What’s stopping Canadians from learning about money?

If you’re like most people who aren’t in the financial services industry, you’d probably rather watch toast burn than sit through a seminar about taking control of your finances. But guess what? If your financial knowledge is weak and you’re not working with a financial planner, you’re probably leaving money on the table that you didn’t even know was available.

A study by the Financial Planning Standards Council (FPSC) and the Financial Planning Foundation shows that Canadians who engage in comprehensive financial planning report significantly higher levels of financial and emotional well-being than those who do only limited planning or none at all. Having a better understanding of your options lets you choose the ones that will help you reach your financial goals more effectively.

While there are ample resources (both free and fee-based) to help educate or counsel Canadians on financial matters, most of us don’t use them to the extent that we should – if at all. Why not?
You probably think this is the part where I tell you to just buck up and stop procrastinating already. Well, it’s not that simple. There are actually some legitimate barriers holding us back from learning more about financial issues. These are based in unconscious personal biases and demographic influences. The following is by no means an exhaustive list, but it shows some of the more common deterrents in each of these areas.

Personal bias

Personal biases can create barriers to financial literacy that are based on perception rather than actual knowledge. The way we perceive financial services, and financial service providers, can prevent us from becoming more involved in the financial planning process. A report from the Society of Actuaries, in conjunction with The Financial Literacy Group, shows how this can cause us to make decisions that might impede our financial wellness. Here are three of the more common biases:

Lack of awareness

A lack of basic financial knowledge can itself be a barrier to improving literacy or seeking financial advice. If you’re unaware of just how important financial planning is, you may underestimate the value of increasing your knowledge and working with a planner. This means you’ll be less likely to consider learning about financial products that could be beneficial in helping you achieve your financial goals.

Uncertainty aversion

Financial jargon is often overwhelming and can make people feel embarrassed about their lack of financial knowledge. This may cause them to hold back when talking with financial experts. Or, it may deter them from seeking professional help altogether which could affect their ability to buy a home, support their children’s education or retire comfortably. This is known as the principle of ambiguity or uncertainty aversion in behavioural economics: people avoid what they don’t understand.

Worse still, if someone does seek advice despite lacking adequate financial knowledge, they could be susceptible to overpaying on fees – or even fraud. This creates yet another barrier: lack of trust in financial services providers.

Lack of trust

Because we tend to place greater trust in our family, friends and colleagues than we would in a stranger, we sometimes go to them for advice even when it may not be in our best interest to do so – as in the case of financial matters. By all means, ask your aunt Edna for the name of her financial planner, but don’t take stock tips from her because her medicinal plant shares are doing really, really well right now.

There are ways to ensure you’re working with a certified professional who is required to take continuing education courses and uphold ethical standards. See if they’re registered with a governing body like the FPSC (or the IQPF in Quebec) if they’re a financial planner, or the Securities Commission in your province or territory if they’re an investment advisor. And ask for references from their clients. This can help alleviate your fears about whether or not you’re getting advice that’s in your best interest.

Sensationalized media stories or negative word-of-mouth experiences may be the exception – not the rule – so don’t shortchange yourself. You could be missing opportunities to learn about things that could really boost your retirement nest egg, like tax savings and investment strategies.

When you look at the objective outcomes of people who increase their financial knowledge and work with a planner compared with those who do not, it becomes easier to override these biases and see the value in upping your game.

Demographic influences

Unlike personal biases, which are more internally based, demographic influences are the result of external barriers. Certain groups may have a restricted ability to acquire financial knowledge, regardless of whether or not they have an interest in doing so, due to their life circumstances. Statistics Canada research shows that demographic markers can affect financial well-being, and three of the more common ones are income, gender and immigration.


A study conducted by Statistics Canada, known as the Canadian Financial Capability Survey (CFCS), found that income plays a notable role in our level of financial literacy. People with higher incomes generally have increased financial knowledge, which may be due to the fact that they have more disposable income, creating a greater need for financial services. They also tend to associate with those who encourage behaviours like saving and investing.

