Canadians are far less knowledgeable about money than they think, new research shows. Three quarters say they are financially literate. But nearly as many scored a C or lower on a true-false quiz from LowestRates.ca.
They were especially weak in mortgage terms, car insurance and tax-advantaged savings accounts. Canadians have plenty company, of course. These findings echo those in the U.S. and other nations. The results underscore the need for greater financial education in Canada, where efforts to beef up the system have stirred heated debate this year.
“Financial literacy continues to be a hot topic and we know it needs to improve, but Canadians need to be honest with themselves about what they don’t understand,” LowestRates CEO Justin Thouin said in a statement. “This is a serious problem.”
Canadian men are more likely to be out of touch with their level of financial literacy than women. Eighty-four percent of men believe they are financially literate while 73% of women believe they have a high degree of financial skill. Overall, fewer than half passed the quiz.
The generational breakdown is interesting: 52% of Baby Boomers passed the quiz, compared to 45% of Gen Xers. Millennials are the most confident—and most mistaken. They rated their financial literacy higher than other demographic groups but only 31% passed the quiz.
The LowestRates survey is the latest to spotlight weak financial literacy among Canadians. In May, a survey from MNP, a financial consultant, found that 52% of Canadians are only $200 away from insolvency and 31% cannot cover their monthly bills.
Household debt in Canada stands near an all-time high. Some of that is the result of rising housing prices and bigger mortgages. But the LowestRates survey showed that more people are taking on credit card and car debt.
The survey highlighted some important deficits. Many Canadians don’t know how a mortgage is calculated or what questions to ask before agreeing to a loan. Three quarters don’t know that car insurance rates are based on things like age, driving record and neighborhood.
All of this points to the need for more financial education, if only to spread the word that many people don’t know as much about money as they think.