Almost a year ago, the federal Task Force on Financial Literacy issued a series of recommendations to improve Canadians’ grasp of financial concepts and help them make sound decisions about things like saving, managing debt, investing and planning for retirement. Key among its suggestions was that financial literacy be taught in school.
Patrick O’Meara beat the education drum when he presented to the task force. The chair of business administration and commerce at Red Deer College’s Donald School of Business, O’Meara described to a panel in Calgary how community colleges were an ideal place for financial information to be disseminated to students and the general public.
In fact, it’s already happening at Red Deer College.
Students in the college’s financial services program are required to take an introductory course that covers topics like retirement planning, the time value of money, and the pros and cons of borrowing. But Financial Services 180 also attracts students from other programs, and is even open to members of the public.
O’Meara would love to see it become mandatory for all Red Deer College students, and is even working to introduce at the high school level.
Junior Achievement is already working to provide financial education to students from grades 4 to 12 in local schools. It offers a series of in-school programs that begins with “Business Basics” and progresses to a program in which participants start and operate a real business.
“Each of our programs build on the concepts taught in the program before,” said Karen Vavrek, the Sylvan Lake-based director of regional development for Southern Alberta Junior Achievement.
About 100 Junior Achievement programs are delivered in 30 Central Alberta schools, with around 100 members of the local business community volunteering their time.
Vavrek agrees that financial literacy often slips through the cracks when it comes to children’s education. Parents assume it will be taught in school but educators have difficulty fitting it into the prescribed curriculum.
“There certainly is a hunger for this kind of information out there,” said Vavrek of children’s interest in the material.
She echoed O’Meara’s assessment that financial education is very important for youths entering adulthood.
“Kids need some very specific tools and concrete strategies for being able to plan ahead: how to use credit wisely, how to manage a chequing account, how do they shop for their first mortgage — those kinds of things.”
At college and university, many students are managing their finances for the first time, said O’Meara. With the cost of a post-secondary education rising, they can expect increasingly higher levels of debt when they graduate. And international competition for jobs is increasing.
“So they’ll have to be a little bit more financially savvy about the money they do earn,” said O’Meara, adding that there’s also the likelihood of higher taxes in the future that will erode their disposable income and force them to make tough decisions about the lifestyle they can afford.
“How they do that is really at the heart of financial literacy.”
Young workers today will probably migrate through a number of jobs over the course of their careers, with “financial friction” likely with each transition, said O’Meara. And the rapid shift from defined benefit pensions to defined contribution pensions elevates the importance of carefully managing your retirement funds, he said.
Add to this the growing complexity of the world’s financial systems, and the ease of accessing an expanding list of consumer debt options, and the dangers facing young people’s pocketbooks becomes even more profound.
Melissa Span and Logan Vogt are learning about these hazards. Both are first-year students in the Donald School of Business’s financial services program, and several weeks into Financial Services 180.
“Taking these classes here really helps your knowledge,” said Vogt, who has seen friends fall victim to rising debt loads. “That’s why I decided not to get a credit card before, because I didn’t know about interest rates or any of that until taking this class.”
Span said she now recognizes the importance of saving for retirement, stating at an early age.
She also realizes the dangers of credit cards. Span said she would step in if she saw a friend flirting with an unmanageable level of debt — intervention that one might associate with drug or alcohol abuse but which Span thinks is approprate in this case as well.
“It’s an addiction to spending money.”
O’Meara said peer-to-peer education is an important part of financial literacy.
“It can’t just be me up there saying, ‘Thou shalt put money into an RRSP. If the students taking these courses go out there and start to coach and help other students understand why they should have an RRSP, or why they should make sure they pay off their credit card every month, that’s a much more powerful experience for the student.”