This week, I would like to simply continue where I left off from last week and walk through some more key points in the discussion paper released by the task force on Financial Literacy.  I will tackle three more sections in the discussion paper.

The Learning Foundation

In this section, the paper talks about how “Financial literacy education in the school system is something that we can support and build on together.”

I could not agree more.   We need to develop a financial base in financial education and start it earlier in the school system.

The youth have become active in the economy as both spenders but also influencers.  My kids are too young to spend themselves but they are key influencers in our family spending habits because of what they see on TV and what their friends are all buying.

One of the concerns addressed in the paper surrounded creating national standards when we have a system that empowers each province to make their own laws about education.  This shared system of power can make it difficult to create consensus among all provinces.

From my perspective, I would like to see financial education in the school system mandatory at a minimum level.  I would like to see this happen throughout the grades from as early as grade 1.  I would suggest the task force or a central body can provide minimum requirement with a suggested program but every teacher, school, or province still have some level of customization.

I also like the idea of helping teachers by offering tools or programs or courses on how to teach kids about money.  I’ve worked with many teachers that do not have enough basic financial knowledge to teach other about money so they will need some help in this as well.

I think it matters more that we are teaching kids something at an early age than what we teach them.  It’s about awareness and consistency.  We need to instill good financial education at an early age and continue to teach them something as they grow.  The perfect place for that is the school system.

How do you think the school systems can implement financial education into their existing curriculums?

Understanding Financial Behaviour

In the position paper, this section starts with “Increasing young Canadians’ exposure to financial concepts can help improve their overall financial knowledge. However, formal education and the availability of information may not be enough. Financial instruction does not mean that people will automatically become more financially astute. The recent global financial crisis has shown that even “experts” can make unwise financial decisions, or act irresponsibly.”

How can you not agree with this statement?  As the old saying goes, “you can lead a horse to water but you can’t make it drink.” That being said, I still think we need to lead more people to the water because they can’t even find it.  And even though many still won’t drink it, I think you will also find that more will.  You can’t change people’s behavior unless they want to change but you can give people the opportunity, the knowledge and the resources to make changes.

What roles do you think different parties (schools, employers, non-government organizations, parents) should perform?

Borrowing and Debt

The discussion paper asked three key questions on debt:

1. What options could be considered to help more Canadians understand the difference between good and bad debt?
2. What appropriate initiatives might help people with financial challenges before they become insolvent?
3. What changes do you believe could be made to help people make more informed choices when it comes to debt and borrowing?

Here’s the interesting thing about debt.  There is no shortage of information out there on debt, the use of debt, the difference between good debt and bad debt.  You can find this information on many of the finance blogs like this one.

Maybe the reason we have so much debt is because it has never been easier to access because the debt industry is big business and profitable business.  Generally, I am against government intervention but maybe when it comes to debt, we need to create some regulations about debt.  The government has shown a history of intervention.  Just recently, the government introduced some rules around mortgages and not long ago around credit card debts.

When it comes to debt issues, although education is important, it is not working in this case.  Maybe we need to limit the amount of debt people can have.  It’s clear that people are having a tough time with discipline including the governments with their multi-billion dollar deficits so what other solutions do we have?  What do you think?

This is part two of four parts.  Next week I will talk about savings and retirement.