Tenille Lafontaine was in the middle of a mall food court flanked by two hungry kids when a moment of realization dawned.
Her 10-year-old son Elijah was craving a burger, while her four-year-old youngest daughter Everleigh's eyes were on a dish in another direction. Caught in the middle, Ms. Lafontaine opened her wallet to find no cash – only plastic. She'd never taught her kids how to pay without coins and bills so handing a bank card to her son wasn't an option. It was a simple lapse in her lessons on money that made a huge impact.
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"We live in a cashless society and we're teaching our kids about dollars and cents with a piggy bank. It was kind of a light-bulb moment where I thought, what am I doing here? We've evolved!" said Ms. Lafontaine, 38, who has spent a lot of time thinking about parenting and saving money, penning a blog called Feisty, Frugal, and Fabulous from her home in Regina.
After lunch, Ms. Lafontaine took her kids to a nearby store and turned to Elijah. "I told my son, 'I'm going to teach you how to use a debit card.'And he looked at me like a deer in the headlights – even though he'd seen me do it for years. He had no clue."
The Lafontaine family's concern over how to best prepare their children for financial success later in life is increasingly common as rapid changes in technology alter the way money trades hands, and educators struggle to keep up and reach students in meaningful ways. With many parents hesitant to impart money lessons because of their own financial missteps and lack of knowledge, the government has recently ramped up its efforts to encourage new programs aimed at improving young Canadians' financial literacy. But some believe bolder reforms are necessary if Canada is to prevent the next generation from repeating financial mistakes of the past.
As scars from the Great Recession begin to fade, Canadians still face mounting financial challenges. They are more burdened by debt than ever before. Soaring housing prices, persistent public equity market volatility and an interest rate cut by the Bank of Canada have added more pressure on consumers to make wise financial decisions. At the same time, increasingly complex financial products, lower savings rates and changes to workplace pension plans leave Canadians more vulnerable to financial mishaps.
For young people especially, navigating the new financial landscape can be daunting. University students face soaring tuition and studies show they graduate with around $25,000 in debt on average. Married couples under the age of 34 have a debt-to-income ratio of 180 per cent, compared to 125 per cent for couples in their 50s, according to Statistics Canada.
Canadian youth – those aged 18 and younger – have more resources to help them learn about money than ever before, from websites to apps. But getting kids to care about how much they spend and save can be a tall order, especially when other temptations like online shopping and Xbox downloads are a simple click away. It's also tough to gauge how prepared young people are for their financial future, since there's no national system to measure their financial literacy levels and education on the topic differs across provinces. Also, parents from different cultural backgrounds sometimes have their own philosophies on things like allowance, for example. But one thing the government, private sector and not-for-profit groups do agree on is that kids don't know enough about saving, spending and preparing for their financial futures.
Research shows Canada isn't doing enough to prevent young people from making costly financial mistakes. One study commissioned by the British Columbia Securities Commission in 2011 showed that many students are currently leaving Canadian high schools with "weak financial skills and little knowledge of the financial realities they will face." Less than half of high-school graduates polled remembered learning about personal finance, and that those who did receive financial literacy training only benefited if they had a good experience and found the material interesting.
The financial services industry has positioned itself alongside schools and parents as one of the major supporters of financial education in Canada, launching new seminars and information resources for all ages. But consumers are also bombarded with millions of dollars worth of advertising for financial products like credit cards, bank accounts and investment products that are more complex than ever.
The urgency around addressing financial literacy reached a peak when the Financial Consumer Agency of Canada launched a national financial literacy strategy on June 9 called Count Me In, Canada. It's the product of more than five years of government focus on strengthening Canadians' financial well-being, with an intense round of consultations conducted in the past year by Jane Rooney, the country's first financial literacy leader. Special attention was paid to at-risk groups such as seniors, aboriginals, newcomers to Canada and youth in the year-long process.
The strategy set broad goals for improving financial well-being for Canadians, and roughly 50 new initiatives such as seminars and workshops that teach personal finance topics were instituted. Canadian banks have also committed to a $10-million fund to sponsor community groups working to improve financial literacy. But it fell short of setting specific targets for boosting kids' and teen's financial literacy. The government could deliver a stronger recommendation in its follow-up action plan in the coming months.
