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Consumers' financial literacy a key focus for Ottawa: Flaherty

Federal Finance Minister Jim Flaherty

CHRISTINNE MUSCHI/REUTERS

Pushing Canadians toward a better understanding of their finances is a key focus for the federal government, Canada's Finance Minister said Monday as he launched financial literacy month.

"The issue of financial literacy means a great deal to me, and it certainly means a great deal to our government," Jim Flaherty said at the kick-off event in Toronto.

"Throughout our time in office, our government has been focused on helping Canadian consumers to identify and take advantage of the best possible financial products and services for their respective needs and circumstances."

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Mr. Flaherty, who created a federal financial literacy task force in the 2009 budget, has said increasing consumer knowledge will contribute to a more stable financial system.

Financial literacy has emerged as a key issue following the global economic crisis, with personal debt levels relative to income sitting at historic highs.

In recent months, Mr. Flaherty and Bank of Canada Governor Mark Carney have been vocal in trying to dissuade Canadians from taking on too much debt because, they warn, interest rates will soon start rising.

Many Canadians have taken advantage of ultra low interest rates coming out of the recession to pile on record debt loads.

The $5-million task force, headed by Sun Life Financial chief executive officer Donald Stewart, is charged with developing Canada's first national strategy to improve financial awareness.

After embarking on a cross-country tour, the task force released a report earlier this year that contained 30 recommendations on how to improve financial literacy. It said education, starting as early as elementary school, is the best way to sow the seeds of knowledge and skills Canadians need to save, invest, buy homes and plan for retirement later in life.

Other initiatives it recommended include the establishment of dedicated national leader on literacy, and that Ottawa create a one-stop website where Canadians can obtain information on everything from mortgages to retirement planning.

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Financial literacy is usually defined as a combination of knowledge of financial matters and numerical skills, such as an understanding compound interest, as well as having the ability to put those skills into practice in making financial decisions.

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