The federal government has announced a five-year plan to make you”financially resilient” – and it’s actually their second one.
Money is fun to spend, hard to save, and complicated to invest. That’s why the federal government is touting its new National Financial Literacy Strategy. Its lofty goal: Improve every Canadian’s finances by 2026.
The government’s Financial Consumer Agency isn’t going to give you free money. Instead, it’ll give you a free education, and free access to tools and services that will make it easier for you to make your own money – and keep it around for both emergencies and your own financial goals.
If that sounds too good to be true, the FCA has already done this once before. Its initial five-year plan was released in 2015. Here’s what it did then, and what it plans to do now…
What is financial literacy?
Financial literacy is a skill set an individual possesses. This knowledge allows them to make informed, educated, and effective decisions. So naturally, these decisions apply to money and financial resources.
Do you need help rebuilding your financial wellness? Talk to a counsellor today.
What is the National Financial Literacy Strategy?
“A Canada where everyone can build financial resilience in an increasingly digital world.” This is the vision of the 2021 to 2026 National Financial Literacy Strategy. In other words, it is a strategy implemented by the Government of Canada. The goal is to improve financial literacy among Canadian individuals and families.
The Financial Consumer Agency of Canada (FCAC) has a mandate to protect consumers and improve financial literacy in Canada. The FCAC looks forward to collaborating. The National Financial Literacy Strategy is in place to achieve the mandate.
The strategy is a five-year plan. It has an emphasis on accessible, inclusive, and effective financial management. It helps all Canadians, regardless of socio-economic class, income, or other unique characteristics. The end goal is to equip Canadians better so that they are more financially resilient.
The National Financial Literacy Strategy’s foundation is research and collaboration. Overall, the strategy takes an evidence-based approach to help Canadians. In addition, the strategy believes in collaboration within the financial ecosystem. Partnerships and cooperation will lead to increased investment in initiatives that actually work.
The history of the National Financial Literacy Strategy
The National Financial Literacy Strategy was first launched in 2015. As the current strategy, it was a five-year plan, 2015 to 2020. The 2019 Progress Report showed that the strategy was working effectively. In general, many Canadians took action to acquire and sharpen their money skills.
Schools across the nation implemented Financial education. As a result, nearly all grade levels have some monetary education. Finally, the use of collaboration and community engagement helped improve financial literacy.
Whether or not Canada still needs a National Financial Literacy Strategy was in question. Canadians are facing great financial challenges at this time. In addition, things aren’t getting easier. The COVID-19 global pandemic left many without income which led to further economic struggle.
The marketplace has grown to become complex, with tons of financial products available. Navigating the maze is overwhelming, particularly if financial literacy is lacking. For this reason, the Canadian government decided to update the strategy for the 2021 to 2026 period.
How does the National Financial Literacy Strategy work?
At a high level, the National Financial Literacy Strategy is complex. It requires all Canadians to make an effort and share the responsibility. To encourage organizations and individuals to enhance their Canadian financial literacy, the strategy highlights the following:
Bettering the financial ecosystem for consumers
Entering the financial ecosystem can be daunting, especially if your financial literacy isn’t up to par.
The strategy aims to reduce barriers and catalyze action to help Canadians to build their skills. This will lead to better financial resilience. There are six areas of focus:
- Reducing barriers for entry. The financial ecosystem often limits people from accessing and understanding it. So if Canadians don’t have the opportunity to learn, they will be less financially literate and resilient. Accordingly, minimizing barriers will happen in three ways:
- Communicate using methods people understand
- Establish and provide for all needs
- Support increased digital access and literacy
- Catalyzing action for positive financial change. Now is a good time for Canadians to take positive action with their finances. Therefore, the first step is to eliminate biases and misunderstandings about financial barriers. Consequently, stimulating action will happen in three ways:
- Improve access to trustworthy and affordable financial assistance
- Use behavioural design to simplify financial choices
- Enhance consumer protection measures.
Improving Canadians’ capacity, skill sets, and behaviours
The financial ecosystem is one major component of the National Financial Literacy Strategy. Subsequently, the second major component is highlighting building blocks for consumers.
It’s proven to help consumers develop capacity, skill sets, and behaviours. Furthermore, these building blocks will help Canadians improve their financial resilience:
- Managing expenses
- Skills to navigate the financial marketplace
- Just-in-time knowledge and confidence
- Managing debt
- Managing savings
The National Financial Literacy Strategy and you
In Canada, financial literacy varies from person to person. Some are already financially resilient. At the same time, others have endured setbacks from recent economic events. Regardless of where you stand, the National Financial Literacy Strategy will help all Canadians better manage their finances.
We all need to do our part in improving accessibility to financial literacy in Canada. That might mean taking steps to improve our own financial literacy. Or, it could mean helping a friend or a family member improve their financial literacy.
However, you can help improve the financial ecosystem in Canada. So get motivated and do your part today!
Part of managing financial literacy is cleaning up debts, building a healthy savings fund, and working on your credit score. If you’re ever lost or need advice, reach out to Consolidated Credit for financial advice at any time.