"The challenge really became greater than probably everybody who jumped in in recent years anticipated," says Gary Rabbior, president of the Canadian Foundation for Economic Education. "It's not just getting in front of people, getting a website done, getting a book in people's hands. It's really touching them in their lives and showing how the material relates to their lives."
'An important life skill'
It was the financial crisis that put Canadian financial literacy into the spotlight. As asset values collapsed and economies were thrown into turmoil, attention turned to preventing the same financial havoc in the future.
In 2009, then-minister of finance Jim Flaherty suggested Canadians could strengthen the national economy through better daily financial decisions. "Recent events have shown us that there are major risks and that financial literacy is an important life skill," he said during an announcement of his new Task Force on Financial Literacy.
By 2010, one of the task force's recommendations was to formally integrate financial literacy in the provincial and territorial education systems, from elementary school to high school. It also suggested that teachers should be provided financial literacy professional development opportunities. Helping kids understand financial risk now could provide a cushion for the next generation. "One of the most important areas we see to address is kids," said Mr. Rabbior, who has researched how to address financial education in schools as part of the government's initiative. "People obviously care about kids. Sometimes they'll smoke, but they won't want their kids to smoke. You may drive too fast, but you don't want your kids to drive too fast."
British Columbia was at the forefront when it made money management a core topic in the province's health and career education curriculum in 2006. Ontario moved the bar forward in 2011 with a new plan to boost financial literacy education for Grades 4 to 12, with a revised curriculum in subjects from career education to social studies, mathematics and Canadian and world studies. And more provinces are stepping up. Prince Edward Island's Career Exploration and Opportunities course will be mandatory for 10th graders starting in the next school year. A significant portion of the class will cover topics such as budgeting skills, financial products and services, and credit ratings.
Still, many believe provinces need to do more to integrate unbiased financial education into schools. "If you think about the other things they teach in the school system, whether it be music, art ... all of these things are as important as academics. And certainly I think financial skills are just as important," said Robert Stammers, director of investor education at the CFA Institute. "But they're not getting them in the school system. And so there's a greater responsibility for parents to build in that training as early as possible."
We did hear the importance of kids learning through the school system," Ms. Rooney said of her consultations across the country. But she says financial literacy is being taught in all jurisdictions.
Some provinces have an opportunity to prioritize financial education on their own. Saskatchewan, New Brunswick and British Columbia are among the regions in the midst of curriculum revisions or consultations. Quebec's Ministry of Education said it is developing a draft curriculum for a financial literacy program that could be available for secondary school students in the September, 2016, school year, if only as an elective.
Everyday experiences
Aly Hirji, a teacher at Sir Wilfrid Laurier Collegiate Institute in Toronto, has witnessed high-school students' need for financial education first hand.
"We just got a Tim Hortons across from our school. A lot of students will grab breakfast from there, instead of bringing breakfast from home," said Mr. Hirji, who teaches business, careers, guidance and math, and has trained other teachers across the Greater Toronto Area to deliver financial literacy lessons in their own schools. When he sees those cups and wrappers, Mr. Hirji breaks down for students how much they could save if they forgo their daily fix, adding in the change they'd save if they pocketed bus fare and walked to school. "You could have saved $2 on a bus trip each way, $4 per day, times five – $20 each week, $80 per month," he tallies. Mr. Hirji also adds in an entrepreneurial edge: Why not use that seed money to rent equipment to clear snow or aerate lawns to earn more cash?
Mr. Hirji is concerned that some students are lured into financial mistakes such as signing up for a credit card just to get a free T-shirt at sporting events, only to be stuck with debt later. "That's what I show my Grade 12s. Yeah, this can be a good way to build your credit, but it's very easy to get carried away with the crowd and realize – how am I going to pay this back?" He knows how tough those decisions can be – his parents collected the money he earned handing out flyers as a teen and used it to help fund his university education.
Alicia Webber wishes her school system had taught useful lessons about managing money and saving. "My financial life and professional ambitions have been a bit of a roller coaster," said 27-year-old Ms. Webber. "I wish I had figured it out before now. I wouldn't have acquired as much debt."
