Youth Financial Literacy Study

Conclusions

Canadian youth generally have access to banking services, with more than eight in ten having a chequing account (although this falls to under 70 percent among those with less than a high school education) and only five percent having neither a chequing nor a savings account. It is interesting to note that as many Canadian youth have a credit card (72%) as have a savings account (74%). This is not entirely surprising, as access to credit cards among students (and youth generally) is much easier now than in years past.

In terms of accessing banking services, young Canadians have embraced the digital age — on-line banking is the method they prefer to perform day-to-day banking/financial transactions and more than seven in ten have made at least one purchase from the Internet in the past 12 months. However, there is evidence of a "financial digital divide" based on education. Among those young Canadians who have not completed high school, ATMs are preferred over on-line banking and only half have made any purchases on the Internet in the past year.

Usage of "alternative" financial services (such as cheque cashers, payday lenders and pawnbrokers) is generally low, but is much higher among some segments of the youth population. Most notably, about one in six among those who have responsibility for a child have used cheque cashers (16%) or payday lenders (15%) in the past year. The speed of the process for using these services is a key component of their appeal.

The majority of young Canadians have sole responsibility for managing their own finances and most report financially responsible behaviours. Two-thirds make a monthly budget (although most do not always stick to it) and seven in ten put money aside for the future (although only half of that proportion do so regularly). Most young Canadians believe they have at least a fair understanding of personal financial matters and most think they do a good job of managing their money. For the most part, those who assess their own financial knowledge and skills most positively display the most responsible financial behaviours. However, it is worth noting that this group are also more likely than others to have made use of alternative (high-interest) financial services.

Most Canadian youth are carrying some debt — six in ten report debt of some kind, with more than one-third of this group carrying a total debt load of $10,000 or more. Credit card debt is by far the most commonly reported type, followed by student loans. Servicing this debt may place a significant burden on young Canadians; this may partially explain the fact that almost four in ten young Canadians did not have enough money to meet their monthly financial obligations at least once in the past year.

Only one in four young Canadians report having received any education or training on personal finances, with most of this education at the post-secondary level. There is significant interest in financial education, particularly in the area of budgeting.

It would be useful to conduct further research among the general population 30 years of age and older to identify exactly how financial attitudes and behaviour, as well as general financial literacy, differ between youth and older Canadians.