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How Canada ranks against the world in financial smarts

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Canadian women lag far behind men in their financial knowledge – but they behave more intelligently than their male counterparts when it comes to actually handling money.

This intriguing gender mystery is revealed in an international survey of adult financial literacy conducted by the Organization for Economic Co-operation and Development (OECD).

The survey, which spanned more than 50,000 respondents around the world, delivers the reassuring message that Canadians are better with money than the vast majority of their peers in 29 other countries.

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Canada trailed only France, Finland and Norway in the overall financial literacy score calculated by the OECD's International Network on Financial Education.However, the report, published Wednesday, also highlights a striking global gap between the sexes when it comes to financial knowledge.

In 19 of the 30 participating countries, men were significantly more likely than women to correctly answer at least five of seven questions regarding money, markets and interest rates.

On average, 61 per cent of men around the world achieved the minimum target score compared with only 51 per cent of women.

It would be easy to blame this gender gap on cultural factors that might make women less used to dealing with money. For instance, many of the developing nations that participated in the survey, such as Malaysia and Jordan, have relatively few women in their work forces.

But such a pat explanation for the gender gap doesn't stand up to examination. Some of the largest chasms in financial knowledge between the sexes occurred in advanced economies with large numbers of female workers. A big gender gap was the norm in Norway, the Netherlands, New Zealand – and, yes, Canada.

Seventy-two per cent of Canadian men were able to meet the minimum standard for financial knowledge. Only 50 per cent of Canadian women did so.

The questions that proved so challenging were not particularly sophisticated. For instance, one asked respondents to calculate how much $100 invested for a year at 2 per cent interest would be worth at the end of the year.

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Based purely on such book knowledge, men would appear to be much better prepared to deal with personal finances than women. But, of course, knowledge doesn't mean much if it isn't reflected in action.

Besides evaluating people's level of financial knowledge, the OECD survey also graded each country on its financial behaviour and its attitudes. Each country's overall score was based on all three factors.

Despite the gender gap in financial knowledge, the report failed to find any significant difference between the sexes when it came to wise financial behaviour. Around the world, both sexes were more or less equally likely to pay bills on time, live on a budget, carefully consider purchases, keep a close watch on their financial affairs and set long-term financial goals.

In Canada, women were actually slightly more likely to hit a minimum hurdle for smart financial behaviour than men, although the difference was not statistically significant. By the OECD's reckoning, 68 per cent of Canadian women handled their money prudently, compared to 67 per cent of men.

Where Canadian women really outperformed was in their attitude toward personal finances.

The OECD asked questions designed to gauge whether people had a long-term focus on building wealth or simply lived for the day and let tomorrow take care of itself. In Canada, 68 per cent of women had a long-term perspective on money, compared with only 60 per cent of men.

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That far-sighted attitude combined with the right behaviour may trump the ability to calculate interest. If nothing else, the differing skills of the two sexes serves as a good argument for ensuring that both you and your spouse are involved in money discussions.

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About the Author

Ian McGugan is a reporter with The Globe and Mail's Report on Business and has been writing about investing, economics and business for more than 20 years. He joined the Globe and Mail in 2010. He has been executive editor of Canadian Business magazine and founding editor of MoneySense magazine. More

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