Financial Literacy: A Family Affair
Fast facts
- Parents and teens are talking about money: 81 per cent of teens and 92 per cent of parents report discussing money and financial matters at home together.
- 68 per cent of teens and 64 per cent of parents describe teenagers’ basic financial understanding as good or very good.
- 65 per cent of teens and 73 per cent of parents cite parents as the primary source of information about managing money and finances.
The bottom line
Financial literacy is an essential life skill and both parents and teens understand this. While both parents and teens agree that teens have a good basic understanding of money management, the same isn’t true when it comes to more sophisticated concepts like investing and borrowing.
In December 2009 the Canadian Bankers Association commissioned The Strategic Counsel to conduct two national surveys of parents and teens to compare parents’ assessments of their teenaged children’s financial literacy with teens’ own assessments. Here are the results of that research.
Parents and teens are talking.
Both parents and teenagers recognize the importance of financial literacy and agree that parents play a big role in the financial education of their children.
- 86 per cent of teens and 95 per cent of parents agree that an understanding of money and financial matters is an important component of a teen’s education.
- 81 per cent of teens and 92 per cent of parents report discussing money and financial matters at home together.
- 65 per cent of teens and 73 per cent of parents cite parents as the primary source of information about managing money and finances.
- Other sources of information include:
- self-learning, identified by 18 per cent of teens and 13 per cent of parents and,
- school courses, cited by 12 per cent of teens and seven per cent of parents.
Teens understand the basics
Both teens and parents report that teens have a good understanding of money and are well-equipped to manage their finances. When questioned about specific financial skill sets, the survey found the following:
- 84 per cent of teens and 68 per cent of parents reported teens have a good understanding of the value of saving money.
- 73 per cent of teens and 59 per cent of parents reported teens are good with their own personal money management.
- 66 per cent of teens and 52 per cent of parents reported teens are doing a good job of saving for their future.
As teens age, their confidence in their financial ability increases. When asked about budgeting, for example, 67 per cent of all teens described their skills as good. When broken down by age, the results show an increase in confidence over the years:
- Among teens aged 14 and 15, 58 per cent described their skills as 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.
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.
- 50 per cent of teens and 57 per cent of parents reported teens have fair or poor understanding of the difference between good and bad debt.
How teens bank
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 survey of teens found that:
- 94 per cent have a bank account
- 78 per cent have a debit card
- 74 per cent have savings
- 26 per cent have a credit card of their own and
- 31 per cent have investments
Interestingly, 64 per cent 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.
When asked about the source of their income, the survey found that 50 per cent of teens have a part-time job with four per cent reporting a full-time job. Other sources of income include:
- A regular allowance (29 per cent)
- Money from parents by request (47 per cent)
- Money from investments or trusts (12 per cent)
- Gifts or presents (56 per cent)
- Babysitting, odd jobs, seasonal work, paper route or a school loan (15 per cent)
Teens give high marks to parents
Interestingly, not only do teens acknowledge the importance of their parents’ role in their financial education, they also give high marks to their parents for their money management skills.
- 84 per cent of parents rate themselves as good on money management and teens agree, with 84 per cent describing their parents’ money management skills as good.
- Teens are more inclined to give strongly positive ratings to their parents for money management skills:
- 41 per cent of teens describe their parents’ skills as excellent compared to only 26 per cent of parents themselves.
Banks and financial literacy programs
Many Canadians look to banks as a trusted source of financial information and banks are working in their communities to provide consumers with the information they need to make sound financial decisions.
In addition to the initiatives sponsored or led by the individual banks to promote financial literacy, the banks also jointly support a non-commercial in-class seminar called YourMoney, which delivers basic money management information to senior high-school students in communities across Canada. Delivered by volunteer bankers, the seminar has reached over 200,000 students to date. More information can be found at www.yourmoney.cba.ca.
General inquiries
1-800-263-0231 or inform@cba.ca
Media inquiries
Rachel Swiednicki, Manager, Media Relations
(416) 362-6093, ext. 220 rswiednicki@cba.ca
