Economics, Life Learning, Video|October 29, 2011 7:57 pm

Are we financially illiterate?

In this video interview, Jeff O’Rourke points to a statistic from the Payroll Association indicating that “60% of Canadians would have financial difficulties if their paycheque was delayed by one week.” Although the conversation was about financial literacy for low income earners, this stat seems to indicate that Canadians of all income levels could benefit from learning how to manage money.

I’ll let Jeff explain his perspective here:

One point he made that didn’t make this cut was one about how we don’t equip university students to learn how to use credit cards. Furthermore it doesn’t help that credit card companies promote credit cards as if they were giving you money.

I was lucky in that I just followed my parent’s cardinal rule of always paying off the credit card every month. However, I didn’t really understand how loans and interest worked until much later in life.

But isn’t this financial literacy problem a symptom of a much larger problem? Which is that our economic structure is based on spending and debt-financing. Isn’t there an inherent motivation to get people to take out loans and spend with the assumption being that people can pay off the loans with interest?

In a way, it’s kind of like our schooling system. In school, we learn how to conform and obey authority. In economics, we learn how to consume and salivate at the latest product.

Maybe we’re not financially illiterate. Maybe we’re doing exactly what we’ve been trained to do. Now that’s a scary thought.

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1 Comment

  • I think it is common sense to save enough money in the bank to at least replace your income for two months. The problem is that most people are still living the way they did prior to the recession. We are all still waiting for the economy to take off and for the easy money to come rolling back in. Unfortunately this isn’t going to happen and now the advice given to me by my grad parents to save is finally worth its wait. For years people having been preaching to concept of invest rather then save. This has finally turned around.

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