Context

This is a 2014 study commissioned to provide a benchmark of financial capability and knowledge among Canadians and to identify areas where financial literacy could be improved. It repeats and builds on a 2009 study.

The study

The report focuses on managing money and debt, and on planning and saving for the future. It repeats a telephone survey undertaken in 2009 and highlights changes to those figures. It presents descriptive analyses of the results by various socio-demographic groups but is representative of the Canadian population over 18 as a whole. The sample is based on the Canadian Labour Force Survey. The survey uses a multi-stage probability stratified sample design to ensure people from all parts of Canada are represented.

Key findings

• • Bills and payments: 69% were “keeping up, no problems”, but this fell to 50% among Aboriginal Canadians living off reserve (who experience more unemployment, among other disadvantage) and 58% of those aged 35-44 (possibly because they are most affected by mortgages and student debt). Higher income was strongly correlated with keeping up.
  • Budgeting: Less than half of Canadians (46%) set a budget and but over 90% of those who do keep to it. Aboriginal Canadians, people with low incomes, those not in a couple relationship, 18-24-year-olds and those aged 70+ were least likely to set a budget.
  • Checking account balances: 63% check balances at least weekly, with lower levels among low-income earners and “newcomers” to Canada. Among the former, this may reflect “financial avoidance” arising from higher levels of financial stress.
  • Debts: Credit card and mortgages were the main types of debt across all groups. Those with higher incomes tended to have larger debts. Student loan debts were particularly significant for those with “some” tertiary education. While this may reflect continuing education, debt stress may present a risk for completion.
• • Saving: for children’s education: While 71% of those with responsibility for children were saving for their tertiary education (rising to 78% among “newcomers”), only about half of Aboriginal Canadians, those not part of a couple, those with low incomes and those with lower levels of educational attainment were doing so.
  • Planning for retirement: 66% reported planning for retirement, but 71% were at least reasonably confident that their retirement income would be sufficient. Those with low incomes, those aged 18-24, Aboriginal Canadians, those not part of a couple and those with “some college, trade or university” were most likely not to be planning. These groups were broadly those who also reported not knowing how much to save, although overall 60% of Canadians reported that they didn’t know. State, occupational and private pensions were the main expected source of income in retirement, with low-income earners expecting to be most reliant on state pensions. Overall, 5% expected to rely on continuing paid employment.
• • More Canadians should set budgets; most who do stay within them.
  • The Aboriginal population and low-income earners are the most financially insecure.
  • Higher income earners have more debt but are more able to manage it.
  • Completing post-secondary education is associated with better financial management and well-being.
  • Canadians are not doing enough to secure their retirement: only a minority are confident that they know enough to assure secure retirement. This suggests a strong need for better information and education. Aboriginal Canadians, newcomers and those with lower incomes are at greatest risk, particularly when lower levels of knowledge in these groups are accompanied by higher levels of current financial insecurity.

Points to consider

• The appendices include a full methodological description. The survey was designed to be compatible with the 2009 survey. While the sampling methodology appears to be robust, no information is provided on the overall sample size.
• The study is applicable to the Canadian population, with insights into various groups, but some of the demographic categories and wider economic and financial arrangements vary from the UK.

As a broad survey, the report does not give detailed consideration of nuanced approaches for various groups and some of the observations are hypothetical. There are comparatively few examples highlighted of change from 2009.

Full report

Managing money and planning for the future: key findings from the 2014 Canadian financial capability survey- full report