Canadian Bankers Association

Canadian Bankers Association

February 10, 2010 13:11 ET

Parents and Teens Agree: Financial Literacy a Family Affair

TORONTO, ONTARIO--(Marketwire - Feb. 10, 2010) - Both parents and teenagers recognize the importance of financial literacy and agree that parents play a substantial role in the financial education of their teenage children, this according to a recent Strategic Counsel survey commissioned by the Canadian Bankers Association (CBA). The survey, developed to compare parents' assessments of their teenaged children's financial literacy with teens' own assessments, also found that the majority of both groups believe that teenagers' basic money management skills are relatively strong but more sophisticated capabilities, such as investing and understanding personal credit history, are underdeveloped.

Learning begins at home

The study found that a substantial majority of parents (95 per cent) and teenagers (86 per cent) agree that an understanding of money and financial matters is an important component of an individual's education. And learning begins at home with two-thirds of teens (65 per cent) and nearly three-quarters (73 per cent) of parents citing parents as the primary source of information about managing money and finances. Moreover, 92 per cent of parents and 81 per cent of teens report discussing money and financial matters at home together.

"These results are encouraging and show that across the country, household discussions about money management and financial issues are taking place," said Nancy Hughes Anthony, President and CEO, Canadian Bankers Association. "The global financial crisis has certainly highlighted the importance of financial literacy and personal money management so it's good to see that parents and teens are discussing these issues."

Other sources of information on financial matters were self-learning, identified by 13 per cent of parents and 18 per cent of teens and school courses, cited by seven per cent of parents and 12 per cent of teens.

Strong basic financial skills

Encouragingly, the study found that approximately two-thirds of both parents (64 per cent) and teenagers (68 per cent) describe teenagers' basic financial understanding as good or very good. Furthermore, 66 per cent of parents and 72 per cent of teens reported that teens are well or very well equipped to manage their money.

Looking at specific financial skill sets, the survey found:

  • 84 per cent of teens and 68 per cent of parents reported teens have an excellent or good understanding of the value of saving money.
  • 73 per cent of teens and 59 per cent of parents reported teens are excellent or good with their own personal money management
  • 66 per cent of teens and 52 per cent of parents reported teens are doing an excellent or good job of saving for their future.

Interestingly, 64 per cent of teens reported they had personal savings set aside for their education, but only 56 per cent of parents reported their teens had done so. These results suggest that teenagers may exert more independence in their personal financial management than parents realize.

Room for improvement

While both groups agree that teens have relatively strong basic money management skills, the survey results show that the same may not be true with more sophisticated financial matters:

  • 56 per cent of teens and 64 per cent of parents reported teens have a fair or poor understanding of credit ratings and personal credit history
  • 59 per cent of teens and 71 per cent of parents reported teens have a fair or poor understanding of investing
  • 63 per cent of teens and 71 per cent of parents reported teens have a fair or poor understanding of borrowing and accessing credit

Financial ability increases with age

While these numbers certainly show there is room for improvement in teenagers' understanding of complex financial issues, the study also found that age has a substantial influence on how teens rate their money management capabilities. In every category examined, teens' self-reported skill levels increased as the age of the respondent increased.

For example, on the issue of budgeting, 67 per cent of all teens described their skills as excellent or good. However, when broken down by age, the results tell an interesting story:

  • Among teens aged 14 and 15, 58 per cent described their skills as excellent or good
  • Among teens aged 16 and 17 this number jumps to 66 percent
  • Among teens aged 18 and 19 it further increases to 73 per cent

This pattern was consistent in every performance area examined in this study.

"This may be a case of ability and confidence increasing with experience," explained Ms. Hughes Anthony. "As teenagers grow older they handle money more regularly, for example many get part time jobs and receive regular paycheques. This regular interaction with money may deepen their understanding of financial matters. Along these same lines, most teenagers have limited experience with investing and credit, which may help explain why they provided lower self-assessments in these areas."

Survey methodology

This survey was commissioned by the Canadian Bankers Association and conducted by The Strategic Counsel. Two studies were conducted on-line using quotas by region and by age. The first study was conducted among 1,000 parents of children between the ages of 14 and 19 years and took place between December 9 and December 14, 2009. The second study was conducted among 1,000 teenagers between the ages of 14 and 19 years and took place between December 8 and December 13, 2009. A random probability sample of 1,000 respondents would yield a margin of error of plus or minus 3.1 percentage points at the 95 percent confidence interval.

A detailed backgrounder and survey results are available at www.cba.ca.  

Banks and financial literacy

Banks in Canada provide a wide range of educational materials for their young customers, including information about how to read a bank statement, the importance of saving and budgeting, and how interest works. Many banks also offer no-fee youth and student accounts, so young people are able to learn about money management and banking through hands-on experience.

The CBA has long been a strong advocate of financial literacy in Canada. For over a decade, the CBA has brought financial literacy to Canadians through its high school seminar program, YourMoney, which has taught more than 186,000 senior high school students about budgeting, borrowing, saving, investing, and protecting themselves from fraud.

The non-commercial seminar uses volunteer bankers from the local community to teach young Canadians about responsible money management. YourMoney is offered in partnership with the Financial Consumer Agency of Canada (FCAC). Teachers and bankers interested in finding out more about the YourMoney program or bringing it to their classroom are encouraged to visit www.yourmoney.cba.ca. 

The Canadian Bankers Association works on behalf of 51 domestic banks, foreign bank subsidiaries and foreign bank branches operating in Canada and their 263,400 employees. The CBA advocates for effective public policies that contribute to a sound, successful banking system that benefits Canadians and Canada's economy. The Association also promotes financial literacy to help Canadians make informed financial decisions. www.cba.ca.

Contact Information

  • Canadian Bankers Association
    Andrew Addison
    (416) 362-6093, ext. 220 or Cell: (416) 587-7733
    Email: aaddison@cba.ca