As a kid, her parents struggled with their finances and didn't offer many money lessons. At school, the personal finance teachings she can recall never felt practical.
After high-school graduation, the high cost of living and socializing in Toronto made it tough to manage money. "I thought it wouldn't bother me because everyone was in debt, so why did it matter if I was, too? Honestly, I just ignored my problems," Ms. Webber said of maxed-out credit cards and unpaid bills.
But in 2012, she hit a wall and moved home to Brantford, Ont., to regroup. That pushed Ms. Webber to take control, hiring a financial planner who developed a savings plan. "Now I know how to balance my budget – for instance, no more than 30 per cent should go towards rent," she said.
Having made a big dent in paying down debt and loans from film school, Ms. Webber feels financially stable and optimistic about her future. But she worries about the next wave of students.
"I wasn't able to continue working in film because it was not financially viable for me to do full time," she said, noting that unpaid work is common in that field. "I would hope that in the future, kids, and teens more specifically, are taught how to manage their finances. Nobody prepares you for the sheer amount of debt you can get into during school."
A 2012 study of Ontario high-school students by the Investor Education Fund (IEF), a non-profit group founded by the Ontario Securities Commission, showed students overwhelmingly say their parents are both their primary source of personal finance information and their most trusted source.
But giving sound financial lessons is where many parents struggle, according to Mr. Rabbior. They don't see themselves as a good role model. "A lot of parents don't think they've got the background, or that they've made mistakes, therefore why am I in any position to do this?" he says. But making mistakes is one of the best ways to learn, he adds, and puts mom and dad in a position to help their kids avoid the same mistakes.
Reaching the kids
But it's not enough to just talk about financial literacy – the lessons have to be useful.
Wichita, Kan.-raised band Gooding has taken rock and roll on the road as a way to connect financial literacy with teens. "Control your money or it will control you!" says the band's lead singer, who also goes by Gooding, from a gymnasium at Salisbury Composite High School, about half an hour east of Edmonton.
He has 20 minutes to win students over with a talk about predatory lending and debt. Gooding shows the audience how many sports stars have trouble keeping a handle on their finances and wind up broke – even after they've signed major-league deals. And when the lecture is done, a rock concert begins.
The band's Funding the Future tour in Western Canada is sponsored by investment dealer Raymond James Ltd. with performances for students in Victoria, Kelowna and Edmonton earlier this year.
By high school, teens are amassing cash through allowance, gifts and part-time jobs. Most also have a savings account and are thinking about personal finance, according to the Investor Education Fund. By Grade 12, these students are interested in buying cars, what it costs to live on their own, and how to manage debt such as student loans. But the majority won't graduate with a strong level of knowledge in those areas. And topics like buying a home or building a financial plan score even lower levels of financial know-how.
There is no shortage of materials designed to help youth learn about money, but what really counts is reaching these kids in a way where they can apply what they've learned. In the same vein as Gooding's rock concerts are programs like Funny Money, for Grade 11 and 12 students in North America where comedians offer "fun-ancial advice," an initiative of the IEF. A few years ago, a Hip-Hop Summit on Financial Empowerment used the entertainment business as a backdrop to talk about repairing bad credit and other financial matters – it was sponsored at the time by Chrysler Financial Canada, the provider of automotive finance products that was later forced to restructure amid the financial crisis.
For younger kids, there's the annual Talk With Our Kids About Money Day in April. This financial literacy program aimed at seventh graders was created by the Canadian Foundation for Economic Education (CFEE) and supported by Bank of Montreal. It also has a home program, with online resources for children as young as five years old, to help parents continue the conversation at home.
"I'm a parent of three young children so I can immediately get how hard it is to talk about money matters," said Joanna Rotenberg, chief marketing officer at BMO, who works on Talk With Our Kids. "Money is a deeply personal thing."
The technological challenge
As parents, teachers and schools seek to connect with youth, technology is rapidly changing the way goods are bought and sold in a way that can make it challenging to show young kids where the money goes.
The rise of smartphones has added new financial pressure for Canadian youth. Agreements tethering young people to their mobile devices are often their first experience with signing a contract, and their first major financial responsibility.
