There's always room for improvement

Troubling new statistics make it clear that Canadians need to improve their financial literacy. Here are a few tools and resources to get you started.

Statistics Canada recently announced that the ratio of household debt to after-tax income rose to a high of 164.6% at the end of June, up from 163% at the end of March. This startling development makes it clear that Canadians need improvement when it comes to their financial literacy.

The federal government is doing its part. In June, Jane Rooney, financial literacy leader at the Financial Consumer Agency of Canada (FCAC), announced the National Strategy for Financial Literacy — Count me in, Canada. The strategy is based on cross-country talks with Canadians about the importance of financial literacy and how best to enhance their financial knowledge and skills and increase their confidence in dealing with money matters. The three main goals are to empower Canadians to manage money and debt wisely, to plan and save for the future and to prevent and protect against fraud and financial abuse.

The plan is to improve Canadians’ level of financial literacy by coordinating the resources of governments, educators, financial service providers, employers and non-profit organizations as well as individuals and families.

This effort is underway and there are now many resources available. One of the best is the FCAC website, which offers a tremendous amount of solid information.

For those just starting their financial literacy journey, there is a self-assessment quiz that takes less than 10 minutes. After you answer the questions, you are directed to sources of information under such categories as keeping track, making ends meet, planning ahead, staying informed and choosing products. The resources are in the Canadian Financial Literacy Database, which has info on budgeting, saving, investing and fraud prevention.

There are a myriad of tools on the FCAC website that are based on different stages in life, including paying for postsecondary education, moving out on your own, starting your first job, living as a couple, having children, teaching children about money, owning a home, planning your retirement, dealing with debt, losing your job, getting separated or divorced, living in retirement and living with a disability.

The tools include the credit card selector to help you choose the best credit card for your needs; the credit card payment calculator to determine how much it will cost if you pay only the minimum on your credit card balance; the mortgage qualifier tool to see what size mortgage you qualify for; and the mortgage calculator tool, which determines your mortgage payment and provides a mortgage payment graph so you can see the effects of making prepayments, changing the amortization period or choosing different payment frequencies. There is also a budget calculator, which allows you to enter detailed information about your income and expenses to plan for the future. And there is a comprehensive account selector tool that compares features such as interest rates, monthly fees and transaction costs from different bank accounts so you can choose what’s best for you.

Another good source of personal finance information is, an Ontario Securities Commission website that provides unbiased and independent financial tools to help you make better financial decisions. It has information on the financial issues of older Canadians, investing, retirement, investor warnings and real estate. There are videos, infographics, a monthly e-newsletter and quizzes. The site has dozens of calculators covering retirement planning, investing, budgeting and saving, credit cards and debt, paying for education, and home ownership. Thinking of buying a house? Try the buy or rent calculator. Trying to decide how much you’ll need to retire? Use the retirement cash flow planner. Starting university? Check out the university cost calculator.

MoneySense magazine’s website also has good information on saving, debt, property, investing, retiring, spending and taxes. It also offers free online tools including a credit card selector tool, a mortgage payment calculator, a compound interest calculator and an RESP calculator. The credit card selector tool is especially useful if you pay off your balance each month and want to optimize your rewards because choosing the best card depends on what you spend your money on.

CPA Canada too has online resources and publications, including a financial literacy blog and books on the subject. (For more information on its financial literacy initiatives see “Help Spread the Word About Financial Literacy,” November 2014.)