The term ‘Financial Literacy’ doesn’t sit well with me, largely because we are implying Canadians are less than smart. I’d like to believe that we all care about what happens to our money, but perhaps Canadians are simply led to confusion.
Let me be clear – I fully support the Government’s commitment to Financial Literacy. Strong financial management is important for our Government, and just as vital for each of us as individuals. ING DIRECT has long held concerns regarding the level of consumer debt as compared to savings. It is important that Canadians understand the implications when personal debt is growing faster than income, and how this impacts everyday financial decisions as well as long-term financial wellbeing.
But consider the banking industry as a whole. Banks have benefited by having Canadians be unclear about their finances, through lack of transparency and the use of unnecessary financial jargon. Comparing mortgages or investing in RSPs for the first time can be a daunting task when met with complicated applications and big financial terms and statements. Canadians start with the best intentions, but with exposure to unnecessary ambiguity, they are led to believe that managing money is an enormous task. It’s simply not. The basic financial needs for the typical Canadian household are not difficult to manage at all.
Historically, Canada has been a nation of Savers, but we can’t ignore the fact that we have lost our way in recent years. Our use of credit has increased and so has our spending. I am encouraged that a recent ING International survey found that Canadians are more willing to use savings to pay down debt than other parts of the world. This is good news. It’s the first step toward reducing debt, which is an important aspect of experiencing financial wellbeing, and securing the future of our children and the country. But the responsibility is not entirely on the individual Canadian.
Following a meeting with the Minister of Finance, the Honourable Jim Flaherty, for a pre-budget roundtable discussion in PEI in December, I thought of the magnitude of the commitment the Government has made to balance the budget by 2014/2015. I applaud the Minister for his efforts and for consulting and listening to business, academic and sector leaders from across the country on advancing Canada’s economy. It was an honour to be asked to participate, and offer the views of ING DIRECT on how to achieve a sustained economic recovery for Canada.
At ING DIRECT, we advocate the importance of saving. We believe in telling Canadians the truth and providing information to help them make smart decisions on their own. We encourage them to know how much to save for the road ahead and we want to get young Canadians on the right track by starting to save now for their retirement. Simplicity and clarity matter in the financial tools we provide Canadians. Complexity will drive them to feel less adequate about their own ability to take care of their money.
I have always believed that financial wellbeing is attainable once we understand the importance of being informed. That, accompanied with making basic finances clearer and simpler for all Canadians to comprehend is an important shift in the right direction: helping the Canadian economy and promoting personal financial wellbeing. This is a very serious matter for us at ING DIRECT, which is why we created the Canadian Charter of Financial Independence – a road map to help encourage Canadians to commit to a healthier financial future and show them the basic steps to getting there.
Financial Literacy will continue to generate much debate in our industry, with similar discussions as the most recent article on ‘Who Should Teach Us To Be Fiscally Responsible?’ by Jonathan Chevreau and Garry Marr of the National Post. Both bring up interesting points on the topic. What I have come to realize is that our business at ING DIRECT is less about banking and more about motivation and education.