When it comes to finances, Canadians are not completely illiterate, but they might be over-rating their own knowledge of financial matters. There is definitely room for improvement, according to the inaugural BMO Financial Literacy Report Card.
Canadians were asked to give themselves a grade on their level of personal finance knowledge. The majority said they deserved Bs (37%) or Cs (31%), but only 9% gave themselves top marks (an A).
When broken down by product and program area, Canadians claimed the most knowledge about RRSPs (69%), tax-free savings accounts (64%) and the CPP (61%). Canadians are less confident in their knowledge about registered disability savings plans (15%), exchange-traded funds (14%) and dividend reinvestment plans (14%).
The study also found that 61% of Canadians feel they would benefit from a “Personal Finance 101” course.
“Financial matters can be complicated and sometimes intimidating. However, Canadians can improve their overall financial knowledge by first getting a better understanding of their own financial ‘big picture,’” says Tina Di Vito, head of the BMO Retirement Institute and author of 52 Ways to Wreck Your Retirement…and How to Rescue It.
“In many cases, Canadians are well-informed financially, but a common stumbling block is understanding how everything fits together.”
“It’s clear from the numbers that Canadians see room for improvement when it comes to their overall understanding of personal finance. Given the challenges faced by households in Canada, enhancing this skill set should be a priority for everyone involved—including the financial services sector,” says Su McVey, vice-president, BMO Bank of Montreal.