In my formative school years, it was mandatory for all students to learn cooking, carpentry and typing, among other non-academic pursuits. While I’m certainly grateful to have those life skills, as I get older I wonder why we weren’t taught to invest in the stock market, save for retirement or do our taxes.
Generationally, I straddle the divide between the millennials and generation X. Older generations say we’re lazy, lack a work ethic and employer loyalty and are financially illiterate. I agree, in a general sense, with the last stereotype, but it comes with a caveat: we’re perched on an unprecedented precipice, ironically balancing the fact that we’re less financially educated with facing down more financial challenges than recent generations.
So it’s no surprise that a quarter of gen-Xers said the need to pay down debt was the main reason they haven’t started saving for retirement, according to a Franklin Templeton Investments Corp. survey in May.
Consider, for instance, that household debt in Canada was 100.2 per cent of GDP at the end of 2017, compared to 32.2 per cent at the beginning of 1969, when my grandparents were my age. Defined benefit plans, which both my baby-boomer parents are riding into their retirement years, aren’t the reality for today’s workforce, particularly in the private sector. Instead, my generation is facing the complications and complexities of the relatively fresh world of defined contribution plans and the uncertainty of what retiring with one of these pensions will look like in 30 years or more.
Trying to harmonize the more urgent reality of paying off debt with the far-off concept of retirement is incongruous for my generation. So when I hear about employers focusing on financial wellness as a real component of their employees’ holistic well-being, I applaud them. Some are even putting their money where their mouth is and meeting workers where they are on their individual financial journeys.
The Royal Bank of Canada, as detailed in this month’s Employer Strategy, is now offering to put matching contributions into employees’ DC plan when they make student debt or mortgage payments. Like many plan sponsors, it had previously only matched contributions employees put directly into the plan. But the new option recognizes that whether or not workers are contributing to the plan, if they’re paying down their debts, they’re demonstrating financial responsibility and should be rewarded accordingly.
It really demonstrates how feasible it is for an employer to cater to the needs of younger employee groups — and their different priorities — without forcing words like ‘pension’ and ‘retirement’ down their throats. Turning the conversation to overall savings, with the first step as paying down debt, sets people on the right path towards their future savings goals.
Moving from the workplace back to the classroom, I believe the next big step is for Canada to focus on its financial education and literacy programs. As children move into middle and high school, we need to teach them basic money skills to ensure they’re prepared for their financial futures.
At Benefits Canada’s Defined Contribution Investment Forum in September, personal finance expert Preet Banerjee cited a study in which Canadians were asked three very simple finance questions: one related to interest on $100 in savings, one on interest and inflation and one on the stock market.
Alarmingly, 58 per cent of all respondents couldn’t answer all three correctly, and that number rose to 70 per cent for those aged 35 or younger. Very concerning, indeed. Canada doesn’t teach the basics of personal finance in school, said Banerjee, though he commended Ontario’s former Liberal government for its proposed curriculum.
The aim of that pilot project, which was launched at 28 high schools during the last semester of the 2017 school year, was to revamp the Grade 10 careers course to ensure financial literacy was part of the curriculum. At that time, Ontario was expecting to roll out the new program in the 2018-19 school year. Unfortunately, it looks like it’s become yet another casualty of Doug Ford’s Conservative government, which seems more focused on moving backwards than into the future.
Using the public education system to highlight financial literacy is significant because not all families have the ability to teach it to their children. And by incorporating it into the day-to-day curriculum, maybe finance will one day mean as much to children as learning about the history of Canada, solving a quadratic equation or reading Shakespeare.
One can only hope.
Jennifer Paterson is the editor of Benefits Canada.