(Dreamstime)

By David Opinko

Report: Canadians confident about their financial literacy, but 46% failed test

Nov 18, 2020 | 12:08 PM

TORONTO, ONT – A new report suggests a good portion of Canadians are not as financially-savvy as they would like to believe.

Zolo conducted an online survey between September 19 to October 12, 2020, where 6,651 respondents rated their knowledge, confidence, and skills when it comes to managing their finances for their Financial Literacy vs Financial Sufficiency 2020 Report.

“Developing good money-management behaviours, like budgeting, are critical to financial well-being,” explains Romana King, personal finance expert at Zolo. “Without basic financial literacy skills, people rely on high-interest credit cards or loans without fully understanding the financial and lifestyle cost these decisions have on their current life and future goals.”

King recommends making a detailed budget of all of your household income and spending that gets reviewed regularly and consider meeting with a financial planner if you have not already.

When it comes to their feelings about their financial knowledge:

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• 70 per cent said they are confident about their overall financial literacy
• 82 per cent said they are good at keeping track of money
• 79 per cent said they are good at making ends meet
• 76 per cent said they have a clear idea of what financial products they need
• 70 per cent said they have a “good idea” of how much money they will need to retire

The respondents then took a basic financial literacy test, which suggested at least some might be a bit overconfident.

• 46 per cent failed the basic financial literacy test
• 78 per cent said they would run out of money in 90 days or less if they lost their job today
• 77 per cent are willing to neglect saving for retirement in order to buy a home sooner
• 66 per cent of renters are willing to buy a property where household payments would exceed 30 per cent of their income
• 20 per cent do not have life insurance
• 56 per cent have written a will
• 80 per cent know that making late payments on credit cards can hurt your credit score, yet 27 per cent believed it was “ok to skip a payment now and then as long as you eventually pay it”

The COVID-19 pandemic has certainly played a part in impacting peoples’ financial stability and confidence going forward.

• 55 per cent reported being behind on two or more consecutive months in paying a bill
• 47 per cent were behind on two or more consecutive months in making a loan payment
• 47 per cent reported being behind on two or more consecutive months in paying their rent or mortgage

The estimated margin or error for Zolo’s report is +/- 1.59 percentage points, 19.8 times out of 20 (99%).

More details here.