Remarks by Casey Cosgrove

Financial Literacy Empowerment

Good morning everyone. My name is Casey Cosgrove, Director of the Canadian Centre for Financial Literacy, a division of national nonprofit Social and Enterprise Development Innovations, or SEDI. I am delighted to join the members of this panel today to talk about financial literacy empowerment. I will focus on financial literacy empowerment for low-income earners, the group we at SEDI have served for over two decades.  SEDI is a Canadian national charity which has been at the forefront of initiatives that have propelled low-income people to save, invest wisely and participate in the economic mainstream. The organization’s work focuses on three areas: financial literacy, asset building and entrepreneurship, and since our founding in 1986, SEDI has helped shape significant social policies in Canada by conducting market and policy research and by acting as a unique link  between communities and governments.

In 2008, based on extensive market research, SEDI saw the need for a coordinated, multi-sectoral effort to increase financial literacy in Canada. The organization called upon the federal government to create a financial literacy task force that would make recommendations to the Minister of Finance on a national strategy. The task force was included in the 2009 Canadian federal budget and is expected to be established within the year. As part of its efforts to move financial literacy forward in Canada in a coordinated, national manner, SEDI created the Canadian Centre for Financial Literacy in 2008, a division entirely dedicated to helping nonprofits and financial literacy practitioners access the training needed to deliver effective and innovative financial literacy programs. The Centre is a community where financial literacy advocates and practitioners collaborate and share ideas and best practices. It also offers services for government and corporations interested in supporting financial literacy initiatives for low-income Canadians. The Centre focuses on five vulnerable groups: youth, Aboriginal Peoples, newcomers to Canada, families with children, and women. It seeks to reach more than 230,000 low-income earners with financial literacy supports over the next five years.

Financial literacy is an essential skill. It is about having the knowledge and skills to manage money wisely and make informed financial decisions. Few of us were taught about, and what to do with our money. In school we learn reading, writing and arithmetic, and often we pursue more education aimed at acquiring a job to earn money; but rarely in that mix does anyone teach us about money management skills. This lack of financial knowledge can have devastating consequences on our lives, particularly in tough times such as these. For example, for a single mother, an autoworker who lost his job, or a newcomer to a country, a lack of financial knowledge, confidence, and planning tools can lead to a struggle to meet everyday expenses, to survive. Careless credit card usage leads to snowballing debt. Lack of an emergency fund can compromise the future of a family.

For example, in Canada our level of household debt has risen to $90,000 – which is $24,800 more than the average annual household income. Consumer credit-card debt in Canada totals $80 billion, a 40% increase from 2004. Many people make poor financial decisions every day that can affect their future, as well as the future of their children.  The sooner we face this fact, the faster we can act appropriately.

There are more issues at play than we would have time to discuss today regarding financial literacy among our citizenry. The current global financial situation has emphasized the importance of financially literate citizens.  Individuals need knowledge and understanding to better navigate the financial services sector and make better decisions with resources at hand – especially in an economic downturn.  There exists an incredible amount of passive information about financial management and investing on websites and magazines, which is great if one knows what to do with the information. The reality is that only a small portion of that ocean of information is active, engaging information that people will relate to the realities of life. Relevancy is the ‘stick factor’ in financial literacy. In our experience working with vulnerable youth, for instance, we learned that they will become much more engaged in content that is directly related to them, such as the decision making that goes into buying a new pair of jeans or to pay a cell phone bill.  We have learned that financial literacy initiatives work when they are delivered through community organizations that are connected to people, bring ideas and content that are timely and relevant to the realities of peoples lives, are carefully adapted to the target market, are integrated into the education system or community programs, and offer more than just ‘product’ information.

Money and personal finance is seen in many ways by many people.  There isn’t one right answer or way to think about the subject.  To some, it relates to ‘respect’, for some it carries a stigma of poverty. Few want to be seen in their community as somebody who lacks money and money knowledge. A posted sign saying ‘Attend here and become financially literate’ will likely not attract many visitors.  I think many that work in this ‘field’ understand that ‘if you build it, they will not necessarily come’.  

Here is an anecdote from a client in our Independent Living Account Project that captures the thinking of Leroy, a program participant.

‘I’ve got no time for this, they’re asking for three hours of my time, for me to sit in my skin, where my head is at, with no education – trying to learn, that’s only an annoyance.’ Eventually, Leroy, who spent almost three decades cycling in and out of jail, on and off the streets – decided to give the program a chance, and achieved remarkable things in his quest to economic recovery and stability. “What really sold the program for me was that it was a group process. I like being part of a group and throwing things back and forth - that’s the way people grow. And that’s what happened. I got really into it and started enjoying listening to the other guys, giving my input, getting feedback and slowly growing. After a little while it became fun. Some guys caught on a lot quicker than I did, and when I see stuff like that it only drives me more because I know someday I’m going to be there too.”  It wasn’t ‘financial literacy’ that was the selling point, Leroy said ‘ what really sold the program was the opportunity to save for first/last months’ rent, having an  endpoint to inspire me’.  

Because Leroy knew the program would make his dream of getting established in his own place possible, he started making plans and saving a little bit each month. Combining financial literacy with incentives to save is one of the approaches that SEDI uses to help people not only understand the benefits of educating themselves on money matters but also use this knowledge to realize their dreams.  This is financial literacy in action.

Lack of financial confidence, skills, and knowledge presents a growing challenge for consumers of financial services and for governments who want citizens to save for a first home, for retirement and for their children’s education, to spend wisely, and to build wealth. Having the capacity to manage savings and debt is critical to self-sufficiency and participation in the economic mainstream. However, navigating with the right information and confidence is a major challenge for many consumers, particularly those who cannot afford the services of a financial advisor.  Empowering people to make more informed decisions is key.  It is critical that businesses, educators, nonprofits and governments share the responsibility of building a financially literate nation. They can do that by working together to build and restore consumer confidence – in themselves, the market and financial products –, by incorporating financial literacy into school curriculums and by supporting public policies that help consumers better navigate the financial system and thrive in a knowledge-based economy.  

This summit provides a day of ‘conversation among leaders’ from around the globe, and is a wonderful start.  What I look most forward to is the challenge that each of us leaves here with to put financial literacy in action across our neighbourhoods, our communities, and our countries.

Thank you.