National research plan for financial literacy 2016-2018

1. Context
2. The study
3. Key findings
4. Points to consider

• Context
• The study
• Key findings
• Points to consider
• Full report

Context

Many Canadians are financially constrained: one third of Canadians are struggling to make ends meet, which rises to 42 per cent for those between the ages of 35 and 44 years old. Many of those Canadians rely on sources of credit, rather than savings, when their income is inadequate to cover their expenses. The National Strategy for Financial Literacy—‘Count me in, Canada’, was developed to mobilise and engage public, private, and non-profit sectors to strengthen the financial literacy of Canadians and empower them to do the following:

• Manage money and debt wisely
• Plan and save for the future
• Prevent and protect against fraud and financial abuse.

The study

This review document presents Canada’s 2016-2018 National Research Plan for Financial Literacy, the objective of which is to focus efforts among researchers to generate key evidence that will contribute to the successful implementation of the National Strategy for Financial Literacy—Count me in, Canada.

It develops individual plans for financial literacy programmes for young people and for adults to help them achieve positive financial outcomes for the future. There are also a number of key areas discussed within the plan:

• Budgeting;
• Paying down household debt;
• Building savings;
• Increasing complexity and availability of financial products and services.

The plan starts with a summary of what the evidence already shows about interventions involving financial literacy:

• A more financially literate population leads to better outcomes for individuals and for society as a whole;
• Financial education that is focused exclusively on imparting financial knowledge does not consistently lead to sustained behavioural change;
• Timing matters: financial education specific to a given decision is most effective when it closely precedes that decision;
• Financial education in Canada will benefit from a better understanding of the unique needs and characteristics of demographic groups, namely, newcomers, youth, seniors, Indigenous Peoples and low-income Canadians, to better tailor program content to their specific needs;
• Financial education in Canada will benefit from a systematic approach to measurement and evaluation in order to assess changes in behaviour and report on incremental progress and success.

Key findings

This plan benefits from a set of key areas (mentioned above) and for every key area there is reference to a key statistic which evidences why it is an area of particular focus for the Financial Consumer Agency of Canada:

• Budgeting: One third of Canadians are struggling to make ends meet. This rises to 42% for those between the ages of 35 and 44 years old.
• The Canadian debt-to-disposable income ratio continues to climb and is one of the highest in the world. Further examination finds that highly indebted borrowers tend to be younger (under the age of 45), have lower incomes and wealth, and are less likely to have pursued post-secondary studies or training.
• Research findings demonstrate that one-third of Canadians have recently faced the situation of not being able to cover living expenses through income alone, and one half (48%) of this group also identifies using some form of credit to make ends meet.
• Research in Canada has found that receiving advice on financial products is associated with positive savings and financial planning behaviours.
• Within the discussion of key areas, this review document provides details of current research being carried out, and by which organisation or individual, in order to allow other organisations to contact them, share information, or find out more.

Points to consider

• Relevance:
  • This study will be of interest to anyone interested in exploring the role that indebtedness plays in modern economies, as well as looking at national plans on providing remedies to overindebtedness.
• Generalisability/ transferability:
  • This is a Canadian review of evidence used to demonstrate a plan for financial literacy research. Therefore it has limited transferability to the UK, but remains of interest to stakeholders interested in seeing how evidence informs national planning around financial literacy interventions.

Full report

National research plan for financial literacy 2016-2018 - full report