The importance of talking to children about money and finances in challenging times
Canadian students continue to rank among the top countries worldwide for financial literacy
May 11, 2020
To mark the release of the financial literacy results from the 2018 Programme for International Student Assessment (PISA) survey conducted by the Organisation for Economic Co-operation and Development (OECD), the Financial Consumer Agency of Canada (FCAC) is encouraging parents to talk to their children about money and finances during these challenging times.
The results of the triennial worldwide survey of 15-year-old students found that teens who talked about finances with their parents, even just once a week, scored 33 points higher in financial literacy than those who did not. Higher levels of financial literacy in students are associated with confidence in keeping track of their account balance and planning their spending with consideration of their current financial situation. Both are key factors in building a financially secure future.
Canada ranked second, tied with Finland, out of 20 participating countries and economies for the second time in a row. Compared to the OECD average of 86 percent, 91 percent of Canadian students performed tasks associated with at least the minimum level of financial literacy required to participate fully in modern society. While, almost half (44%) of Canadian students performed tasks associated with advanced levels of financial literacy.
As many families are re-evaluating their household finances as a result of the COVID-19 pandemic, parents should consider involving their children in conversations about news related to economics or finances and how the family is responding financially to these unprecedented circumstances. This can be a good way to open the door to discussing important personal finance topics, such as helping children understand how external factors can influence family finances and the importance of having an emergency budget.
Beginning conversations about personal finances early will help strengthen financial literacy in children and prepare them to manage their finances responsibly in the future. When children are young, parents can begin with basic concepts such as counting and recognizing coins and bills. As children grow older, parents can discuss budgeting, income, expenses, and saving. For teens, introducing concepts about using credit, saving for something they want, and managing debt can set them on the right path for future financial success.
FCAC makes it easy to talk to children about money. Encouraging discussions between parents and children is an important element of FCAC’s financial literacy efforts. The webpage “Teaching children about money” offers free, unbiased resources and tools to get you started.
FCAC funded the Canadian component of the PISA financial literacy survey and it was administered by the Council of Ministers of Education, Canada in seven provinces.