The following article was submitted by the Canadian Institute of Chartered Accountants.
November is Financial Literacy Month, and parents across Canada are being urged to educate their children about the ABCs of money. The bottom line is that money should not be a taboo topic in the home. In fact, all the evidence shows that parents who are most successful at teaching financial skills familiarize their children with the family's financial situation.
A recent study by the Canadian Institute of Chartered Accountants (CICA), measured the financial literacy of Canadians aged 16-22. The survey found that nine-in-10 young Canadians believe their parents should be good role models for responsible financial decisions and 83 % have approached their parents for advice about money management.
"Being open and transparent about money matters is a key element to opening doors of conversation, producing a higher level of trust and helping youth develop their own financial goals," says Kevin Dancey, president and CEO of the Canadian Institute of Chartered Accountants.
Of the 78% of respondents who are familiar with their parents' financial situation, the majority (83%) believe that knowledge has helped them establish their own money management goals. Those familiar with their parents' financial situation are more likely to say they have both been approached and have approached their parents for advice.
Overall, seven-in-ten respondents are optimistic about their financial future (23% very optimistic and 46 % optimistic), however, only 47 % believe they will be more prosperous than their parents.
The survey suggests that there is plenty of room for improvement when it comes to financial literacy among youth. Fewer than half surveyed are very confident in their ability to develop a budget (36 %); stick to a budget (3 %); limit spending (39%) or use credit cards responsibly (48%). In fact:
Only 43% of respondents have a budget
Only 52% of respondents track their spending
More than one quarter (27%) of the youth surveyed say they do not limit their spending
Half (54%) of those surveyed have a credit card and 22 % carry a balance
FEMALES CAUTIOUS
The survey also found that teenage girls and young women tend to be more cautious:
Females are more likely to worry about money (62%) than males (49%); females also tend to be significantly less optimistic about their financial future (64%) versus 74% for males.
About a third of the youth surveyed (38%) believe their parents have been very successful in teaching them about money. Those results echo the findings of the CICA's "Canadian Finance Study 2010" that surveyed parents. It found that 78% of Canadian parents had attempted to teach their children financial management skills, but two-thirds (60%) believed they were not very successful.
TOOL FOR PARENTS
The CICA will release a new tool titled "A Parent's Guide to Raising Money Smart Kids" in the new year.
"Teaching money management is an important facet of parenthood," says Dancey. "Learning about financial matters helps both children and youth develop the knowledge, values and discipline needed to make life's important financial decisions.It is best to start when the children are young and then get progressively more advanced as they get older."
The vast majority of youth surveyed (89%t) believe that responsible money management teachings lie largely in the hands of parents. Educators are next with 24% of respondents referencing them, followed by the financial services sector and banks (16%) and government (13%).
A survey summary report is available online at www.cica.ca/yflstudy2011.
TOP 10 SKILLS
The Canadian Institute of Chartered Accountants asked teenagers and young adults about the financial skills taught to them by their parents. The poll found that 87 % of Canadians aged 16 to 22 have been taught money skills by their parents and that youth are hungry for financial knowledge and skills to improve their financial IQs.
Below are the top ten financial skills taught by Canadian parents:
1. Limiting spending (76%)
2. Saving for a major purchase (69%)
3. Using credit cards responsibly (61%)
4. Sticking to a budget (56%)
5. Keeping a good credit rating (52%)
6. Developing a budget (51%)
7. Managing cell phone expenses (50%)
8. Investing (47%)
9. Minimizing interest on debt (34%)
10. Avoiding financial fraud (28%)
SOURCE: CICA Youth Financial Literacy Survey
