National Financial Literacy Month

Only 13 per cent of Canadians understand financial risk, suggests TNS Finance's Personal Risk Assessment and Risk Literacy Survey.
...[Respondents] were tested on three questions: assessing the relative payout of two lotteries, the relative risk and returns from two investment funds, and the relative risk of investing in a single stock versus a basket of stocks.
Canadians fail financial literacy test, Kim Covert
Financial Post (Feb 04 2010)

First, she complained about the syringes.

This is a story, you understand. A true story, though I'm going to leave some parts vague, and ask you to trust me a little. I'm telling the story because I think it says something about the questions in that TNS survey, and those bright, shiny people pictured above with their girl-friendly investments.

She complained about the used needles first, and then about the near-by houses where the drugs were sold.

Since these houses, like her own, were part of an N.B. Housing project, she complained to Housing. Tell it to the police, they replied. The police were polite but regretful - without firm proof, etc. They suggested she take it back to Housing.

By this time, she'd fallen from favour with both Housing and her drug-dealing neighbours. It was just a matter of time before someone reported on her for cheating welfare. Her checks were frozen. She wasn't cheating, of course, and she cooperated with the investigation. But by the time that got cleared up, rent periods had come and gone, and she'd been evicted from Housing.

She found one, and then two, part time jobs. They paid enough to allow her to stay out of Housing and be independent of welfare checks, though not enough to disqualify her from retaining a provincial health card.

Nonetheless, someone at the Department canceled her card. She protested, to no avail. She asked for help from her MLA. He seemed more disgusted than surprised, and set about forcing the Department to follow its own policy and re-instate her health card. This lasted a couple of months, and then they canceled her card again.

She decided not to fight them anymore. She found a third part-time job. She feared it would cost her valuable time with her young family (it did, with unfortunate consequences), but it was the only way she could secure her children's futures.

I met this mom through my community and family literacy work. Some of these events happen while she was receiving our support. That was awhile ago, but I still see her now and again. Her youngest is doing really good in school. The others are struggling a bit. It's hard to say whether she's done better or worse having moved from social assistance to the working poor. Better, I suppose. If her private-sector employers are frequently exploitative and tight-fisted, at least they aren't hypocritical. And, of course, they can't expel her from her home.

I mention all this because April is Canada's National Financial Literacy month - a whole month when the bankers, CPA's and investment houses who spent two decades shredding our economy are invited to lecture us on our spending and saving habits, and, of course, how to invest wisely - with a special emphasis on women and girls. Serious planning for this circus began last spring. In June of 2009, the Honourable Jim Flaherty, Minister of Finance, was able to announce a "Task Force on Financial Literacy."

“Our economy is built on millions of everyday financial decisions by Canadians,” said Minister Flaherty. “Recent events have shown us that there are major risks and that financial literacy is an important life skill. Whether it is a question of saving for retirement, financing a new home or balancing the family chequebook, improving the financial literacy of Canadians will add to the stability of our financial system and make our economy stronger.”

The task force was chaired by Donald A. Stewart, CEO of Sun Life Financial Inc., Canada's third largest insurer in 2009.

“I am honoured to undertake this role...” said Mr. Stewart, believing he might be able "to help Canadians make informed decisions to improve their lives.” Maybe. Stewart's own finances are on the slide - assuming he's not hiding money - since he took home more than $19 million in 2007 (link), but only $6.6 million in 2008, and about $3.8 million in 2009 (link).

Earlier in 2009, Mr. Donald Stewart was in the news, for approving of a plan whereby the federal government would allow insurance companies to pay a fee for a government guarantee that money they borrow will be repaid. This would be similar to the federal guarantee of student loans. Under this scheme, Canadian taxes - not a company's own money - would be used to cover losses arising from risky business deals. I don't know if that plan became reality, but his support of it suggests Mr. Stewart is okay with a welfare-like safety net for corporations that make uninformed decisions.

Anyway, this taskforce seems to have evolved into a Financial Literacy month with an emphasis on educating women. In March, the Government of Canada announced support, via the Minister of State (Status of Women) for a "National Initiative for the Care of the Elderly, which will receive $390, 227 [that is, one tenth of Mr. Stewart's take-home] for its national project, Older Women and Financial Literacy: Bridging the Income Gap."

I don't know why.

Maybe they think elderly women, like women with kids, make safer targets. Maybe they think they're a little easier to bully, to marginalize, and then to blame.

By the way, for a glimpse of what appropriate financial education might look like, check out Womanspace. Predictably enough, this promising and effective work is in immanent danger of shutting down through a lack of funding.


Maria Moriarty said...

Hi Wendell: As usual you have hit the nail squarely on the head - I admire the accuracy of your aim... and thank you... thought you might be interested in looking at this little experiment in Toronto - STOP Community Food created the project "Do the Math" designed to challenge us all to think about how to live on very, very little, i.e. social assistance... several promiment torontonians took up the challenge and you can follow them and get lots of good "financial literacy" info. on the site at;


Wendell said...

Thks Maria.

I took a quick look, and will have to go back.

I saw the question, "If you were a single person on social assistance, what would you need?" and thought, not yet.

But, you know, that's not true. I was, for a short time, single and on welfare (which, bad as it was, can't be as awful as being a single parent on welfare).

Of all my memories from that time, what I do not remember is worrying about how to invest safely or compare portfolios.

The gap between the land of the rich and the land of the poor - working or otherwise - keeps growing.