TORONTO, ONTARIO--(Marketwire - Nov. 9, 2012) - With Financial Literacy Month in full swing, BMO Financial Group today released its second annual BMO Financial Literacy Report Card which gauges the personal finance knowledge and understanding of Canadians.
Much like 2011, most Canadians gave themselves a passing grade on their level of personal finance knowledge, with nearly three-quarters giving themselves a B or C. Only one-in-ten (10 per cent) believe they deserved an A, while 3 per cent gave themselves a failing grade:
- A = 10 per cent
- B = 41 per cent
- C = 33 per cent
- D = 9 per cent
- F = 3 per cent
The report, conducted by Pollara, also revealed that Canadians are feeling more confident in their knowledge of various financial terms compared to last year. Canadians feel most knowledgeable about:
- Registered Retirement Savings Plan (RRSP) - 79 per cent; up from 69 per cent
- Tax Free Savings Account (TFSA) - 72 per cent; up from 64 per cent
- Guaranteed Investment Certificate (GIC) - 62 per cent; up from 60 per cent
Meanwhile, despite a notable increase in awareness, Canadians continue to feel least knowledgeable about:
- Registered Disability Savings Plan (RDSP) - 23 per cent; up from 15 per cent
- Exchange Traded Funds (ETFs) - 24 per cent; up from 14 per cent
- Dividend Reinvestment Plan (DRIP) - 25 per cent; up from 14 per cent
Interestingly, half (50 per cent) of Canadians say their financial knowledge has increased since the financial downturn of 2008.
"Improving financial literacy among Canadians is critical to the financial well-being of families, as well as the overall economy," said L. Jacques Ménard, Chairman of BMO Nesbitt Burns and Financial Literacy Task Force Vice-Chair. "Increasing financial literacy should continue to be a focus for all involved, including financial institutions."
Mr. Menard added that BMO strongly supports the efforts and recommendations put forth by the federal government, including the Task Force on Financial Literacy and the introduction of the Financial Literacy Leader Act last November.
Familiarity with Financial Concepts
As part of the research, Canadians were quizzed on three questions related to common financial concepts:
- Canadians are accurate in their belief that they deserve top marks for their understanding of the RRSP, with 80 per cent correctly answering that you only pay taxes on RRSP investments when they are withdrawn
- The majority (68 per cent) recognize that weekly mortgage payments enable a mortgage to be paid down sooner
- Just over half (57 per cent) understand the benefits of compounded interest
However, according to the report's findings, a successful understanding of the financial literacy quiz is tied to age, with the majority (54 per cent) of those under 30 answering over half of the questions incorrectly. Furthermore, nine-in-ten (87 per cent) of young Canadians believe they would benefit from an introductory course on personal finance.
"While it's encouraging to see that Canadians are feeling more confident in their understanding of personal finance, there continues to be room for improvement, particularly among younger Canadians," said Gary Rabbior, President, Canadian Foundation for Economic Education (CFEE). "This underscores a need for financial literacy programs targeted to younger age groups to ensure they have a solid base of financial knowledge early on in life."
As a commitment to 'Making Money Make Sense', BMO is releasing a financial tip each day throughout November in support of Financial Literacy Month in Canada. To learn more about BMO's financial tips, visit www.bmo.com.
For more on financial literacy, Canadians can visit the Government of Canada's Financial Literacy Month website, as well as BMO's Financial Literacy online resource.
For more information on CFEE, please visit www.cfee.org.
The survey results cited in the 2012 Financial Literacy Report Card conducted by Pollara are compiled from a random sample of 1,000 Canadians 18 years of age and over between October 25 and October 29, 2012. A probability sample of this size would yield results accurate to ± 3.1 per cent, 19 times out of 20.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $542 billion as at July 31, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.