpected life event that causes individuals to become insolvent; a job loss, divorce, the loss of a loved one. Those who are severely in debt and lack financial knowhow are far more vulnerable,” said Bazian.
Mario Toneguzzi is a veteran Calgary-based journalist who worked for 35 years for the Calgary Herald, including 12 years as a senior business writer.