Financial Literacy

The government of Canada commissioned a task force to study the issue of financial literacy in Canada. The report they released can be found here.

I will restrain my comments to say that just as how (in Western Europe) illiteracy was reduced from about 2/3rds in the 18th century to less than 10% today, I would estimate the financial literacy of Canada as being quite low.

By improving financial literacy, people will have a toolbox to make more efficient decisions. Just like literacy today, where you can be bombarded with outright false information, a financially literate population can be bombarded with financial garbage (such as scams that promote a risk-free 30% annual return), but will be better prepared to discard such trash. This is similar as to how people do not take the items printed on the supermarket tabloids seriously.

Financial literacy is a good idea in concept, but it requires a completely different skillset than written literacy – quantitative know-how. Having the mathematical know-how to properly process financial parameters is not an easy skill to teach. Genetic aptitude towards mathematics greatly helps the process.