The following quiz scores show a correlation between annual household income and financial literacy:

  • Canadians with household incomes of $67,000 or less achieved an average score of 62%
  • Canadians with household incomes in the median range ($67,001 to $95,000) had an average score of 67%
  • Canadians with household incomes above the median (above $95,000) had an average score of 71%

As you can see, financial literacy scores for Canadians who earn over $95,000 per year are about 10 percentage points higher than those for Canadians in the lower income group. Because people in higher income brackets also tend to have higher levels of education, increased financial knowledge may be correlated with increased education itself.

Gender roles

Women face different financial challenges than men. Canadian women can expect to live about 4.5 years longer than men, which means they need to finance a longer period of retirement. They also have higher disability rates than men, and may incur higher long-term care costs as they age. A woman’s cumulative lifetime savings may be lower than a man’s due to the gender pay gap and shorter working lives. They tend to work more part-time jobs than men and have gaps in employment due to caregiving responsibilities. These gender-related barriers create a greater sense of urgency for the financial literacy of women.

Using data from the CFCS survey, a study released by Statistics Canada in 2016 found that gender plays a notable role in financial literacy. A 2014 survey showed that 22% of men were able to correctly answer 5 of 14 questions related to interest, inflation and risk diversification, compared with only 15% of female respondents.

The study also found that in opposite-sex couples where the male partner is mainly responsible for the long-term financial management of the household, only 10% of women answered the five key financial literacy questions correctly, while 33% of male partners did so. The difference in levels of literacy tends to be more pronounced among more senior Canadians. When couples share the responsibility for the financial management of the household, or where a woman’s contribution to household income is similar to that of her male partner, there is no gender difference in financial knowledge. So with increased education and income, the financial literacy of this demographic improves significantly.


According to Statistics Canada, recent immigrants continue to have lower employment rates than native-born Canadians; however, this gap has been narrowing since 1996. Added to the challenge of finding work, many immigrants struggle to understand and avoid the pitfalls associated with high-interest credit, service charges and other money matters because they lack the language and terminology associated with financial services in Canada.  This makes them easy prey for unscrupulous service providers. With improved education, the immigrant employment rate generally rises, as do income levels.
With each of these demographic influences, we see that obstacles to financial knowledge are removed as levels of education and income increase. In general, higher levels of education correlate with increased income, which increases both a need for better financial literacy and an appreciation of its value.

Where to start

There are plenty of excellent resources and financial experts to choose from when you’re ready to dive into the world of financial planning, but if you’re still struggling with some of the above- mentioned barriers, here are two reliable and easily accessible places to start.

  1. The Financial Consumer Agency of Canada (FCAC) helps Canadians increase their financial literacy by giving guidance on things like paying down debt, budgeting, building savings and increasing knowledge of financial products and services. Their website includes articles, tips and questionnaires in basic financial language, to help you navigate the world of financial planning. You can even take a financial literacy self-assessment quiz to find out how you measure up to the average Canadian.
  2. Another reliable resource can be employer-sponsored financial education or counselling programs if this is something that your workplace offers. The financial companies that provide these services are usually vetted by your HR department to ensure they have a good reputation and are on side with any national, provincial and territorial governing bodies. These professionals are usually well versed in all aspects of financial planning and can help you look at your overall financial picture with an eye on reaching your life goals and retirement objectives.

You can also now find online games, tools, calculators and an insane amount of articles to help you improve your financial knowledge. Register for a free lunch-and-learn seminar or make an appointment to explore your options with a planner. These days, it’s way more interesting than watching toast burn. And once you get started, you might be surprised to learn how unstoppable you really are.

Lucy Conte, T.E. Wealth, Toronto

This article was published in T.E. Wealth’s Strategies newsletter, December 2017 edition. Read the full edition here.

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These articles are for general informational purposes only. Please obtain professional advice before taking any action based on this information. No endorsement or approval of any third parties or their advice, information, products or services should be implied by any references to third parties contained in any article. Trademarks cited in these articles are the respective properties of their owners.

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