It's also an chance to discuss which plans provide the best value, how to negotiate prices and ways to avoid racking up hundreds of dollars in data overcharges or game downloads. Parents can use this as an opportunity to teach kids how to pay the monthly bills and talk to them about interest, terms and conditions, and cancellation policies.
"Before some of these young people sign contracts for cellphones or other financial products like credit cards, I really think there needs to be some assurance that they understand what it is they're doing," said Greg Pollock, chief executive officer of Advocis, an association of Canadian financial advisers and planners.
For Ms. Lafontaine, technology has changed her children's lives, especially her youngest. Her four-year-old uses the family iPad, which didn't exist when Elijah, who is now 11 years old, was younger. Changes like those are making it difficult to teach kids about money, she says, because it's harder to teach a lesson without a physical experience.
"When I was a kid and I wanted an item, I had to leave my house to go get it," Ms. Lafontaine laments. "You went to the mall with your friend and you saw an item you really wanted and then you went home and talked to mom about it." Back then, maybe a parent would agree to take you back to the mall later in the week, or maybe you forgot about it after a day or two. "Now? That virtual item is right there in front of you, that instant gratification of buying it with no time to really think about it or convince mom you really need it."
But alongside these challenges, Ms. Lafontaine says the virtual world brings opportunities for the next generation of spenders, including being able to quickly shop around for a better deal.
The financial institutions link
In teaming up with the private sector, the government has an imperfect partner that is both connected with Canadians making financial choices and reliant upon their business. Banks, telecommunications companies and insurers have financial products and services Canadians need, and they connect with consumers at key points in their lives such as getting their first account, first job or first car, which all provide an opportunity to teach a financial lesson. "They're a network we can leverage to provide financial literacy and education to Canadians," said financial literacy leader Ms. Rooney.
On the other hand, leaving consumers in the hands of businesses presents challenges because their interactions with consumers aren't unbiased – they involve selling a financial product, or in the case of investments a commission may be on the line.
"Because it's such a transactional environment, there's a glaring hole in the private sector when it comes to advice and literacy and I think that Canadians as a result need to arm themselves with their own knowledge and understanding," said Jason Heath, managing director at Objective Financial Partners Inc., which offers advice-only financial planning for a fee.
Mr. Heath says he encounters many people who are highly skilled in fields linked to financial services, from lawyers to financial advisers, who are not well versed in personal finance, and don't understand their own various tax, insurance or savings situations. "So, I think it's incumbent on consumers of financial advice to empower themselves and be as educated as possible and I really do think it starts, even if it's just a little bit of financial education, at a young age," he said, adding that many of his clients' money habits and beliefs have roots in their upbringings.
The government has been pushing banks and credit card companies to be more transparent. "The financial institutions have a responsibility to disclose information around those products and services," Ms. Rooney said.
Last year, the federal government got major banks to agree to offer no-cost banking accounts for youth, students and low-income seniors. Ottawa also proposed an increased consumer protection framework for banks this year, which could require simpler disclosure of information and better reporting of consumer complaints, among other things.
Ms. Lafontaine couldn't wait for government or school programs or others to prepare her kids for their financial futures. Conversations about money, like sex and drugs, need to happen at home as soon as possible, she said. Since the day in the mall, she has opened opened bank accounts for her kids. Sunday is allowance night, and if the chores are done, each child gets five dollars electronically deposited in their bank account. They can watch their money accumulate online, and buy things on their debit card.
"I'm excited, and fully behind moving them to a cashless system," Ms. Lafontaine said. "I strongly feel that's how we exist today and how kids should learn."
Like cursive writing and the Rolodex, cash and piggy banks have their place in history. But for kids today, the future is digital, whether they are financially capable or not.
The Globe and Mail personal finance team is visiting university and college campuses this fall to talk to students about money. Student loans, budgeting, credit cards, saving and investing – we cover it all from an independent, unbiased perspective. To arrange a visit, please contact Globe personal finance editor Roma Luciw at rluciw@globeandmail.com or personal finance columnist Rob Carrick at rcarrick@globeandmail.com.